HOW MUCH UNLEASED, DEVELOPABLE ACREAGE REMAINS IN THE HS PLAY FOR MAJOR OPERATING COMPANIES NOT CURRENTLY ACTIVE
I HAVE LONG SPECULATED ON THE BOUNDARIES OF THE HS PLAY AND THE AMOUNT OF UNLEASED ACRES THAT REMAIN AVAILABLE FOR THE ENTRY OF NEW, MAJOR OPERATING COMPANIES. THE GENERALLY ACCEPTED CURRENT BOUNDARIES INCLUDE HUGE LEASEHOLD HELD BY PRODUCTION. LAND SPECULATORS ALSO HOLD SIGNIFICANT ACREAGE. THE REMAINING UNLEASED ACRES HELD BY LAND/MINERAL OWNERS MAY BE ISOLATED AND NOT ATTRACTIVE TO NEW MAJOR DEVELOPERS BECAUSE IT IS NOT SUFFICIENTLY CONTIGUOUS FOR DEVELOPMENT PURPOSES. AS A MEANS TO ILLUSTRATE MY THEORY, I AM INCLUDING A TOWNSHIP MAP OF NW. LA. THAT DEPICTS THOSE TOWNSHIPS WHICH CONTAIN SECTIONS THAT HAVE BEEN UNITIZED. PLEASE NOTE THAT ALTHOUGH NOT ALL SECTIONS MAY BE INCLUDED IN DRILLING UNITS, MUCH OF THE SURROUNDING ACRES ARE UNDER LEASE OR HBP. I DO NOT KNOW THE ANSWER TO THE QUESTION I POSE BUT I THINK IT IS WELL WORTH COMMENT AND DEBATE AMONG THE MEMBERS. THE HS PLAY IS RAPIDLY MATURING AS TO SIGNIFICANT PROSPECTIVE AREAS NOT LEASED, HBP OR NOT UNDER THE CONTROL OF THE LAND/MINERAL OWNER. AT THIS TIME, MY OPINION IS THAT ANY NEW, MAJOR OPERATING COMPANY CAN ONLY ENTER THE PLAY IN A SUBSTANTIVE MANNER BY ACQUIRING THE EXISTING LEASEHOLD OF ONE OR MORE CURRENT OPERATORS WITH SIGNIFICANT LEASEHOLD. IF SUCH WERE TO OCCUR, WOULD IT HAVE ANY MAJOR IMPACT ON BONUS OFFERS EXCEPTING RELATIVELY LOCALIZED INSTANCES?
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Replies to This Discussion
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Permalink Reply by Jay Reynolds on
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As an oil producer in the Caddo Pine Island Field, (Oil City/Vivian area) I can tell you that there has been virtually no leasing up here and thousands upon thousands of contigious areas remain available for deep drilling. Most of our acreage is HBP from very old leases.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Jay. HBP acreage does not allow for bonus offers to mineral owners.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Jay and Jim. I agree. My motivation for posting this discussion was to elicit a dialogue on the future of bonus offers for land/mineral owners. I would appreciate any thoughts that you may have on that subject.
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Permalink Reply by Skip Peel - Mineral Consultant on
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JIm. I concur but would interject my opinion that the range you propose will vary significantly based on the specific conditions of each unleased mineral estate. Some may get a little more but many will get less.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Otis. Could you state at what bonus amount range your company would consider the numbers would work?
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Permalink Reply by Skip Peel - Mineral Consultant on
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Hey, Graysands. I do not know. But they would sure be welcome to come play on our field anytime.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Jim. I have not heard Solly Hemus's name in ages. Wow, a real blast from the past.
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Permalink Reply by Duncan McGehee on
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I heard not above $5,000.00
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Permalink Reply by BirdDawg, plain ole' idiot on
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There are several sections west of Ringold that are predominatly HBP. Wonder what that would be worth?
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Permalink Reply by Skip Peel - Mineral Consultant on
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GoshDarn. Any major operator not currently involved in the play would probably not enter any time in the near future in a way that would change the price of bonus offers. They would require a huge, relatively contiguous, leasehold to do so. Though the number of unleased acres in NW. Natchitoches and N. Sabine might seem large to you and I, I doubt that it would be sufficient. If that major player could pick up 3 or 4 hundred thousand acres from an existing player, they might acquire some additional acreage from unleased land owners. If that were to occur it might help stabilize bonus values in a localized area of the play but it would not boost competition in a manner that would restore the bonus offers of this past summer.
Despite the seismic studies and the Encana well you mention, it is unlikely that the boundaries of the play will shift significantly south and west of the area you mention. There is reason to believe that landowners in the immediate area, such as yourself, will get offers and hopefully some good wells sometime in the future. Have you ever wondered why there is considerable unleased acres and little, or no, land HBP in this area? There must be a reason for that. I do not claim to know the definitive answer but I am fortunate to know some experienced colleagues in the industry and this is what I have heard: The geological strata across NW. LA. is relatively continuous and even. It does vary in depth specifically getting deeper as it progresses north to south. The downdip. At some point approximately mid-parish in Sabine and Natchitoches the strata of NW. LA. runs into that of SW. LA. Along that line much of the continuous, undisturbed nature of the stratographic zones is lost. The collision of the two creates folding and displacement. Therefore the area is less predictable and relatively unknown as there is less solid historical data. I suspect that the defined boundary of the HS will creep into this area until a productive limit is established. I do not think that anyone, especially myself but including industry experts, knows where that edge of the play lies. The major operators in the area, Encana and SWEPI, will probably be the ones to establish that edge at some unknown time in the future.
As the HS is "unconventional" it may not exhibit some of the problems inherent in an area of disturbed geological zones that would plague "conventional" plays. Any productive zones with high permeability might be highly disrupted and unpredictable in this zone of convergence. The HS may exist and be producible there. But there are other areas of the play that can better be expanded without running against these problems. The extent of the HS may not be fully defined for many years. And some regions with thinner deposits may be of lesser interest at this time but may be more so in the future especially with higher energy prices.
I have been curious about this edge of the HS play for some time. And would not mind if the description that I offer is proven to be inaccurate. I hope that our discussion on the subject will cause others with greater technical knowledge than I possess to weigh in with their opinions. We could use input from some geologists and reservoir engineers. Gooble-gooble, to you too. Skip
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Permalink Reply by Jay Reynolds on
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Skip,
Re: >HBP acreage does not allow for bonus offers to mineral owners.
In most cases that is true. In my case it's not because I split bonus money and ORRI with the mineral owner that I work very hard for in producing stripper wells.
Anyhow, the frustrations in trying to operate profitably as a stripper well producer have led us to develop an entirely new way of producing at shallow depths that eliminates rods, tubing, pump jacks, workover rigs and corrosion. www.strippersolutions.com
Aside from any ORRI of monies for farming out deep rights, I really most want to get to look at a log below the Nacatoch because there has been a real lack of information and geology about potential deeper prospects in the area.
The primary challenge in our area is going to be the difficulty in running title and obtaining valid leasehold/farm outs when dealing with very marginal production in leaseholds that are often a half a century old or older. Also, the leases/assignments etc., that have carved up the mineral estates into smaller and smaller plots. Overall, the larger tracts with less owners involve and acreage that is not HBP is going to be the initial path of least resistance for acquistion. I am watching the progress of the three Hall wells near the KSLA road (HWY 1 North) with great interest. One is going horizontal now and the location for another is being prepped now for HZ with an adjacent new location being prepared.
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