Replies to This Discussion

Permalink Reply by Sandstone on February 19, 2009 at 11:20

Thanks for the information - maybe things are looking up.

Permalink Reply by JWC on February 19, 2009 at 14:52

That is good news Lawrence. Thanks for the update.

Permalink Reply by ALongview on December 1, 2009 at 5:34

"Devon is already over exposed"
Rick, Could you clarify this comment a little.
Thanks.

Permalink Reply by ALongview on December 1, 2009 at 8:13

Got it. I tend to agree that they will not be paying the high bonuses in the area anytime soon and that people(unleased) should focus on royalty and terms/protections. What are your thought on the 1000's of acres already under lease with an avg. leasehold near to $5000/acre? I am assuming they would not be willing to risk walking on the renewals and trying to renegotiate with the same people again. There would be some pretty ticked of landowners in that case I would think.

Permalink Reply by Jon Williamson on December 1, 2009 at 8:52

Best to just wait for better economics. I for one do not want my gas drained for $4.50. We will not get back to the crazy days of 20k bonuses, but as prices pick back over the next couple of years 10k is maybe reachable for larger tracts and definitely 1/4 royalty.

Permalink Reply by om28v on December 1, 2009 at 10:05

A good many folks, large land and mineral owners are used to waiting for trees to grow, and having favorable timber prices. If timber prices are off, let the trees grow until a time that the market returns, it always does. Many owners are not poor, and if mineral prices are not appealing, may leave them to their heirs. Time may be on the side of L&M owners, they own what is under the trees and they are not going anywhere, just like the timber, until the time is right. Don't get me wrong, I do not feel many are opposed to making a deal, but in many instances this has been the case already for generations and the oil companies have come and gone and come and gone. I doubt this is the last ship. IMO

Permalink Reply by Jon Williamson on December 1, 2009 at 11:48

Im willing to gamble for a while. These two Range wells will tell me what I need to know.

Permalink Reply by om28v on December 1, 2009 at 11:56

The two Range wells will indeed. All of the wells drilled in the North/East have been shallow, old technology. Range must have a different set of geologists, time will tell. Crimson's map goes right over that spot as well. Some said Devon's monster well was in a bad spot. That being said, if we are surrounded by good areas and we are not included, can I interest you in some pine tree's?

Permalink Reply by ALongview on December 1, 2009 at 12:17

I had a landman tell me that the entire area East of the town of San Augustine was where the shale disappears......right where the Devon well is located. I also had one tell me that they used to lease the whole haystack to look for the needle but in this play they already know where the needle is, and this was in the Northeast part of Sabine County. The companies science teams and engineers know what they are doing and one real tell of the potential of an area is are they still leasing there in this environment? In this case many, many companies have been leasing in Sabine County in the Northern half all the way through the recession. This list includes: Devon, Cabot, Crimson, Endeavor, Southwestern, Encana, Chesapeake and many more smaller outfits probably looking to join up with a bigger player. That being said there is no way to tell for sure til the wells are drilled. I do however have a hard time believing that Devon announces a 100 well program over the next two years to its shareholders and then proceeds to sell offshore assets to help fund the development in an area that is considered "worthless". I have always said if you want an answer to something in the O & G business just follow the money. 100 wells at 10 mil per well is a pretty easy trail to follow. Nobody would put a billion dollar(approximately 3% of their market cap) exploration budget out there to shareholders unless they were pretty darn sure of it being profitable.

Permalink Reply by JWC on December 1, 2009 at 12:22

Well said ALongview.

Permalink Reply by jffree1 on December 1, 2009 at 16:23

I have talked to geologists who say the North East is worthless...

I find that statement very curious since activity was concentrated in that exact area in '08. Moved down the lake toward Hemphill and west toward San Augustine north of Hwy. 83. Do you think that no one thought to check the geology before spending that kind of money? Hmmm... like I said, it's a curious statement.

Permalink Reply by jffree1 on December 2, 2009 at 4:04

Good answer. But, I think it's much more likely that Sabine is omitted on those maps because there is no Haynesville production at this time and it is largely an unknown.
And I would remind people that James Lime gas is a lot cheaper to produce, being so much shallower. Cabot has had some 6, 8 and 10Mmcf James wells at county line... 10 million cfgd is the same price at the sales point no matter what interval it comes from.

So, if one has James Lime potential in addition to (possible) Haynesville/Bossier potential (along with everything in between... Pettit, TP, CV) then, hmmm, let me think about this.... that should justify a higher bonus, wouldn't you think? Makes the investment appear a whole lot less risky, doesn't it?

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