Replies to This Discussion

Permalink Reply by mick on April 6, 2011 at 17:59

I have a lease with Chesapeake Energy.They will not be renewing any leases north of I-20.The numbers are not there,due to gas prices and they are finding the shale is larger further south.I wish i had better news for you.God knows I wish they were.All we can do is be thankful we received our bonuses.If Obama and his administration could only see that Natural Gas is Americas answer.The jobs that could be created.!Lets hope they work out differences soon.Natural Gas could literally turn our economy around within just five years.

 

Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2011 at 1:45

The problem with shale development north of I-20 is more about clay content and less about the price of natural gas.  All the major shale players in the Haynesville are ceasing to lease new lands and only leasing where they plan to drill in the near future.  A number of areas with proven quality shale also have leases which are being allowed to expire.  The companies that drove the competition for leases in the first phase of the Play now have huge proven reserves of dry shale gas.  They simply do not need any more.  And they need to go drill wells that produce oil and liquids.

Permalink Reply by P.G. on April 7, 2011 at 3:23

How far north of I-20 are you talking about. I'm in T 17n and R 15 west There are a lot of wells permitted in the township..just not my section..are they letting leases expire in the few sections not permitted?

Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2011 at 3:45

It appears that Chesapeake is holding on to W and SW Shreveport.  The portion of 17N - 15W south of I-20 has a number of relatively new permits and several wells Waiting On Completion.  That portion north of I-20 appears to be reasonable productive on the west half as it adjoins 17N - 16W which is definitely economic.  I-20 is often used as a dividing line for the Play because it is well known by so many laymen.  However when speaking of Caddo and Bossier parishes, it is not a straight east-west line.  The stretch from the TX. line to downtown Shreveport is 7 miles further south than the stretch from Bossier City east.  Portions of all the 17N townships from 16W to 9W may turn out to be attractive to energy companies.  The east-west line of the 17N townships is a more accurate line IMO.  It is just not often used in discussions because so many people do not know where those townships are located.  Everybody knows where I-20 is located.

Permalink Reply by P.G. on April 7, 2011 at 4:03

How close to the expiration of the lease's primary to they usually go if they plan on exercising their option?

Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2011 at 4:17

It's a case by case decision.  Extension options may be exercised any time before and up to the last day of the primary lease term.  If you are close to that date, call your lessee and ask if they have plans to extend the lease.  They will often tell you.  If it is a number of months off, you may have to wait for that decision to be made.

Permalink Reply by P.G. on April 7, 2011 at 4:32

Thanks!

So if they let it expire, it wouldn't be because they overlooked it, right?

Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2011 at 4:35

That happens infrequently but it is possible that an extension deadline will missed.  You can always call and remind the lessee.

Permalink Reply by P.G. on April 8, 2011 at 9:05

Do you think if the lessee decided to extend the lease through the option it would be a good indication that a well is going to be drilled in the section?

Permalink Reply by SharonB T18N R15W S8 on April 7, 2011 at 10:58

Shucks.  I missed my opportunity last time and I was sure hoping for another chance to lease.  Kicking myself in the butt on this one big time. 

Permalink Reply by Skip Peel - Mineral Consultant on April 8, 2011 at 9:09

Yes, P.G. but it is not a sure thing.  For example EnCana exercised options on leases in a portion of the play one month and let others immediately adjacent expire the next month.  I suspect that their opinion of the prospective nature of the shale there did not change but corporate development plans changed.

Permalink Reply by P.G. on April 8, 2011 at 11:47

What kind of a relationship, business wise, would the lessee have with a driller if the lessee was not the driller..?

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