$2,000,000 lost because he wanted $2,400,000 in Sabine
So I'm in the Desoto courthouse today and a young guy (I guess about 24) sitting in the hallway on a folding table working on his laptop gets a cell phone call. It's like talking in a library, you can hear conversations no matter how low somebody tries to talk. He goes on to tell his friend on the phone about how he was working on a 200 Acre tract of land in Sabine. He offered $10,000 an acre on behalf of Chesapeak. The land owner said he wanted $12,000 so the guy says he would take that offer back to Chesapeak. I didn't catch in his story how long this process took but after he called in the counter offer his boss told him that they weren't taking any new contracts in Sabine. If there wasn't already a signed leased they weren't making new offers. The land owner called him and said "so what about my $12,000 an acre?" He told him they couldn't do that, so the land owner said "ok, I'll take the $10,000". He says "no, you don't understand, we aren't even offering that now". In telling the story to his friend on the cell phone he was taking great joy in the fact that the entire $2,000,000 was now off the table. I got the feeling he is tired of working all the back and forth negotiations.
Don't ask me any details because I do not know anything more than what he was saying on his end of the conversation. I would guess the land owner will get another offer from somebody at some point. It was just very interesting to hear such numbers. That guy was going to bed one night thinking he's got at least $2,000,000 in the bank and then the next day he's got nothing. I'll be looking in the newspaper to see if some wife killed her husband because you know he was saying to her "don't worry, I know what I'm doing."
Don't ask me any details because I do not know anything more than what he was saying on his end of the conversation. I would guess the land owner will get another offer from somebody at some point. It was just very interesting to hear such numbers. That guy was going to bed one night thinking he's got at least $2,000,000 in the bank and then the next day he's got nothing. I'll be looking in the newspaper to see if some wife killed her husband because you know he was saying to her "don't worry, I know what I'm doing."
Views: 187
Replies to This Discussion
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Permalink Reply by Two Dogs, Pirate on -
One day the money is there and the next day it is gone. It didn't come back, job was shut down but that was 1997. Too many players in the shale, who knows where it will go. You may be a winner today and a loser the next day. I would never be one to tell you what to do as to a lease right now. They put people out there to put disinformation on the street, by way of cell phone conversations in the courthouse. You have to make your own mind up as to what you want to do.
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Permalink Reply by po boy on
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Do you play poker?
Avg lease in La before Petrohawk made a media frenzy was $125.
Historic prices were paid jockeying for position. a lot of useless and marginal land was bought to get leaseholdings up .To get stock prices up and raise more money.Millions spent on PR (mail,print informercials,contributions)
No gas has made it to market no return on investment.
Gas prices dropped,stock values dropped.
OR:
The big players chose to get along and slow the feeding frenzy.
OR:
We priced our selves out of the market. What were your mineral rights worth to you two years ago?
OR:
They may be bluffing. Do you REALLY know where that fourth ace is?
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Permalink Reply by John B on
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just something to keep in mind:
since the last $400,000 would have been taxed at the highest ordinary income tax rates (marginal rates for fed and state taxes), he would have paid 35% federal and 6% state, for a total of 41%. thus, of the last $400,000, he would have only netted $236,000. ($164,000 would have gone to taxes).
of course, in all fairness, about $1.7 million of the $2 million would have been in the highest marginal tax rate, as well.
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Permalink Reply by TCB DS3 on -
Pat, you should listen to the CEO of CHK vs a one sided conversation for the value of the HA play and its leases. Go to http://podcasting.thomson.com.edgesuite.net/2008/July/CHK/CHK080108....
You will learn the actual numbers and science behind CHK's activities, their two years of prepartions for this play, the long term steel tubular pipe contracts they entered into to make certain they had plenty for rigs, even have a CHK boardmember who is the CEO of a tubular pipe company, and their five year plan to keep gas prices stable although there will be at least 5% more gas moving in the piplines for the next two years. The CEO even lays out how they are financing this play. Oh, the the first item they state they needed for this play "land".
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Permalink Reply by Bobi Carr ("parker") on
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They may figure that a lot of us are stuck on 30/30 and that they can come back to us with this at anytime.
They may be courting another "new play" at $100 - $200 per acre.
Then figure that they can come back to us for our 30/30.
We will have too much production information at that time and then it may be 50/?
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Permalink Reply by Snake Stewart on
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Makes it much more difficult to bully people when they are so dadgummed informed ! Great thread guy's. When you reveal their strategy options it almost makes it unfair to be O&G...................NOT !!!!!
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Permalink Reply by John on
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Classic case of "GREED got the best of ya!"
$50/?.....Get real. There is no way it is going to be economical to drill a Haynesville well at $8.00 gas and only have a NRI to the company of 50 to 60%. I get a chuckle at the comments that I read in the papers that state, "25% royalty is the STANDARD royalty, and you should even be able to do better than that". The landowner is leaving no room for an operator to move their leases around. One word, GREEDY.
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Permalink Reply by CWGray on
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It seems to me that we can aford to be greedy.....the bottom line is, we have what they want and if they want it bad enough, they'll pay a fair price for it. My guess is, the O & G companies are betting on two things.....need and greed, the poor people need the money and that makes the poor people desparate enough that they'll except whatever the O & G offers out of fear of not getting anything. I didn't have the money before the Haynesville Shale so I'm not losing anything if they want my minerals. The O & G companies have the money to do this or they wouldn't be in the business to begin with.
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We must remember too, they have what we want; Drilling Rigs. No drilling, no royalty. Isn't life great!
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Permalink Reply by Don Howard on
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The landowners ARE getting too Greedy! There will be some who get left out of units and bonus's and wonder what the heck happened. You people need to do a LOT more checking on what is happening in the Barnett Shale than you currently quote (which is mostly in the CORE Area). Wait and See.
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I am not looking for an operator to move leases around , I am looking for someone able to drill the Haynesville right now.
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