Which part are you worried about?
This piece is a roller coaster. Production is down and prices are down. That's bad. Wait, if we export LNG, then prices will go up and production might increase. That's bad. So we don't want to export LNG to keep prices down. But wasn't that bad? But the wells won't turn a profit if the price doesn't go up. Is that bad or good? I am really confused.
With regard to the specific issue of the profitability of some of these plays, it is entirely possible that they are still profitable, in both a real and tax sense in the face of declining prices. These plays are frequently structured and sold to investors in the form of Master Limited Partnerships(MLP's). Typically, all losses, from amortization of capital expenditures, are distributed in first years, to the limited partners and profits are distributed, in the later years after all the capital expense has been fully amortized. In the later years, even though prices are declining, the only expenses the MLP accrues are operating and bookkeeping expenses and even at $2.60 that still translates into a nice profit.
