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?

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And that is simple for there accountants to figure too. They knew from there past history that these big bonuses would have to be paid. Again , They would have never started paying these size bonuses in the blind . They always knew from the start how much they had to spend , how much they would spend and when they would start getting a return on there investments " leases , drilling , pipelines , etc." . The people who are starting these rumors are land men or people who have already signed for a lesser amount and this is there way of venting off there frustrations. I would bet that some who are posting this negative stuff dont even own any mineral rights but just love to agitate. Now can you imagine the largest natural gas production companies in the world who have been leasing properties for many many years just start going crazy spending money not knowing how much they have to spend and get in a bind 1/2 way through the play. When you have a super natural gas field just waiting to get tapped with pressures so high they wont even have to build any compressor stations and they only have to pay 25% royalties with 75% going in there pockets they have banks from all over the world wanting to lend them money. The money that they are paying out for these leases is something that they expected and planed for at the onset . And like all hot news items the big talk will start slowing down as will this website as time goes on and the average person will think that means the moneys playing out. I dont know how these landmen get paid but I would bet its simular to car sales. The manager tells the car salesman just how much this car must sell for and anything over that he gets to pocket. These production companies probably tell the landmen a bottom figure that they will pay for certain sections and if they can get people to sign for less the landman keeps the leftover. Say for instance Petrohawk tells a landman that they will pay $20,000.00/acre and 25% for a certain area/section and if the landman gets someone to sign for $18,000.00 acre he gets to pocket $2,000.00/acre. If they do operate that way wouldnt it be a good idea to start rumors that the companies are running out of money so you better sign for this offer now. It works everytime !
This is incorrect. I have been working in the Oil and Gas Industry long enough to know. Landmen are not receiving the difference on deals they sign. There may be specific instances where this takes place on a smaller level, but on whole, you don't see it.

And most good landmen know that you always take care of the landowner to the extent of your authority - because you may have different clients over the years, but you will run into a lot of the same landowners. Good landmen are more mediators than negotiators. At the end of the day, your goal is to lease up a section or specific area. To bring this many landowners together takes more agreement, explanation and understanding than it does "negotiation". The good ones that last in the business are friends with landowners -not enemies.
Thats true. The good ones have and will be around for a while. The fly by nights better have another trade to go to after this play settles out. Its like that with all businesses. Your good shops have been around a while. A gent that I work with that has land in S Caddo just got offered $25,500.00 and 25 % from either PH or Ches. He is going to sign . Thanks for the correction. Jed
I can relate to this. I used to be a real estate agent and some agents looked for repeat business and referrals, others looked to make the quick cash. I've dealt with really good land men in the past. I've also run into some I avoid like the plague.
Selected comments:
The vast majority of field landmen work through brokerage companies and are paid a day-rate plus expenses. There are some independents who may be out there buying leasehold with their own capital and flipping it to the operators, but as the bonus dollars per acre escalated, there are fewer and fewer of these.
Also, the majority of the field landmen that are actually buying leases in these large acrea lease plays are the less experienced. A smart land manager will have the more experienced ones researching title. Rarely do the field brokers making the offers have a wide limit on authority for the basic lease terms. The auto salesman comparison is not valid.
Petrohawk is making a stock offering that will generate more than 600 million dollars in new cash for leases etc. Here is a link:
I do not think they have any immediate cash flow problems.
Keep in mind Oil 'Dilla... at current rates of lease bonus, that is not even enough cash to lease 60 square miles of open fairway, or to lease and drill 35 640-acre horizontal prospects, if you could drill them all before the leases began to expire.
I visted a well site in E Texas last night and met the gent known as the "company man" . He is the production companies engineer or geologist or probably both. He said dont worry about them running out of money. He said that he has turned down offers up to $15,000.00 and 25% on land he has in Caddo Parish. FYI Jed
I also parked on one of the tallest hills in Harrison County last night and took a look at how many rigs I could see. I could see 4 dericks lit up in the distance. Energy drilling is now punching a well on FM134 N about 3 miles N of Jonesville. I stopped to watch them boys a while and when the air powered spinner was used I almost jumped through the top of the cab ! Boy that thing runs on some high air pressure. I got to visit the R&R rig on 134 N just before they started up drilling one night and that was a treat. Those boys earn there pay. I met the little guy that "slings a chain" . He's a tough looking little feller. Got a head like a crocodile. Can anyone explain to me how they hook up this air powered spinner to a joint of pipe ? And what is "Slinging a chain " ? Sounds like work ! Jed
CHK just sold an Anandarko Shale play for 1.5B$. so they have the money. i agree they're gonna need more wells drilled to confirm their core holdings. also agree about reserving shallow rights as well as rights to deeper than14K feet
There is a pretty good story in todays The Times on page 1 and page 4 of the first section about the Haynesville Formation. Does anyone know just what takes place on the tip of the bit to make it start a 90 deg turn ? Ive heard "mud motor" They may could drill vert then pull out and install this mud motor and when the hit the hard point again "Non drilled" this part makes it start turning horiz ?????? I wonder how they know when they are in the middle of the shale formation ????? They must use some kind of radio transmitter or nuclear device that lets them know what type of formation they are in ?????? I use a nuclear device that tells how dense soil or rock is and its moisture content but only to a depth of 12 inches max. I wish that I had the time to really dig into Geology . com , I bet the answers to my above questions are there somewhere. Can anyone give me a rough answer to these questions ? Jed
I was told this as well by both Chesapeake and Petrohawk.


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