Replies to This Discussion

Permalink Reply by JHH on June 2, 2015 at 3:51

don't sell.. only lease.  unless of course they give you a billion dollars and you have a lawyer who knows what he/she are doing.  i'm not an expert... but people on this site always advise.... NEVER  sell your mineral rights.

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Permalink Reply by Skip Peel - Mineral Consultant on June 2, 2015 at 5:16

Every mineral owner and every particular situation is unique.  It is a mistake, IMO, to say never sell.  In my career I have seen many instances where a sale was a good decision.  I think what can be said as a definitive point is, never sell without performing reasonable due diligence, getting some professional assistance and soliciting multiple offers.

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Permalink Reply by Skip Peel - Mineral Consultant on June 2, 2015 at 5:32

JWD, I suggest that you read my Mineral Fundamentals blog (link follows) and then ask questions.

http://www.gohaynesvilleshale.com/profiles/blogs/fundamentals-of-mi...

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Permalink Reply by JHH on June 2, 2015 at 8:44

Well... you're right... Never say Never.

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Permalink Reply by Skip Peel - Mineral Consultant on June 2, 2015 at 9:30

No one can know what another's situation maybe.  By just saying, Don't Sell!, we have too many times in the past denied the help that some came seeking because they had a need or had already made up their mind to sell before ever becoming a GHS member.

Details matter.  In addition to the lack of drilling in SA by EOG and the corporate announcements of their focus on liquids mentioned by jffree1, there are other pertinent facts.  How large is the unit and how many wells are currently producing?  Some EOG SA Haynesville units are as small as 200 acres.  They probably won't be getting another well by EOG although there is the future possibility of another operator acquiring the unit and wells and applying to increase the unit size.  If that is possible. 

Although it is generally true that there is less competition to buy Haynesville minerals owing to the current depressed price of natural gas, buyers who need producing minerals are still paying impressive sums for the right acreage.  Only a broker would be likely to know the identity of that buyer. 

Anyone intending to wait for some future date when the price of natural gas is significantly greater should be prepared to wait for some years.  If you look at natural gas futures you will find that the first month for $4 gas is January 2022. 

http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

There is a discussion on the main page that covers the timeline for LNG export, that I will link below.  Keep in mind that operators in the Marcellus can currently sell their gas on the Gulf Coast for less than the cost for a Haynesville operator even incurring the cost of transportation.  Any meaningful volume increase in export liable to raise the price of Haynesville gas is probably early to mid next decade.

http://www.gohaynesvilleshale.com/forum/topics/nymex-natural-gas-co...

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Permalink Reply by JWD on June 3, 2015 at 8:46

We want to thank everyone for their input.  As far as need, there is not much at this time.  As I mentioned it is a small share, (pocket money) someone said.  We are trying to make good decisions.

So here is a little more info.  Maybe some of you have similar interests.

EOG

San Augustine County

1. Chinaberry 1H   % Interest   .00123789  approx.  45 acres

2. Phelps 1H    % Interest   .000637  approx. 40 acres

(Told you they were small :)

Again, thanks for every ones input.

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Permalink Reply by Joseph on June 2, 2015 at 6:31

Unless you are in desperate need for cash, the rule of thumb is to not sell your minerals. EOG's drilling activity has slowed some due to low commodity prices but they are one of the more active HA drillers in East Texas. I'm not familar with Montego but I do know they are in the business of trying to make money which could equal taking money out of your pocket in the long run. Just do your homework before you decide to do anything, because there are many factors that should be considered as Skip pointed out.

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Permalink Reply by Spring Branch,mineral owner on June 2, 2015 at 8:02

For what it's worth, EOG has not drilled a Texas Haynesville well in quite a long time,  At current natural gas price, I doubt any are on the drawing board.  Just my opinion.  I personally threw a Montego Minerals solicitation for San Augustine Co. in the trash just today.  Having said that,  I think that Skip's summary is right on.

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Permalink Reply by Joseph on June 2, 2015 at 10:59

I believe that EOG drilled some allocation HA wells in Panola during first quarter of 2014 and I agree that they won't be drilling many more at current prices. However, I do think they will be one of the first to return to drilling when prices creep up.

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Permalink Reply by Skip Peel - Mineral Consultant on June 2, 2015 at 11:24

The HA wells in Panola produce liquids which is what EOG has focused on for a number of years now.  Their last dry gas Haynesville well in Louisiana was drilled in late 2011.  IMO, it is a long shot that EOG will drill a dry gas HA well in the future, LA or TX.  At any price.

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Permalink Reply by Joseph on June 3, 2015 at 1:48

This is true and I'd expect them to start drilling the dryer areas IF gas prices stabilize in $3.50-4.00 range. They are not interested in divesting any HA assets which tells me they intend to develop at some point.

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Permalink Reply by Skip Peel - Mineral Consultant on June 3, 2015 at 1:55

Joseph, how do you know that EOG is not interested in divesting any HA assets?  Could it be that they are and that currently there are no buyers for HA rights where the formation does not produce liquids?

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