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Permalink Reply by Brenton Spence on June 26, 2008 at 1:52

Few operators will be listed on any exchange.....most are small operators (family-owned operations) that have been active periodically for over 20-40 years. The only option for you would be to contact them directly to inquire about investment opportunities in shallower plays. But, not likely that any will be open to SEC-type regulatory oversight such as public companies are required to report. Many individuals have made good money in private investments in O&G under this scenario, but there probably many more who've lost......those operators with "staying power" to compete in this high-priced environment can do well, but it cost a lot of money to do anything in this business now....including simple shallow well workovers.

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Permalink Reply by Lerret on June 26, 2008 at 3:12

Any company that operates in the region and is holding a lease by shallow production can make a deal with a larger firm or drill their own well(s). Companies like Petrohawk and many other shale gas companies are funded by speculators, your teacher retirement system, Chinese investors, via hedge funds, etc. They are hardly huge outfits. Chesapeake is just a large public version of above and much of the money is generated by selling MLP (Master Limited Partnerships) in gas plays. They may take these companies on in joint ventures as partners or the companies may convert their interest to a royalty interest.

If a company holds a particularly large tract, then there would be a potential for windfall, but small fields, etc. are not going to accrue sudden great value to the owner of the leases...

If you can find a field which has a large arial extent and where a public company is operator, then there may be potential for buying stock. But lots of oil company stock is priced pretty high already. I would hate to try to pick the winners.

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Permalink Reply by Douglas Williams on June 26, 2008 at 4:34

I have bought some stock in Cubic Energy (QBIK) for the reasons you mentioned- they have about 7500 net acres leased that make a doughnut in Petrohawk's acreage- so they look like a prime target to me for a buyout.

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Permalink Reply by BeatBama on June 26, 2008 at 4:41

I have been thinking the same thing. Ive been following them for a couple of months and they have grown.

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Permalink Reply by BeatBama on June 26, 2008 at 4:42

I recommend requesting an investor packet from Cubic, I did and it provided information about Cubic and other companies in the play. It is also FREE!

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Permalink Reply by Douglas Williams on June 26, 2008 at 5:18

Yes, you're right, its Chesapeake, not Petrohawk- Cubic has a pretty good web site:

http://www.cubicenergyinc.com/home.html

Also, some pretty good (and bad) discussion on yahoo message board:

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/...

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