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Permalink Reply by buckmaster on March 2, 2010 at 16:28

skip ihave also noticed the change in the notices for different fields,really dont have much to base my opinion on but i will give it any way. i dont think they are looking for gas because of the price and the supply. my guess is probably looking for oil.

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 16:38

You are absolutely correct, buckmaster. Not just oil, but also "wet" natural gas as nat gas liquids and condensate command a higher price. There were several posts recently of articles about Chesapeake placing a greater emphasis on oil and before that EOG touting its Combi Play in the Barnett Shale which is oil and "wet" gas. Most of the formations represented in those increasing "non-Haynesville" applications are oil plays or those that also tend to produce nat gas liquids. For the better part of two years the HA Play was limited to a handful of parishes and counties. The new emphasis on oil and liquids bodes well for a much wider geographic area of LA. and the Ark-La-Tex. But there is an important question to be answered, " Will land/mineral owners demand Haynesville Shale money for plays that are not Haynesville Shale?" "And what is a reasonable offer for a Smackover lease in north LA./south AR.?" Or other non-Haynesville prospects?

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Permalink Reply by Spring Branch,mineral owner on March 2, 2010 at 16:43

My opinion is if you don't own any acreage in the Haynesville Shale and you want to continue to be in the oil and gas business, you have to eventually drill wells or lay off your exploration staff and eventually go out of business. I also have noticed more permits from areas in Louisiana outside of the Haynesville, the majority of which seem to be from the small to midsized private companies.

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 16:52

SB, a least some of the dynamic may be related to F&D costs where conventional plays have a hard time competing for capital with unconventional. I value your opinion, can these non-Haynesville Shale plays find traction and allow those small to mid-size private companies an opportunity to make a profit and stay in business?

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Permalink Reply by buckmaster on March 2, 2010 at 17:11

skip i briefly looked over some of the non haynesville apps and there is no pattern to go by as they are all different depths ranging from 8000 feet to 15000feet and are all in different parishes. i dont think it will affect us unless they find something really big. i think these fields are like our smaller fields are they already know where the oil and gas is.

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 17:18

buckmaster, regardless of the variance in depth or location in different parishes, there is a pattern. The pattern is indicative of the much better value of oil and nat gas liquids as opposed to natural gas which is in more than adequate supply and mired in a depressed price environment. The gas glut is unlikely to moderate in the near term. And I predict that more mid-majors will shift focus to oil and nat gas liquids until that changes. That may also be a good turn of events for smaller operators who don't drill deep, horizontal wells.

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 17:23

Electro, I can accept 20% as being a reasonable royalty for non-haynesville prospects. The real test is what mineral owners will accept as a lease bonus.

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Permalink Reply by buckmaster on March 2, 2010 at 17:45

skip iagree with you . these smaller oil and gas co.are probably goinhg to have to lookfor oil if they are going to survive. some have acerage held by production. they probably couldnt affford to lease even if they could find some acreage.if iremember right desoto was already the highest gas producing parish inthe state before the haynesville came along. these smaller co were the backbone of the oil and gas industry in north La. for the last 110 years.

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Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 18:18

buckmaster, I agree with the exception that it is not just smaller oil and gas companies that are looking for oil. All of the mid-majors that have been focused on gas, especially shale gas, are not only looking for oil and liquid-rich natural gas, they are touting that shift in strategy to investors, Wall Street and equity firms. Their news releases are becoming more and more specific that they are not just focused on nat gas.

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Permalink Reply by North LA on March 3, 2010 at 9:41

"they are touting that shift in strategy to investors, Wall Street and equity firms. Their news releases are becoming more and more specific that they are not just focused on nat gas."

I understand that they want to diversify because wall street likes a diverse portfolio. I wonder if they already have some oil targets in mind since they are releasing all of this information without any current strong producing wells.

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Permalink Reply by Skip Peel - Mineral Consultant on March 3, 2010 at 10:46

North. The Bakken Shale is an oil play. All the players with leasehold there are touting it. EOG has a sizable leasehold in an extension of the Barnett Shale field that is oil and liquids. I assume we will be hearing of other prospects in the future. My interest in beginning this discussion topic was less about the shale and shale companies and more about what may be happening for oil and liquid plays here in our part of the world, Louisiana and the Ark-La-Tex. I wish that I had the knowledge to make specific suggestions but I am strictly a HS guy. I do not know the value of conventional prospects such as the Haynesville Sand, Gray Sand, Smackover, etc. I do suspect that the trend to liquids will bring some opportunities to those outside of the HS boundaries.

Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2010 at 17:48

As a side note to those who are new to leasing land for exploration and production of hydrocarbons, a little background may be in order. There has historically been little or no drilling in or near urban areas. At least not after they became urban. There are many rural families that have granted oil, gas and mineral leases down through their generations who have "never had a well". By that I mean that leases often went undrilled and even when drilled were more often than not dry holes. With that in mind it is not surprising that they should be astounded by the lease bonus offers associated with the HS and think that even if they didn't get a HS well they would have a significant pay day even if, once again, they didn't make a well. Thus the extreme focus on bonus offers. Often at the expense of good lease terms. As those who have spent even a few months on GHS know, that way of thinking is no longer operable no matter how long ingrained. Though it is not "shale related", I think it would be of benefit to GHS members not in the HS Play to have some practical advise and parameters they could use in managing their mineral estates.

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