Can Petrohawk, Chesapeake or Encana drill fast enough to hold their leases in the core area?

What are people's thoughts on the drilling that needs to take place to hold all the leases in the core area per Chesapeake? With prices where they are, would it still make sense to horizontally drill the core area to hold all these leases just to profit from a measly 3.73 MCF gas price with production at 14 million cubic feet (just threw that number out there), not to mention throw in the 70-80% decline rate after the 1st year. That's a significant amount of high volume gas sold at a very cheap price just to hold a lease. Is it even possible now for Chesapeake, Petrohawk and Encana now to punch enough holes to hold there substantial acreage in this core area with the massive cut back in rigs? What's the chances for these companies to just punch a vertical well to hold the lease and pay shut-in royalties until gas prices stabalizes and then come back and finish up the horizontal part of the well and get it to market which would be beneficial to the landowner and gas company at a much high price. These are just a couple things that have been stewing in the back of mind over the last couple months and would like to get some feedback from the regulars on here.

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Permalink Reply by Scott on April 6, 2009 at 14:00
Well with a 50% drop in current rigs drilling for natural gas, I would imagine that would have some sort of affect on the rig count in the Haynesville? Correct me if I'm wrong....
Permalink Reply by John M. Hays on April 6, 2009 at 14:35
And the company was Chesapeake who was ordering rigs from two fabricators and was looking for ecperienced crew to man them...
Permalink Reply by Scott on April 6, 2009 at 14:55
Do you believe it is likely that Cheseapeake, Encana and Petrohawk will be able to drill enough sections to hold the leases in the core area?
Permalink Reply by Scott on April 6, 2009 at 15:15
Point taken. I guess the reason for this discussion was my assumption that they have cut back rigs in the Haynesville which you clearly disproved. That's definitely good news.
Permalink Reply by Les Bamburg on April 6, 2009 at 16:00
Scott, you should read my postings under the following discussion group:

http://haynesvilleshale.ning.com/group/drillingriglocations
Permalink Reply by Les Bamburg on April 6, 2009 at 16:08
Scott, much of the acreage in the core area is already held by shallower production especially in East Texas. Given the current rig count, the operators can drill ~ 350 wells per year in NW Louisiana alone. Given these companies have 40+ years of drilling inventory, a couple of years of low prices may not be enough to cause them to risk losing the acreage to a competitor. Also, the majority of this year's gas production is being sold at $6.00 - $8.00 per MMBtu rather than sub $4.00 prices.
Permalink Reply by herefordsnshale on April 7, 2009 at 11:31
Jim was that a misprint? A lease expiring in 2006 would expire in 2012? Don't know of many people wiling to give a six-year lease.
Permalink Reply by Two Dogs, Pirate on April 7, 2009 at 14:03
I haven't been working Caddo but nearly all the shale leases that I have seen in DeSoto (Southern Portion) and Sabine (Northern portion) have been 3 year with 2 year option to extend.
Permalink Reply by Jack Blake on April 7, 2009 at 14:18
I signed a three year in June/July 08 with no extension. I think many in my section signed the three year w/ 2 year extension. I'm in Northern Sabine within walking distance to Desoto.
If the oil co. can hold the section by exercising option on the others will I still be able to get a big signing bonus again if they can't drill by june of 2011? Will thye just force pool me and not try to get me to sign or what?
Alot of if's.........
Permalink Reply by Two Dogs, Pirate on April 7, 2009 at 14:26
If the majority of the section is leased by whoever then they will become the operator of the well unless they assign into someone else. LONG LIVE JACK BLAKE!
Permalink Reply by Jack Blake on April 7, 2009 at 14:31
No well has been drilled yet. If they do not drill a well before my lease expires (but they still plan to drill one) can I get another big signing bonus?
Long Live the Haynesville Shale and Two Dog's dogs!!!!!!!!!!!!!
Permalink Reply by Two Dogs, Pirate on April 7, 2009 at 14:42
I would have to read your lease.

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