Diminishing returns
From Wikimarcellus
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Revision as of 04:09, 1 March 2010
Production from gas wells in the Marcellus and other shale plays is a matter of diminishing returns. A well's initial production begins at a much higher flow rate of natural gas than will happen over its lifetime. Roughly half of the production comes in the first two years. After that, it declines in a long diminishing tail. Hence, most of the royalty payments, generally based upon a percentage of gas sold from each well, also come in the first two years.
