Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 8, 2012 at 4:52

You're welcome, MB.  IMO, it is better to be informed than not, even when the information is not what we would wish.

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Permalink Reply by little ole 1st grade teacher on August 9, 2012 at 4:11

Skip,

What does this mean for people who are not leased at this time (was leased from 2007-2010)?  My land is located in the Haynesville Shale in Shelby County, Texas.  Back in the beginning of the Haynesville Shale, this area was a hot bed of developing into something big.  Now, it seems that we have basically been put out on the line to dry and we've basically been burned by those who helped to put big pipe dreams into our minds.  I am so happy and blessed, and I thank God each day; that I did not take this "pipe dream" as the gospel and burn myself.....luckily, I did not retire as I was told that I would be able to do.  I'm thinking that we have no hope of being leased any time soon or at all in the future.  Just curious, what is your take on any of the Haynesville Shale in Shelby County, Texas, getting back into  leasing/ drilling/production.  

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Permalink Reply by Skip Peel - Mineral Consultant on August 9, 2012 at 4:27

I'm so glad you exercised some restraint.  For me the great opportunity, and challenge, of GHS is in attempting to maintain access to accurate, timely information while keeping expectations in the realm of reality.  Wishful thinking is understandable but should not lead to assumptions related to important issues.  I've had far too many members contact me privately after poor outcomes fueled by what they read on the site. 

In general, where the HS has been proven it is safe to assume a return of interest when nat gas prices reach the +/- $4 mcf range.  I've given up predicting when that might happen.  As to your particular situation, the location of your minerals in Shelby County is important to the answer.  I would suggest that you check with a member who follows that area closely. jffree1 would be on the top of my list.

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Permalink Reply by tc on August 9, 2012 at 6:34

Skip, would you agree that in general the $4 range would only start drilling in leased sweet spots, mostly infill drilling and not start new leasing.  New leasing cost extra money in aquistition cost and most likely extra infrastructure cost as non leased acreage won't have the pads and gathering lines a producing unit would.

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Permalink Reply by Skip Peel - Mineral Consultant on August 9, 2012 at 6:43

tc, I wouldn't use the term, "sweet spots".  I prefer "proven productive".  Each instance is unique by location and operator.  And only that operator can determine the economics.  The play has never stopped expanding south although it has slowed to a crawl.  So new wells to HBP leasehold are continuing.  How much that might pick up with what level of pricing is tough to forecast.  The Haynesville is still a world class asset and companies with the ability to add reserves could continue to do so at less than $4 if indeed they can generate a 9% return on investment at $3 as ECA does.

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Permalink Reply by Dion Warr, CPL on August 13, 2012 at 8:32

Skip:

I would agree as to your analysis as to "proven productive" areas being the most likely wells to be produced at current prices up to $5/mcf.  I might also further add F/O and acquired HBP areas to this mix as well, depending on location, and also depending upon status of well(s) currently holding the leases in those areas.

 

I say this based upon the general level of increased consciousness of current mineral owners in the HA fairway of the possible value of their minerals in the shale zones as well as an increased level of diligence on their part (collectively) in checking up on the status of leases and wells which may be holding any current lease(s) encumbering their properties (due, in no small part, to awareness raised here on GHS as well as other forums).  Older shallow-well operators are having to field constant inquiries as to well status, levels of production, and development plans from their owners, and while changes in R.S. 30:10 may have served to lessen the economic squeeze on some of these operators (Group readers: see other topics and discussions on this forum for discussions as to this issue), it still appears to be less expensive to deal with existing owners of WI and/or HBP lessees than to "step out" and lease in new areas.  A possible exception may be as to trades that will increase operator NRI to either a better or an economically acceptable level, but these types of acquisitions would be highly selective (ie., key tracts that with minimal effort and brokerage expense advance the goals of both lessor and lessee - getting (a) well(s) drilled)

 

Insofar as the play growing south...  It would appear that southern extension would become extremely limited based upon economic productive limits and depths/temperatures/pressures at TVD and/or frac limit.

 

IMO, the high-water marks for bonus / extensions / "cost-free" royalty still seared into the collective memories of remaining unleased owners will preclude new widespread leasing for quite some time, perhaps on the order of years if not a decade (or two).  Not to say that lease bonuses will not recover and leasing activity will not return (to some extent and in some areas, it has begun to do so, albeit not to 2008 levels), but the expectations from the HA have become quantified, and with the initial land grab being concluded, these acquisitions will be ruled by economics rather than by hype.

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Permalink Reply by Skip Peel - Mineral Consultant on August 13, 2012 at 8:48

Dion, I'm not sure there is much "stepping out" left to do regarding the Haynesville Shale dry gas play in LA.  IMO the play footprint has expanded to the point that it begins to have decreasing rock quality in every direction.  Development in those limited fringe areas might take $6 gas and I'm not sure if we will get back to that level in the next ten years.  The only expansion or attempt at such that I see is where the Haynesville produces sufficient liquids to be economic.  Anadarko in Panola County and possibly in N Caddo Parish in the near future for example.

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Permalink Reply by dbob on August 13, 2012 at 8:57

Skip,

 

Although not Haynesville per see, there is at least one reprot of an apparently succesful Bossier shale liquids well.  http://www.pegasienergy.com/articles/Morse%2030%20Day%20Results%20F...

 

Reported vertical depth is 10,843 feet, with a 2000' lateral. 

Permalink Reply by adubu on August 13, 2012 at 9:36

Skip--you have mentioned these Anadarko shale wells with liquids in Panola County several times. The only one I can find are CV H wells no shale wells with liquids. All APC recent permits in Panola last couple months are H CV wells. Do you have any names or API # for these wells if so would you be so kindly to share that infomation please? Thanks

Permalink Reply by adubu on August 13, 2012 at 10:06

dbob--on Texas RRC permit it says (Morse #1 H ) for CV can you check the initial production info to see what formation it reported? For some reason I can not get RRC stie to download presently. Have you previous see the data?

Permalink Reply by Dion Warr, CPL on August 13, 2012 at 12:47

Skip:

I think we are on the same page but coming from different directions.  I do think that the mid-Bossier shows promise more on the south end of the "step out" areas, particularly extending westward back to the Sabine River (this would also be true within the defined HA area along the TX / LA line as well).  It would appear that eastward and southeastward extensions have been more or less exhausted, with maybe an "inlet" or two near the fringes where the faulting is not as severe.

 

Liquids have consistently been more "bankable" as far as economics, but gas has always surprised as far as price volatility and splits.

Permalink Reply by adubu on August 9, 2012 at 6:16

little ole 1st grade teacher---In Shelby County it all depends on location-Where are your minerals located?-- It gets better going South-- the best appears to be in SW in what's call the "Shelby Trough" that extends into Nacgodoches and San Augustine Counties. The north part of County is questionable. One key well for me is the Batts Well #1H a bossier that was fac and completed just last week about 3 1/2 miles west of Joaquin just to north of Hwy 7--- this well will set the future value of our minerals in this area of county. So I pray it's a good Bossier Shale well ( The Bossier part of shale appears better than the Haynesville part of shale in East Texas)  Classic completed 2 wells just to north of Batts near Panola/Shelby border that were disappointing plus the GoodRich Dean Haynes S/L wells( the #1H is Haynesville and the #2H is Bossier) to the NE about 1 1/2 miles from Batts were marginal making about 1 Bcf each 1st year.

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