Are the big O&G players running out of capital?
I heard today that some of the big players i.e. Chesapeake, were running out of capital because of leasing up so much acreage in the area and that they were going to stop leasing and start drilling to raise capital. The person I was talking with said they were told that it would be after the first of the year before they would get their leasing bonus.
Anyone else hear anything like this?
Anyone else hear anything like this?
Views: 313
Replies to This Discussion
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Permalink Reply by Trenna on
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I have not heard this but they don't have a bottomless pit when it comes to money. They have obligations to shareholders not to incur so much debt and Chesapeake said instead of issuing new stock they would sell other assets. Chesapeake did sell some other assets as of late. Sorry I could not be of much help.
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Permalink Reply by Tigerman on
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I know that we had a meeting scheduled with Petrohawk this sunday to talk about their offer of $20,000 per acre. It was cancelled as of yesterday. They said they got an email from their corporate office that told them to hold off signing anything right now. I figured they were running out of money and needed to drill on what they already had leased up.
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Permalink Reply by Snake Stewart on
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Hey Tigerman , By cancelling the meeting , they are trying to scare you guy's into a lower amount. It will work on some that truely don't understand and know how big O&G play this game.Please be patient and stand your ground. Do not be afraid to tell them NO ! This is your land that will be affected by all this drilling activity , not theirs. Don't let them make you feel they are doing you a big favor. You will pay them roughly 75% of revenues from YOUR GAS for them drilling and marketing YOUR product. You owe them nothing. If they don't want you , maybe one of the bigboys that are headed this way will. They will not leave the billions of $'s floating around under your neighborhood. THEY are far to greedy for that.
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Permalink Reply by Sean on
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The days of the big lease bonus is going away, they have more than enough land. And I know of people who have tried to be greedy and demanding X amount of dollars for their land and were offered around 12 grand per acre...Well, the gas companies stopped talking to them. So don't be greedy and don't shoot yourself in the butt by being greddy
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What turnip truck did you fall off the back of ? They will have more than enough land when they have it all. The land on this shale, not under lease , will only gain market value as time goes on.How do you think the offers got to $27,500 an acre in Fort Worth , Turnip ? Because people that were well informed and team oriented said no to the $12,000 offers! As should everyone on the H/S. I feel that most of the people that feel like something has happened to their hind-end are the ones that took those early offers.
If I never had the $12,000 in hand then I never lost it if something does happen. That is the way I have to view it. I am not a gambler.If I chose to take the early offer I would be betting that this is all I can get. I would rather wait on the sure thing that comes only with time, effort, joining together and a willingness to educate oneself.
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Permalink Reply by Duncan McGehee on
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The reason the prices got so high in the Barnett Shale is because the area was proved by drilling. As of now only about 3 or so wells have been drilled in the Haynesville Shale.
The areas; in the Barnett Shale, with the sweet spots garnered the highest prices. This was in part due to known reserves and competition. As the Barnet play matured every acre was desired. Then, when seismic was done and the faulting and Karsts ( An area of irregular limestone in which erosion has produced fissures, sinkholes, underground streams, and caverns) were discovered, certain areas did not look so good.
Chesapeake is not going to lease or buy leases from individuals anywhere in the Haynesville area. They will only stay in their core areas. The reason; I suspect, is the money is getting ahead of the play whereas in the Barnett Shale the play was ahead of the money. There were many wells drilled before the price exploded and that was due to competition in remaining areas.
If you are in Chesapeakes core area money is no problem. If you are not in their core area, they will pass. Until the play's limits are defined, expect; at least Chesapeake, to confine itself to it's core areas.
As to getting huge signing bonuses, that's fine, but that's not where the money is. The true money is in the royalty check one receives each month.
Signing away all depths when one signs a lease does a disservice to the small independents who have operated out of the Shreveport area for over 60 or 70 years.
All Lessors need to reserve the shallow rights less & except the bore hole rights through the shallow depths. This allows the small independents to a chance to make a living. They can't when these rights are tied up by a lack of lessors reserving the shallow rights.
Your sarcasm shows a lack of true understanding of all facets of this play and hopefully I have expanded your knowledge in areas other than the signing bonuses.
Greed works both ways. I've seen it for the last 25 years and it only gets worse. The fact that people aren't reserving the shallow rights is an area where education is essential if the small independents are to survive. I'm unsure how you feel about this, but hope you and others in this play take that into consideration when signing a lease - and - as you say - say no if they balk at giving up the shallow rights.
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Permalink Reply by insomniacnla on
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I would love to reserve the shallow rights and have included that language in my proposed lease. So far, Petrohawk, Chesapeake and XTO all have refused and stated "If we spend millions of dollars drilling a well, if we drill through it, we are going to keep it". Any suggestions?
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All the coalitions that are forming should band together and remove the shallow rights less & except the bore hole rights through the shallow zones. If they are talking toi you they want it. If all 3 are talking to you they all want it.
The problem which occurs is in Farming out the shallow rights to small independents. The owner comes into a share of the production cutting down on the small independents margin.
Another problem is when mineral owners want Haynesville Shale prices from small independents. Prices they can not afford.
The mineral owner has to hold the line at some point about shallow rights. The mineral owner will still get royalty from the farmed out shallow rights, but the small independent gets squeezed even more.
In Trend plays like the Shale this usually is not that big of a deal, but Northwest Louisiana has had shallow plays going on for many decades and they depend on the economic viability to make a profit.
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Well, if you reserve the shallow rights you would lease them. I guess you could do a farm out, but that would be unusual for a landowner to do.
The spacing is set by the DOC and I believe most of the stripper wells were at 10 acre spacing. I'd have to look that up to be sure. I'm not familar with Elm Grove's spacing rules, but would think most shallow wells would be on 40 acre spacing, but that would be according to the DOC Field Rules.
Spacing is more or less out of the producers hands, but I believe the producers know pretty much what the spacing rules are for their targeted depths.
The rule of thumb; imo, is maximum density without communication between wells. I mean by communication two wells close enough to draw from the same pool which decreases production for one or both wells, possibly even caving in the sand on one of the wells. The production casing needs to be far enough apart so as not to affect other wells.
It's reasonable, but the DOC usually determines the spacing. You should be able to give your input at the hearing, but I think that's the level where that is decided and not at the lessor/lessee level.
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Permalink Reply by po boy on
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Valuable post Mr. Duncan, and I regret that it will get lost in the clutter in a day or two. Would you consider condensing it in to a Blog?
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Is the blog option available on this site?
If not, I guess I could do this on my site http://www.landmen.net or I can set up a blog through my site, although it would be more germane from this site. -
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Permalink Reply by Aubrey C. Sanders, Jr. on
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KB, sounds very reasonable to me. If, and when I ever sign a lease I will have Pugh clause giving company 1 year past primary lease expiration to drill or release all non producing zones. Then I look for small operator to drill. I have given my leases for no bonus but with guarntee to drill within short specified period. Works for me.
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