Replies to This Discussion

Permalink Reply by Dion Warr, CPL on January 17, 2009 at 7:51

KB:

The relationship is more or less like a "go-by", and there is no real cause and effect relationship between the two. In most prospects, the proportions stated more or less continually work out that way, and is generally good for estimating purposes.

Generally, well costs increase more or less linearly (with a couple of jumps for bigger rigs and equipment required to go deeper and deeper), pressures tend to go up linearly (approx. 0.435 psi/ft., which has been quoted here ane elsewhere for reference), and for the given 'typical' formation, EUR tends to go up linearly (if it doesn't, the economics tilt away from viaibility, and O&G likely will consider some other prospect first). Thus, more or less, since risk-on-return tends to be at least 2.5, if you drill a $8MM well, generally one expects to generate (hypothetically) at least $20MM of revenue for the company. That logic doesn't always work in reverse, thus making the unit acreage with the $8MM well worth a $1250 per acre bonus, however.

What has made the HS so much more attractive in the era of predictable and reproducible multistage hydro-frac is that the saleable EUR makes the Tier I (Core) risk-on-return more like 5.0 - 7.0 long-term, with lower overall risk than more conventional reservoirs. So if a CHK or HK wanted to sew up Tier I area and had to pay bonuses in excess of what would normally be predicted by usual rules-of-thumb in the short-term, it was judged to be OK b/c by doing so, other players were pushed out, and more acreage for them.

The detriment of such a strategy, however, is that pushing the bonus higher than the usual allotments weighs upon the bottom line if any of the fundamentals falter (like ng prices, with lower demand). Also, the expectancy of the l/o's in terms of lease bonus has now been raised, so when it comes time to lease some of these folks again, the asking price has now gone up tenfold to twentyfold. Here lately, you see the O&G offers reduced in an effort to make a "correction", and the pendulum has swung to bonuses on the lower side again.

Non-sequitur: I analogize Mac as a loose aggressive hold 'em player who felt strong going in with his cards and aggressively raised preflop in an effort to run everyone else off, steal the blinds and come out ahead. His hand may not have truly been worth the full value of his raises, but no harm done if he doesn't have to face anyone past the flop. Instead, some called, and the flop has come up somewhat poorly for him. But he's committed, and has to play his cards; it's too much to walk away from now. And, going forward, win or lose on this hand, he's going to have to be more mindful of his chips, or figure out a way to raise some more.

Permalink Reply by Snake Stewart on January 13, 2009 at 17:13

(Quote by Dion Warr) At worst, it was a "red herring", low-ball offer that I wouldn't ask an HS l/o to entertain at this point. Neither would Snake; thus I felt it disingenuous for him to bring it up.

Mr. Warr,
Of all the things I have been called in my life, by intelligent life forms, Disingenuous isnt one of them I assure you. The one and only reason I made that statement and asked you that question was because of your reading of the "riot act" so to speak as to how all of us overly assertive l/o types seem to blow the same smoke all the time.
It doesnt matter to me how long someone has been doing something in regards to me showing respect. You could be a serial killer for going on thirty years! Does that mean I owe you respect ? Nope. Not in my book. I gave you respect because of what "The Book" says. I try to give everyone the same amount of respect from the get go, in hopes that they will return the favor.

By , (IMO), trying to scare people into "leasing or getting left out", you show your lean toward O&G. Thats cool Dion. You are O&G. That is what you are supposed to do. Most intelligent folks on here understand that as well.
Now , this is where I come in. I, on the other hand, am M/L owner. I lean thisa way. I am M/L owner, I am supposed to lean thisa way. Most anyone who has attempted to read my shite over these last 10 months understands that.
I have never changed directions in how I feel this whole thing was garbage early on for M/L owners outside of the know. I still feel the same. No matter how I progress friendship wise with industry people. And I have quite a large group of industry people that I would consider friends as I hope they feel the same toward me. I just dont talk about it as much anymore because it has all been said a thousand times.
Just as your "talking points" earlier have been rehashed time and time again. Instead of trying to call you on it, I simply asked you to tell me what you would do in that persons current situation.( $1750 and 1/5). Just because the O&G's send you into the game in the later rounds doesnt mean that those offers havent been played or are being played all around you .To say this is untrue would be disingenuous as all get out.

