Replies to This Discussion

Permalink Reply by The_Baron on November 6, 2008 at 6:08

Just look at their haynesville well sec. 10 15N-16w (ser# 236642)

Its making 173 mcf a day. Classic example why no one around here bothered with the shale. Until the tech. and experiance to drill a horz. well and complete it were used by the big oil companys, its just a waste of time and money.

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Permalink Reply by Bobi Carr ("parker") on November 6, 2008 at 6:28

????

If they drill and there is poor production, can't they hold the lease indefinitely UNLESS someone challenges them to release it?

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Permalink Reply by The_Baron on November 6, 2008 at 6:37

The hope is that the well will go dry or not produce. Its hard to break a lease over a well that is producing even when its in low amounts.

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Permalink Reply by Bobi Carr ("parker") on November 6, 2008 at 6:48

Baron,

Even in that case, wouldn't they have 10 years to come back in and try to do something else to hold their lease?

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Permalink Reply by The_Baron on November 6, 2008 at 10:34

No. once the lease is past the primary term, it will expire with out production. They may be able to hold it for a short term (1-2 years depending on the lease) by paying shut in rentals.

The ten years is for prescription of mineral rights. The clock starts ticking once the well quits producing.

Permalink Reply by Grice on November 6, 2008 at 7:09

Baron, just for fun, I decided to check on the well that you referenced. The original application dedicated the well for the CV zone, but has now been rededicated for the HS zone. Seems they may have something worth keeping an eye on.

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Permalink Reply by Bobi Carr ("parker") on November 6, 2008 at 7:10

Or a pugh clause to negate.

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Permalink Reply by The_Baron on November 6, 2008 at 8:32

They have done this with several wells permitted as cotton valley. The leases probally have a vert. pugh that prompted this.

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Permalink Reply by Spring Branch,mineral owner on November 6, 2008 at 12:55

I agree that Fossil/Tauren/Cubic could just do nothing while waiting for the value of their acreage to go up, but if the price of nat gas drops to $4 the value could also go down. Who here doesn't believe that they could have sold out to Chesapeake 3 months ago for much morre than they could today. In the meantime, their royalty ownwers suffer from the fact that a nothing company has the leases on their acreage while the other sections are getting drilled up by Chesapeake and others. Believe me their lenders are prob putting heat on them to sell.

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Permalink Reply by Grice on November 6, 2008 at 13:21

Last month, Cubic hired RBC to handle any potential sell of the company. The simple act of hiring of that firm, indicates a sell is likely. Either in part, as a whole, there may be hope.

Permalink Reply by Spring Branch,mineral owner on November 6, 2008 at 17:25

Grice, you are correct about Cubic hiring RBC which is a sub of the Royal Bank of Canada. The more I think about it, they probably gain nothing by having Chesapeake and others drill around their acreage. Chesapeake and the other "majors" have drilled enough wells now that they can probably tell you within a foot or two how many feet of shale there is in every one of Cubic's sections. They can probably also tell you the eur's of each of Cubic's sections. The main variables in making a bid for either Cubic outright of for Cubic's acreage is nat gas price assumptions and availability of borrowed money IMHO.

Permalink Reply by Kenny on November 6, 2008 at 18:28

Couldn't agree more, they will sale--it's just a matter of time, wouldn't be suprised if Chesapeake sales too--Money talks no matter who you are, these guys are in a position to make some big bucks, and by the way--I have been receivng royalty payments--

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