Replies to This Discussion

Permalink Reply by Two Dogs, Pirate on February 24, 2009 at 17:12

I think you will see the big boys moving to the country where you don't see the orginized groups asking for certain clauses that will add extra expense for noise control and the like. I thought it was bad buiz to try to drill Shreveport proper. Someone with 1/4 acre has the same voice as someone with 1,000 acres on this website. This play went too fast, with the big boys fighting for territory in a place that was stupid to be fighting in.

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Permalink Reply by Catfish on February 25, 2009 at 2:39

I have a question and I know I will probally get hammered for asking. If a group only has 7 to 8 percent of the land commited in their teritory are they really in a strong position?

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Permalink Reply by Snake Stewart on February 25, 2009 at 12:21

A very valid question Catfish.

It seems to me that It depends on whats at stake. In this play, even an owner with one acre on the HS,has a right to say ( In La anyway ) that he/she wont sign a lopsided lease with no protections for pennies on the dollar. Depending on who is trying to lease you, could also play a huge part in that decission as well.That should at least cross their minds, whether or not they decide to do so is something else altogether. There is too much at stake to just fold up because everybody else is under lease.

From a purely strategic standpoint, the 7% to 8% group has much more power then someone with 35% secured. While unlikely, IMO, the 35% group could be too uneconomical for the O&G's to drill if they decided to ride a well down.The O&G's could pass them by for now but with hundreds of millions of dollars worth under each section...... I think they will find a way to make it happen eventually.
But would the O&G's give up 92% of a leased up section to keep the unleased from ridein' that well down ? Even some of that fancy book keeping that they can do, according to some, wouldnt add up for that scenario.

Being the last of the last in your area to lease,shouldnt make you feel weak or like rolling over for anybody. This is "THE" opportunity to get a good lease w/protections. Tomorrow never comes. Make this shot a good one. If the economics arent in place to offer me a good lease with more favorable terms for me, come back when its better and we can talk again. I dont have any control over market conditions or who is wanting to lease my land. I do however have control over what and who I am willing to sign on the line for.
Have a good one.

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Permalink Reply by Jay Murrell on February 25, 2009 at 2:44

Has anybody here noticed that NG is selling for something under $4.50/Mcf v. $6-$9 a few short months ago? Do you suppose that might have something to do with market forces? You know, the old thing about more supply than demand.

Five figure lease bonuses were a product of many factors. At the top of the list was CHK's strategy to run other players out of the market, which strategy was enabled by cheap and abundant credit and a willing cadre of investors who bought CHK stock (which, by the way looks like a pretty good investment now), and rich prices for the commodity.

If you pine for the days of the $30,000 lease bonus and dig your heals in and say you ain'ta gonna lease for anything less than $ _ _, _ _ _ you are probably going to have a VERY long wait.

Just some random thoughts on my part.

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Permalink Reply by BirdDawg, plain ole' idiot on February 25, 2009 at 18:19

Jay,
Sorry but I just can't resist. Yep, I'm sure quite a few of us have enough sense to tract NG prices, and oh my gosh, even understand supply and demand. Hope you can sleep tonight knowing some of us even think we have the ability to reason also.

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Permalink Reply by Jay Murrell on February 25, 2009 at 3:11

To wait, or not to wait...that is the question. Whether 'tis nobler to lease for $500 per acre and a quarter and get a well drilled and start receiving run checks in 2009, or, to bear up arms against the MEAN, NASTY, CONNIVING, MERCINARY, GREEDY OIL TRICKERS, and hold out for a quadra zillion dollars in one time lease bonus until 2010, 2011, 2012, 2013......... if then.

Has anybody here ever heard of the present value of money?

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Permalink Reply by Jay Murrell on February 25, 2009 at 3:19

'Tis a consummation devoutly to be wished!

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Permalink Reply by Jay Murrell on February 25, 2009 at 3:59

That could be done.

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Permalink Reply by Linda Whatley on February 26, 2009 at 7:39

Exactly what I was thinking Jay....... some folks just don't get it.

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Permalink Reply by Grillin' - MmmMmm on February 25, 2009 at 12:29

Did you include the cost to drill the well? If not, that $4.57 MM isn't too great as it cost more than that to drill the well.

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Permalink Reply by keb on February 25, 2009 at 18:40

Kb, that's awesome, 'girls do rule!". Thanks for your invaluable info. I get hope when you write. thanks keb

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Permalink Reply by Grillin' - MmmMmm on February 26, 2009 at 8:29

Thanks. I just didn't see the cost of the well listed in your original post. I normally account for the drilling separately from the operating costs.

I have been seeing various reports of "break even" gas prices for the HS. Some show it in the $3.50 range and some show it in the $4.00/mcf range. Based on where prices are right now, its easy to say we are at a touchy spot in the pricing curve!!

Thanks for the picture. Gotta love those pilots! I've worked with many of them in other jobs in other places and they are some sharp cookies!

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