Replies to This Discussion

Permalink Reply by Franks on July 23, 2015 at 13:00

Hallburton HAL down around 50%; & TransOcean RIG 2/3 (1yr).  

Permalink Reply by kittycatmama on August 23, 2015 at 13:52

What if one is leased with Company A and Company B is operator or vice versa and one files BK? What happens?

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Permalink Reply by Skip Peel - Mineral Consultant on August 23, 2015 at 13:57

Good question.  I'll see if I can get an answer.  I suspect that it may depend on if and how the lease rights are assigned. 

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Permalink Reply by kittycatmama on August 24, 2015 at 13:47

thanks Skip. With today's market any of the major oil and gas drillers including EnCana and Chesapeake could go. About the only one who seems to be holding its own is BHP and they have mining assets. Probably 80% of the members on this board could be affected  by the company who leased them or who is operator of the lease. These are some really scary times.

Permalink Reply by Skip Peel - Mineral Consultant on August 25, 2015 at 8:27

If the operator of a unit declares bankruptcy the state will likely remove them as operator within a set period of time and seek to continue production with a replacement operator possibly from among the Working Interests if any are already approved as an Operating company by the state.  If your lessee is a Working Interest and not the operator you should be okay.  Relatively new laws require Working Interests to pay royalty in lieu of the operator and gives them recourse against an operator who suspends royalty payments.  That's my best interpretation from what I have been told.  Any comment beyond that is getting too deep in the legal details of federal bankruptcy law and is far above my pay grade.  There are other members better suited to provide legal opinions on this topic.

Permalink Reply by tc on August 25, 2015 at 13:24

People need to be careful with the word bankruptcy.  There are many types of bankruptcy and while some mean the whole company disappears, others means that only the equity holders lose anything and to the outside world its like nothing happened.  Using airlines as an example their bankruptcy can go the route of Braniff Airways or Delta Airlines.

Permalink Reply by Krkyoldhag on August 24, 2015 at 1:19

What I know personally from bankruptcy?  I owned Braniff Airlines stock way back in 1970's..In those days brokers "sold" Airline, Bank and pharmacy stocks as safe Widder Ladie's Stocks.

I ended up with worthless paper ... trash.  Lost every cent paid for it.

So...might just have to paper the bath room walls with our leases.

Based on the stack of reports got from one company might be able to paper the whole house.

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Permalink Reply by Skip Peel - Mineral Consultant on July 23, 2015 at 13:15

Franks, the subject of this thread is O&G operating companies as opposed to field service companies.  HK, GDP and XCO are under $1 and in danger of being de-listed from the NYSE board.  Those GHS members who are leased to those three companies, or any other in financial distress, need to be making plans to take legal action should their operator go into bankruptcy.  Doing nothing is an option that increases the odds of a bad outcome.

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Permalink Reply by Franks on July 23, 2015 at 13:47

Thanks for all that you do here Skip.  

 

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Permalink Reply by Skip Peel - Mineral Consultant on July 23, 2015 at 13:52

You're welcome.

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Permalink Reply by kittycatmama on August 26, 2015 at 2:16

Thanks SKip, a lot of good info. I was glad to see EnCana sold their interests in Desoto & Caddo to the company in Houston. Hopefully those of us with EnCana as operator will see some new refracks. I am still holding my breath with Exco and I will restate, Exco has been the very best company to deal with regarding their attitude to royalty owners. Hoping they get a partner to help them so they can keep going. What some of us don't think about is the number of unemployed workers that have come with this slow down. Having grown up with a father who was in oil & gas, I know that life was about highs and lows.

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Permalink Reply by JHH on July 24, 2015 at 7:24

I received the Sabine bankruptcy document in today's mail.  It states royalties are authorized but does not direct Sabine to pay them.  It also states monetary penalties or loss of lease if royalties are not paid.  i'm not a lawyer and did not stay in a Holiday Inn... but i think that's the bottom line.  T think a court hearing on the chapter 11 filing is sometime in August.

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