Dallas firm acquires Tuscaloosa interest

advocate staff report  Dec. 1, 2015; 7:38 a.m.

Dallas-based Aresco LP has acquired a working interest on 20,000 acres in the Tuscaloosa Marine Shale and expects drilling on the first of four wells to begin in December.

Details of Aresco’s ownership interest and partner or partners were not released.

The oil-and-gas exploration company’s acreage lies north of Baton Rouge and straddles the Louisiana and Mississippi state lines.

Aresco said four wells are planned for the acreage, and the wells should be drilled, completed and begin production around the middle of May.

“With the current oil and gas price downturn, we have been able to step up as an alternate funding source to help support continued development,” said Brandon Laxton, president of Aresco LP and Aresco Operating Co. “This has allowed us the opportunity to offer premium drilling positions and attractive return potential to our team of private capital partners.”

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William, the key is that the production gain that the USA has gained with the shale boom will decline. We went from 4 or 5 million bbls a day to over 9 million bbls a day in a fairly short time. Many of the folks that I follow never thought we could do that, but they didn't take investor irrational exuberance into account.

So if we have the full recession that we've been trying to have in America since 1999 and we clean out the market distortions and the mal-investment we'll eventually be on a real economic footing. Will that happen? How long will that take?

Once the consequences of low rig counts and cheap oil are fully felt then we'll see activity trickle back. I'm sure that trickle won't hit the TMS for some time for the same reasons we were last during the boom.

I have a vision for what I think will happen, that vision might be a mirage or it may be that I'm crazy, but I wish I could see a date on when it will start.

Keith and Chip,

A very wise old Independent Oil Man told me back in the 80's that when you are in the business and your competition is literally sitting on an ocean of oil they can price you into the basement at any time. When our US bunch of guys started talking about removing the export restrictions on oil I was afraid the the Saudis were going to "cut it off at the pass". That was a direct threat to their monopoly and their market share. So basically its not the industry that is a problem its the Saudis and their ability to teach our US Oil Industry who has the real power.  

Joe, I see it good bit differently than that and the production stats prove why. Saudi Arabia didn't raise production levels as much as we did in the last 5 to 10 years. Saudi Arabia didn't have gobs of money coming in from banks to cause a drilling boom that wasn't rational or sustainable.

We in America were irrational and we expect the Saudi's to cut production so we can continue to be irrational.

I enjoyed the ride and I made some money but it's not the Saudi's fault that it's over now.

Another part that I think folks forget about, sure we lifted the export ban, but we import 9 million bbls a day and produce 9 million bbls a day in America, so that means we would have to add 9 million bbls production before we could even think that lifting the export ban means anything.

Lifting the ban was simply a feel good measure that won't have much effect for a long time, if ever.

Yep, you're right Keith. It's simply oversupply. Blame success. Everyone is in it for the $. 

I think the success of fracking and extracting oil from shale came earlier than it would due to investors looking for a place to put money to work. With zero percent interest rates and other mediums not looking so good they made a bet that turned into a mania.

I firmly believe that we will enjoy the fruits of those successes at some point in the future and we'll utilize and grow the technology even further but right now they need to stop drilling and let the market distortions clear out.

 So maybe we won't have over 2000 rigs working in the USA, maybe we won't have anyone with a pulse making six figures in the oilfield and crazy boom towns everywhere, but a sustainable living for workers and production that's in balance with demand is what I hope for. Yes that's boring but I like boring.

Again, We are in competition with someone that has an unlimited supply of oil that is easy to produce. They can produce us into the cellar any time they want to. The best way to correct a situation like this is to have an import tariff kick in if the price of oil goes below $65. At the current difference this would bring in 100 Billion dollars a year. If that money was committed to the national debt then it would be a win win situation. The current national debt is the biggest problem that we have as a country. 

That is not a bad idea.  The Saudi's can afford it.  But not so sure about Iran or Venezuela who are begging that they are broke and need the oil revenue to survive.  And the tariff would support our oil industry.

But I do not like taxes and that will only open the door for Obama, etal to slap a tax on our internal production.  He has already preposed a tax of $10 a barrel on domestic production and obviously never ever heard of depletion allowances.  What a misguided individual. 

Now it is passed mid February and no wells have been spudded in the TMS.  I'm guessing Aresco LP ran out of steam.  Or was it just hype to begin with.  Frankly we all knew it to be bogus as the cost is to high and the pay back is to low to make a TMS well to work.

I ran into a new term today, DUC which is "drilled but uncompleted."  It was stated that there are some 2600 wells in the Permian Basin that are DUCs.  As I drive into Fort Worth I see an equipment yard chock o block with fracking equipment.  Big old V-12 diesel powered pumps just sitting there.  It is a sign of the times in the oil patch, declining activity.  Soon the Aresco's will be selling DUCs or buying them, I do not know which.  I heard Eureka went broke and left a fellow E&P company holding the bag.  I am guessing there will be a lawsuit to divide the remaining spoils.

From statements on the Aresco LP website, this appears to be the West Baton Rouge Deep Tuscaloosa well that they have a working interest in.



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