Question-and-Answer Session
Operator
(Operator instructions). Your first question comes from the line of Brian Singer of Goldman Sachs. Please proceed.
Brian Singer – Goldman Sachs
Thanks. Good morning.
Mike Watford
Good morning.
Brian Singer – Goldman Sachs
When you look at the $0.5 million dollars per well reduction in Pinedale and completed well costs, you highlighted the sharp reduction in drilling days. But do you have some sense of what the split is of that in terms of the efficiency gains versus lower service costs?
Bill Picquet
Brian, this is Bill. Most of that is in fact a very high percentage of it is due to efficiency gains, Brian. We're actually seeing service cost reductions start to level out in areas such as pipe, and the new rigs that we're bringing in that are new builds, are actually higher on day rates at this point in time due to the commitment timing being made back when we did the new builds. In fact, what we're doing is we're continuing to reduce costs primarily through efficiency and applications of new technology.
Brian Singer – Goldman Sachs
Great, thanks. And then secondly, on, Mike, on your comments at the end in terms of your CapEx over the next two years, should we take the $2 billion as roughly even, IE $1 billion in 2009, $1 billion in 2010, and $1 billion in 2011?
And how should we think about the extent of the Marcellus in terms of the contribution to overall production?
Mike Watford
I think it is fine to us split the $2 billion in half, and when we announce final CapEx for 2010, we will see where we are in that. And as to the Marcellus component of our production, over the next two years, we have very conservative estimates in 2010 currently.
We are not ready to share those yet but we are pretty comfortable when we do share them, we will have a great opportunity to under promise and over deliver. And as we have more wells on and more months of production, again, we only have eight wells on as Sally said, and the earliest one in terms of production history is mid July. So we just don't have a large sample size.
But from what we've seen, we're probably pretty confident right now that our production estimates, preliminary production estimates for Marcellus in 2010 and '11 are probably less than what they will be so I'm walking around the question without answering it, I realize that.
- To read the full transcript on Seeking Alpha, click here »