Was it a trap ? No. Just my way of getting around the BS. You are as in the know, as anybody is. I knew you wouldnt accept such a stupid offer so why give someone the runaround, or make them think it may not be so terrible ?
Just telling me "no you wouldn't take it" would have been so much easier and painless for everyone.Fewer drawers all bunched up anyway.

Sorry to have caused so much trouble by just asking a simple question. I will let you go so you can get back on that shelf now.

P.S. Earl got into this cause he was takin up for me. Thx Earl but I wish that you wouldnt have because you have come under scrutiny for something I did and that isnt right. I know you Earl. I know what you are about. You are one of the most genuine people I have ever had the pleasure to meet. There has been many a fool that has underestimated and misunderstood you. I wish that they could know you like I do , Bro.

P.S.S. Because he would never tell you this...... To all the O&G people out there that think you have him figured out or think it is impossible to have you guys figured out , Keep smokin that weed! There are people that aint drinkin no more kool-aid. And that dont give a rip whether or not O&G's go away. Hard for you guys to comprehend that!

Snake, trying to coexist without drinkin no stinkin kool-aid.

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Permalink Reply by Dion Warr, CPL on January 14, 2009 at 4:39

Snake:

And kudos to you for mistakenly trying to figure me out. No one sent me here. I originally found this forum looking for information out in the public domain to better help represent some interests that some landowners (and mineral owners) have up in the area. Much like many other people who came to this site, I came here for information and to get a feel for the general sentiment in the area. Because my background is O&G, I did not need a primer on how the business works.

Upon reading some of the posts, I realized that there were people out there who had very little understanding of what they were getting into. I have tried to help as much as I can in giving my personal perspective on what is going on, what to expect, and to provide counsel if someone has asked for it. I was hooked not so much to convince people of an O&G position, but to try and engage in intelligent discourse and provide reasonable counsel.

You don't need counsel. You obviously have all of this figured out. I called your post disingenuous because IMO it provided nothing to the discussion. I don't know you, or Earl, but I know enough about your positions through your posts to know that posing such an offer (1/5 RI) with any amount of bonus attached was a non-starter. You did it just for the reasons you stated above, and I knew it, that's why I called it disingenuous. I realized later that someone else had posted this offer, but the original post which started this discussion referenced 25%. I put my cannon away once I realized that.

Now you have held me out there again as some 'talking point O&G guy' interested in getting people to drink O&G-tinged Kool-Aid in an effort to somehow discredit me and/or disparage me for 'motives'. Well Snake, you don't know me, either, and you obviously haven't read my posts in which I have counseled people to NOT take the offer on the table, or you just want to conveniently forget them. Either way, my cannon's back out.

My questions to you are these -

If you don't care whether O&G is there anyway, why do you care if they pay, or don't pay, or pay enough to keep posting 'da*!'ed O&G'comments?

Why do you seem so content to paint me with that same BS O&G brush?

If you have a problem with me, fine, but take it to another post, please, or my board, or an email.

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Permalink Reply by Snake Stewart on January 14, 2009 at 11:57

Jay,
Tighten up your seatbelt cause its gonna be a long ride.

If you are tired of the industry bashing, quit beachen about that lame vert thats HBNP...
Holding you By Non Production.You made the statement that the royalties are where its at.In best cases you are exactly right. But that isnt the case for you! You got screwed! You beach about it! You got a right to be upset! I agree with you. But you cant have your cake and eat it too. You cant beach about whats happening to you and then cry foul when others are being told the possible pittfalls of their future mineral lease.

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Permalink Reply by Dorcheated A1 on January 14, 2009 at 14:00

KB,
How about writing you own material instead of using mine. Next time you'll be hearing from my attorney.

