Marginal Cost can mean a number of things but I would take this to mean the cost you incur to produce the next or incremental MMbtu of gas. So essentially the running costs, not the capex. In other words, having made the investment, you may be prepared to keep a field in production even though it is only covering its day to day costs because the capex is a sunk cost and most producers will disregard that sunk cost when looking at forward decisions. The fact that some producers are prepared to sell at a HH price below estimated marginal cost just demonstrates that different producers have different views on their costs and different views on where HH prices are going.

Marginal cost usually refers to incremental production, and should mean which expenditure has been spent in 2013 to create additional production capacity. Exploration/appraisal costs could also be included, but not sure. It mainly make sense to determine the economic value of additional wells in developed fields with limited or no other capex. It should be computed as EA costs + drilling capex + other capex + opex divided by incremental reserves.

Short run Marginal Cost is the more appropriate comparison when deciding whether or not to produce an extra unit of production; or shut down production altogether.

Full cycle normally means everything involved in bringing a field into production i.e. from buying the licence, exploration, capex for production facilities and then the costs of day to day production plus finally the costs of abandonment. It’s the figure you look at relative to the price of gas in the market before you make the decision to invest. Taxes: it all depends on the producer’s tax position. He may have no tax liability e.g. losses he can offset. So this is down to the individual case. Normally in full cycle you would include taxes to give you a fully costed post-tax assessment.

Long Run Marginal Cost as the basis for comparison as this includes all full cycle costs and is the right comparison with the price in a GSPA that will run for 20 years plus.