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Permalink Reply by Spring Branch,mineral owner on February 21, 2011 at 13:19

Once the Haynesville is all HBP'd we may see more Operators begin to drill horizontal Cotton Valley wells for the extra boost of the liquids they produce.  As Jay is very aware, it is starting with Indigo.  Goodrich plans to drill several in Rusk Co. this year.

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Permalink Reply by Henry on February 22, 2011 at 1:02

Will we see big parts of the Haynesville sold off, once CHK gets their tracts HBP?

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Permalink Reply by JHH on February 22, 2011 at 1:17

Who knows what Chesapeake is up to.  As Donald Rumsfeld says in his new book... it's one of those known... unknowns.  We know something is up but we don't know what it is... except they are amassing large quantities of cash to balance the books or devour something... or maybe both.

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Permalink Reply by The_Baron on February 23, 2011 at 4:32

"it's really not about drilling."

 

Yeppers. CHK builds up the shale, doesn't matter if the wells will ever pay out. They then sell the whole thing off and move to the next play....

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Permalink Reply by layla on February 23, 2011 at 4:06

Just an observation-Has anyone else noticed that CHK seems to be selling its interests in various ng holdings to out of US firms like BP, BHP, and then the jv or whatever it is with the Chinese? and isn't STAAToil involved in something with someone to buy US resources?   I know you sell to whomever has the cash to buy but if we are looking to try to establish energy independence from foreign oil, shouldn't we also try to be far-sighted enough to realize it might put a crimp in these plans if we end up selling many of our ng resources to foreign corporations?  I am just wondering.....

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Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2011 at 5:11

Natural gas is a domestic commodity.  It can only be shipped overseas to markets where it is profitable to do so which limits the number.  The natural gas glut generated by production of unconventional reserves will slowly stretch around the world.  Most continents are likely to have producible shale.  LNG export will always be a fraction of domestic consumption.  Foreign companies do not invest in American shale plays to take the gas.  They do so to obtain access to the technology to develop their own unconventional reserves and to make a profit.

 

As to CHK developing shale plays to flip them, I have the following observations. 1) Shale plays are assets and as such as bought, sold and traded on a regular basis.  2) Many companies have sold assets (they tend to refer to them as "non-core", meaning it's not the best asset they own, LOL) that they would have preferred to keep.  They simply borrowed too much in the race to acquire the rights to develop shale plays and are now caught in a bind by prolonged, depressed natural gas prices and reduced cash flow. All the large independent energy companies fit this description to some extent, not just CHK.  3) Every new shale play that comes along changes the dynamics of the others.  The Marcellus Play for example has Canadian producers worried regarding  one of their most profitable markets, the NE U.S.  Every company with large natural gas reserves is worried about the coming competition for markets.  And proximity to end users is a big part of that equation.  The Fayetteville is a lesser value natural gas play in a location that is vulnerable to shifting market demand.

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Permalink Reply by essay on February 23, 2011 at 6:49

They almost hit their target of $5bn without even selling the two equity stakes that were announced, Mr. Market likes, to the tune of $33/share as of today.

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