Replies to This Discussion

Permalink Reply by Jesse Joyner on October 16, 2018 at 7:22

Good question, Spring. What section are they spuddin'?

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Permalink Reply by Jesse Joyner on October 16, 2018 at 7:57

Spring, I found it on SONRIS. If I remember correctly, the BP/BHP deal is pending. I know BHP bought some rights from QEP over a year ago in section 23. And personally, I would prefer to keep BHP as the operator. Conversely, maybe BHP has a deal to further develop the two sections as an incentive to BP. But that's nothing more than a possible hypothetical. 

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Permalink Reply by Jesse Joyner on April 2, 2019 at 9:57

A while back, I was told that BHP Billiton would not drill their permitted leases in sections 23 & 26 in 16N 11W because they had sold out to BPX. I then asked a certain person at BHP if they thought BPX Energy, the buyer of the lease location, would drill those sections anytime soon. I was told that no one knew what BPX would do. So does anyone want to speculate if and when BPX will actually spud these sections since it's a proven location with no risk? Anyone know some inside intel or want to guess at the future possibilities per the present price of NG per very low storage levels for next winter?

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Permalink Reply by Bobi Carr ("parker") on April 2, 2019 at 10:55

Just my guess.  These items were pending before the sale went through.  Good luck to all involved.

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Permalink Reply by Rock Man on April 2, 2019 at 14:46

I will preface my comments with the statement that I have no skin in the game in this area plus do not have any inside dope on what BPX's rig schedule for this area looks like.

But I do have 41+ years of experience in the O&G world including the ArkLaTex area. As well as worked for 17 years (with 15 of those years as a manager) for a major operator like BPX.

BPX purchased the BHP assets to drill them - pure and simple. Once they gear up their operating team (and they will be striving to be as cost efficient as possible), their "machine" will start rolling and won't stop. 

I am comfortable in saying that BPX approved the BHP permits before they were filed - it is very common to see this happen (i.e. selling company handles permits and even some drilling until the new company is ready to take over). The new company is closely monitoring everything.

Trying to postulate the "when" as to drilling is not worth the stress and anxiety. Just remember that the drilling will happen / this acreage was not acquired to let it lie undeveloped when there are offsetting horizontal wells that have shown that they can make 6 to 10+ BCF per lateral. But even with these positive offsets, to assume that there is "no risk" with these permits is not a sound assumption. Many negative things can happen (mechanically) during the course of drilling and completing these sort of wells. Even with very experienced operators.

The timing will be tied to economics and maintaining the acreage. BPX may only drill 1-2 of these permits to get the acreage position HBP and then wait to drill additional wells when prices are higher and economics are better.

But assuming the BPX opts to drill all four new permits, it will take a lot of time since they will first drill the wells one after another (same pad) and then frac the wells in sequence. It may take 6 to 9 months or more to go from spud of first well to first gas production to the pipelines (and then another 2-3 months before royalty checks start coming in).

Patience is the key word for this area right now IMO! The drilling and production will come!

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Permalink Reply by Jesse Joyner on April 2, 2019 at 18:49

Thank you, RM. Your detailed insight, undeniable honesty, and razor-sharp analysis is greatly appreciated, as always. It warms a guy's soul to get such solid feedback. 

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Permalink Reply by Rock Man on April 3, 2019 at 2:46

You are very welcome! Thank you for the kind comments.

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Permalink Reply by casingpoint on April 3, 2019 at 5:11

Aubrey McClendon said the good money was in the flip. We'll see.

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Permalink Reply by Skip Peel - Mineral Consultant on April 3, 2019 at 5:13

And he was right....until he wasn't.  :-)

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Permalink Reply by Rock Man on April 3, 2019 at 5:42

BHP got over $10 Billion from BPX in this deal - sounds like a pretty good exit for the Australians from the US unconventional market

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Permalink Reply by Skip Peel - Mineral Consultant on April 3, 2019 at 5:52

BHP paid $12.1B for Petrohawk.

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Permalink Reply by Rock Man on April 3, 2019 at 6:35

Skip - good point. 

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