Replies to This Discussion

Permalink Reply by DrWAVeSport Cd1 on June 28, 2008 at 5:11

My Fellow Haynesville Shalers:

Please take 4 minutes of your day today and listen to this podcast. You will hear information that you need to know.

IMO: One of the most important points this podcast brings up is this:

ONE well producing (over its lifetime) 1Tcf of gas...will pay for itself (for its lifetime) in approx. 2 years (with ng at or above $6.00) and the REST of those producing years will be PURE PROFIT for the O&Gs, with CHK CEO suggesting that these wells will be producing for up to 50 YEARS...or "generations." (CHK leased up 1.2 million acres of Marcellus at almost NO REAL COST if you factor in the 50-year production figures!)

WAKE UP: If this is true...this Haynesville Shale will be TIED UP in leasing/production for YEARS!!! (Just as the Cotton Valley).

My Question: Are you truthfully getting your money's worth in the above case scenario?

I am a landowner. I want the same long-term view that Mr. CHK has taken. If I take that view...I have not seen the money yet!

DrWAVeSport 6/28/2008

Can you get a clearer picture of what is going on around NWLa? (I am shouting now!)

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Permalink Reply by Natch N3 on June 28, 2008 at 5:31

I'd like to listen to what you've posted but when i click your link where do i find it?

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Permalink Reply by DrWAVeSport Cd1 on June 28, 2008 at 5:39

Natch:

Slide down webpage to: WHAT'S NEW ON Platts.com (midsection of webpage) and click on:

North American Shale gas players energy spotlight "podcast"

Then just click on the podcast icon and it will start.

IMO: This 4 minutes says SOOOOOOOOO much more than anything I can equate to why the "PLAY" is so important to Mr. CHK and Mr. HK, etc.

Shale-produced ng will make up at least 1/3 of the ng our country will need by 2016 (per podcast). And...if crude keeps going up...and heating oil keeps climbing (which costs approx. 2 1/2 Xs what ng costs per heating equivalent)...Be my guest and make a good guess as to how VALUABLE NWLa has become.

Thanks

DrWAVeSport

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Permalink Reply by insomniacnla on June 28, 2008 at 6:01

Thanks for posting the info on this podcast. I listened to it last night, it is exciting to hear people talking about such high numbers.

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Permalink Reply by Natch N3 on June 28, 2008 at 6:30

DWS0 Much appreciated..thanks for sharing...i suppose i can only hope it all moves to the 12-12-6 range and I'd be a very very happy shaler! haha..but good luck to all without a doubt

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Permalink Reply by Les Bamburg on June 28, 2008 at 5:57

DWS, just realize the 1 Tcf was an error by the commentor. I assume he meant to say 1 Bcf (billion cubic feet of gas). A typical horizontal well in the Barnett Shale starts at say 3 MMcfd and will recover 2 Bcf over the life of the well. The well will produce 20% of the reserves in the 1st year but the rate declines rapidly in the first year down to maybe 0.5 MMcfd and then declines more slowly over the remaining well life. So you can see the average rate is much lower after initial pay-out.

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Permalink Reply by DrWAVeSport Cd1 on June 28, 2008 at 6:07

Les B:

Does it really matter? No one can predict the price of crude, ng, etc. two or three years from now...or for that matter in 2016. The only thing that is a sure thing is that the price is not going down.

So, techno speaking...these wells will keep paying at a much higher $$$$ amount.

Tcf or Bcf ...The point I want to make is Bonus moneys (today) are a joke in this scenario. IMHO Watch CNN right now...energy cost? Some predicting $7 per gallon of gas sooner than later! What do you think ng is going to be going for?

DrWAVeSport

I do hope that ALL Prospective lessees will listen to this podcast and get a better perspective for the looooooong haul!

DrWAVeSport 6/28/08

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Permalink Reply by DrWAVeSport Cd1 on June 28, 2008 at 6:19

Look past the forest for the trees...The BIGGER PICTURE is the POINT of this podcast...for me, anyway.

The "shale" holds the key to the equation. I get the mistake, but come on...guys... Mr. Chesapeake and Mr. Petrohawk, and all the Mr. O&Gs...they have a much better conception of what is going on in Marcellus and Haynesville and Barnett, etc., etc., etc....than some of you guys do. (Not personal...just fact)

You guys are here for today...(Caddo"Visitor")...This for NWLa is going to be here for a very, very long time.

Get those binocs out! Ha. Ha.

Have a great Weekend.

P.S. Thanks for your opines and for listening to the podcast. We need info from all sides of the "play."

DrWAVeSport

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Permalink Reply by insomniacnla on June 28, 2008 at 6:39

Thank you both for your information that you post here to help the landowners. What I have been trying to figure out is how much the dollar amount may be in the difference in royalty percentage say 27% instead of 25%?

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Permalink Reply by DrWAVeSport Cd1 on June 28, 2008 at 7:51

With all due respect CaddoVisitor,

Do you have an accurate figure as to how many "royalty" signers will actually become "royalty" receivers in the Haynesville, or Barnett, or Marcellus, or Fayetteville.

It all depends on drilling sites/producing wells, I believe.
I hope all lessees will receive royalty checks for as many years as the Mr O&Gs are predicting.

If a large # of lessees are not going to experience royalty payments...then for these residents...the bonus moneys (for them) become more important in this "play."

However, if the lessee's lease is up in 3 years and no drilling is in sight for that lessee...bonus moneys will again be a valuable commodity to bargain.

CaddoVisitor...great debate! You from "your" vantage point and "I" from mine.

Again to you...great debating!

DrWAVeSport

P.S. Most of the landmen will say (publicly anyway) they had NO idea about "this play" one year ago...ergo the lowly leasing bonus moneys/royalty contracts that were signed...Glad to know at least one guy from that side of the road "knew" about the play for "a year or more now..." (My attempt at being lighthearted about same.)

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Permalink Reply by Les Bamburg on June 28, 2008 at 13:15

Insomniacnla, a real simple example is as follows. A section or 640 acres may hold ~ 50 Bcf of gas reserves. At an average price of $10 per thousand cubic feet of gas the reserves would be worth about $500 million. The difference between 27% and 25% would be $10 million or ~ $15,625 per acre. Of course this is paid out over 20+ years and prices could go up.

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Permalink Reply by insomniacnla on June 28, 2008 at 13:47

Thank you for putting dollars to royalty percentage points.

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