Replies to This Discussion

Permalink Reply by IRielley on July 16, 2011 at 2:51

All, this looks more and more like a good thing for landowners and the economy in the Haynesville Shale footprint. All of the analysis of the deal within the industry over the past two days indicates that BHP's primary motivation is to aggressively develop the Haynesville and Eagleford simultaneously. Below is BHP's presentation on the deal which shows a 30% increase planned for Petrohawk' capes over the next 4 years.

http://www.bhpbilliton.com/home/investors/reports/Documents/110715_...

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Permalink Reply by IRielley on July 16, 2011 at 3:14

Sorry, capex not "capes". Apple's dern auto-correct.

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Permalink Reply by mskillerbee on July 17, 2011 at 5:23

I had wondered over on the Leased to Petrohawk section about what we might expect.  If you have time do you think could read and reply?  I am really curious, I would think a bunch of us are and do not want to be surprised with bad news.  I would rather know up front.

Thank you

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Permalink Reply by Skip Peel - Mineral Consultant on July 17, 2011 at 6:07

If you read through all 4 pages of this thread you will be up on what is knowable at this time.  In the short term at least, Petrohawk will be freed from its money constraints and able to operate as they see fit.  I think that means drilling wells wherever leases remain in force and hopefully picking up some additional leases held by others to consolidate their operational areas.

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Permalink Reply by mskillerbee on July 17, 2011 at 10:14

Thank you.  I had read them and the info is a big help. I suppose it is my lack of the nitty gritty that prompted my question, which I did not state very clearly.  If we are already leased to Petrohawk and they are bought by another company does the new owner still honor the current leases? What I understood from the info here tends to sound like the current exploration and drilling will continue, none of the staff will be fired and Petrohawk will continue as it is now.  I am just not familiar with the legal aspects of this magnitude of  business transaction. So for those of us with leases with Petrohawk, as far as anyone can guess based the info available, we should not see any change in our lease status due to this change of parent company? The leases will continue in force and there will not be a redo of the leases, titles searches or anything up to this point?

Thank you

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Permalink Reply by Skip Peel - Mineral Consultant on July 17, 2011 at 11:43

An Oil & Gas Lease confers the right to explore and develop from lessor to lessee.  The covenants do not guarantee that the lessee will actually drill a well.  They do, generally, provide for the lessee to assign the lease to another party.  During the effective term of the lease, it may be assigned multiple times.  Regardless of the party holding the lease rights, they must adhere to the terms of the lease.  The agreement is not changed in any way and both parties are bound to specific performance of those terms.  A lessee may offer an extension, whether contained in the original agreement or not, and both parties by mutual agreement may cancel a lease in order to enter into a new and different agreement.

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Permalink Reply by JHH on July 17, 2011 at 12:15

If a lessee seeks an assignment... and in the original lease... the lessee must receive approval from lessor for the assignment... is a lease bonus or some sort of compensation part of the equation?  Also, is an extension to a lease negotiable... as in altering lease terms, royalty% and a new negotiated lease bonus?

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Permalink Reply by Skip Peel - Mineral Consultant on July 17, 2011 at 12:25

JHH, the number of leases I have seen in my career that require lessor approval for an assignment, I can count on one hand and have fingers left over.  What you may be thinking of is lease language that requires the lessee to notice the lessor when an assignment is made.  No lessee would ever consider giving up their full right to assign unless the lease covered a huge area and the lessee had every intent to develop.  Extension options contained in lease agreements are not negotiable.  Both parties can mutually agree to start over from scratch.

Permalink Reply by Shale Wizard on July 18, 2011 at 1:27

Another thing to keep in mind, this is a merger, meaning that no assignments will be done.  Exxon used this same tactic when purchasing XTO to avoid the preferrential rights that were in the Arkoma Basin area.

Permalink Reply by Aubrey C. Sanders, Jr. on July 17, 2011 at 6:38

I think this will be very good news to those who are leased to Petrohawk. Certainly it was great news for those who own their stock. I am guessing it may speed uo development.

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Permalink Reply by mskillerbee on July 17, 2011 at 10:16

I appreciate the statement that this is good news for those of us already leased.

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Permalink Reply by Shale Wizard on July 18, 2011 at 1:30

mskillerbee,

 

on your end of things, you probably won't notice any changes unless you are in an undeveloped area, then you could see drilling activity begin soon.  I would imagine that for the most part though, those of you in the field will not notice many, if any, changes from the way business is done now.  Your contacts will still be the same and all of us will still have our jobs, with the exception of those that choose to leave.  Keep in mind that all employees are stockholders as well, and for those that have been with the company for many years, this could mean an opportunity to cash in and retire early.

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