Replies to This Discussion

Permalink Reply by RBH on November 19, 2009 at 19:04

Any news on the 1st well..the Barton #1H

Permalink Reply by DJG on November 19, 2009 at 19:26

I haven't seen any results yet on that one. Perhaps someone else out there has info?

Permalink Reply by adubu on November 24, 2009 at 2:12

the Barton #2H is amended Barton #1H same well permit with added acres and change in lateral leg

Permalink Reply by DJG on November 24, 2009 at 7:29

Cool, thanks.

Permalink Reply by Alamo on December 3, 2009 at 15:15

A strategy that mineral owners(MO) may want to consider is negotiating leases say through the base of the Travis Peak (the base of the Cretatceous) and no deeper. With the the several producing formations in East Texas (James Lime, Pettet/Sligo, and the Travis Peak/Hosston, representing the primary ones), a Gas Operator can offer the MO a relatively minimal amount of bonus money, drill a deep test then complete it in one of those upper zones and let it produce a barely commercial amount of gas to HBD while it goes after more acreage. The MO gets the bonus money and little else, and may be missing out on a considerable royalty return if production had come from the Cotton Valley, Bossier shale or one of the Haynesville units. Eventually the Gas "Operator will either sell the deep rights or shop those rights around looking for a lucrative joint venture (JV) corresponding with the information garnered on the MOs nickel in the deep vertical test These shenanigans are legal and will effectively tie up your minerals while the original lessee can take all the time he or she needs to either properly develop your minerals at some later date--which they, not you, control or cut a deal (which you don't participate in) and you sit back and wish like hell you had done otherwise.

I will not lease minerals in East Texas for the current $350-500 that's being thrown out there unless its for those upper formations only. If they want CV, Bossier or HS I expect money corresponding to the value of the minerals---after all, you are selling 75 per cent of YOUR minerals.

That spiel about low gas prices is temporary, but the average land person would have you believe they will be low forever--don't fall for those lies. Those guys or gals fail to mention that THEIR costs have DECREASED almost 50 per cent during this price softening period. Rig day rates have about halved since last summer. Also, the drilling experience gained since that time has resulted in 30 to 40 per cent decreases in days it takes to drill a 12,000 to 14,000' well.

If what you own wasn't valuable to them they wouldn't be contacting you. If its valuable to them its likely as valuable to someone else although its painful to pass up a dollar in "hand".

Bottom line, seriously consider depth limiting clauses before you give away rights to the center of the earth and let them pay ALL production costs. Everything is negotiable make the best of that process.

Permalink Reply by jffree1 on December 3, 2009 at 15:28

Thanks Alamo... words of wisdom.

Permalink Reply by ledlights on December 3, 2009 at 16:25

I believe the most speculative part of this is game is how long it will take for gas prices to significantly appreciate. I am concerned that the oversupply is going to last longer than we would like. Part of the reason may wind up being a global glut. Unless the USA makes a significant move toward increasing our use (and uses) of NG, it is not at all clear to me that prices will rebound even within the next 3 years - IMHO.

Permalink Reply by jffree1 on December 3, 2009 at 17:45

I don't know... I found some articles from just before Thanksgiving about the LNG terminals at Freeport and Sabine Pass. They both got permitted to re-export LNG shipments coming into their storage because the price in Japan is over $8/mcf. So maybe someone will decide to turn us into a net exporter of energy, LOL. That might help the price...

Permalink Reply by Les Bamburg on December 3, 2009 at 19:20

Jffree, the proposed Kitimat LNG receiving terminal in British Columbia was repermitted as a liquefaction and LNG export facility. It is not yet certain the plant will be built but EOG has committed some of their Canadian production as feed gas.

Permalink Reply by jffree1 on December 3, 2009 at 19:33

Hey, that's good news! I found that Freeport article by following embedded links in a current story about the first LNG shipment coming in since spring. It made me feel better just knowing that the gas wouldn't be adding to our oversupply. I heard Jim Hackett (Anadarko) say in an interview (months ago) that it wouldn't be a huge step to re-export from these terminals and now it looks like it will be happening. And exporting to avoid a glut on our market only makes good sense, to me.