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Permalink Reply by insomniacnla on January 14, 2009 at 13:57

I am only a landowner and I do not know much about the oil and gas business. I came to this site to share what little bit of knowledge I did know and to try and help other landowners in the same situation as I am in. But, I mostly came to this site to learn from others.

I do read and learn from the members on this site who are in the oil and gas business. I may or may not agree with their opinion. I do appreciate their sharing of knowledge with me, for whatever reason "they" decide to post. I don't care what their motive is and if I feel that their post is incorrect, I ignore it.

But what I don't do is post and post and post and post about how I disagree and I do not "call anyone out" on the main discussion board. If someone wants to do that, please use the members' own pages. There are many more members on this site who just read and never post that just want to educate themselves.

Lately the site has too many insults for me to read through looking for information. It is just insult after insult that does not serve any purpose except to try and trump up someone's ego. Almost every single discussion topic is hijacked and is turned into a war of insults. Now, not matter how helpful some of the "professionals" have been to us, we only insult them and most have not even done anything to us. Without some of the "professionals" on this site helping us, we would not have much of the knowledge we now possess.

Can we please leave childishness behind or at least leave it on our own personal pages.

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Permalink Reply by Cathaus on January 14, 2009 at 14:07

If you don't have a vested interest in the Haynesville Shale, then why are you trolling this site?

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Permalink Reply by Jack Blake on January 17, 2009 at 3:34

Damn let's all just stop the hating!

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Permalink Reply by Snake Stewart on January 17, 2009 at 4:00

No hatin' here, Mr.Blake. Just keepin it as real as we can.

Permalink Reply by Snake Stewart on January 14, 2009 at 12:58

See what I mean Mr. Carl !
Sometimes things can be said in angst, or taken out of context. I am afraid Mr. Warr has done such a thing because some of my comments were a tad off color. For that I am sorry.

Mr.Warr,
Who said someone sent you here ? You are a self proclaimed professional landman of 13 years. Where else would you want to be ?

When I refer to the "talking points", it wasnt a shot at you as an individual. It was at the part of the industry that you represent. Which to a great extent hasnt been glorified to any large degree outside of a few, good hearted, landmen that have been here willing to answer those tough questions. I would rather not try to name them for fear of leaving someone out. They , as well as the people that have been here reading for months on end, know who they are.

I just stated that I didnt include you in the kool-aid ring & you jump right into a big ole nasty , paintin you into a corner, slobbering fit. You guys are some of the most tendered feeling folks I have ever seen to turn into bloodthirsty vampires when sittin' across the table from us. Jeez!!!!!
Guess I aint gonna get a Valentines Day card from you either.

P.S. Put your dadblame cannon back up. I done pee pee'ed on your powder anyway.

Snake, wearer of wet powder fired, cannonball proof chain mail.

P.S.S. SEE POST BELOW THIS COMMENT PLEASE MR. WARR FOR CLARIFICATION PURPOSES!!!!!!!!!

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Permalink Reply by Snake Stewart on January 13, 2009 at 18:56

Permalink Reply by parker
If Dion has a kool-aid stand, I haven't spotted it (yet).

Hey Parker,
I dont think Mr. Warr is selling Kool-Aid either but there are plenty of vendors out there that are trying to sell a bill of goods.
If I classified Mr. Warr as such, I wouldnt try so hard to engage him. If he got offended it certainly wasnt because I was trying . I am fairly versed in the art, so sometimes it just comes out without me trying.(LOL) If his drawers got bunched up thats o.k. Happens to me all the time. I havent noticed any long term side effects of it as of yet.
Its only natural for people on the opposite sides of the fence to disagree on occassion. If Mr. Warrs skin isnt any thicker then that he and I may not be able to look forward to a long lasting, long distance relationship but I certainly hope things pan out.He seems to be a good person thats just rootin for the other team come Super Bowl Sunday.(LOL)
Have a good one Parker.

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Permalink Reply by Bobi Carr ("parker") on January 13, 2009 at 19:12

Snake,

I want it to work where both sides win!

It would be wonderful if all of the operators were serving the same flavor kool-aid that Petrohawk is presently selling. I'll drink some of that.

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