Replies to This Discussion

Permalink Reply by Dry Hole on June 21, 2012 at 1:24

  " 12 wells in 2012 within it's approximately 115,000 net acre position"    ---------  That is only one well per 10,000 acres ----- does not sound like a aggressive development plan to me ?  -------- why do companies tie up so much acreage with no intentions to ever drill it all ?   

    On the flip side this is a good thing for lease bonus rates and lets more people get in on some $ 

Permalink Reply by dbob on June 21, 2012 at 1:30

What I'm looking at is 4 wells drilled in the first half of 2012 and 8 more wells during 2012.  Given the results of their other plays, they have to see something promising here to increase the drilling rate.   

Permalink Reply by jffree1 on June 21, 2012 at 2:24

DH, they tie up so much land because, while they probably have a good idea of the general area they want to drill, they may not have enough science to rule any of it out until some wells are drilled and they get new data.  It makes sense for them to spend more on leases while the bonus is low and there is relatively little competition rather than wait until after a good well comes in when both of those conditions are likely to change significantly.  And... the tax treatment (of money spent on leases that eventually expire without producing anything) is favorable so spending that money up front is a win win... win.