Replies to This Discussion

Permalink Reply by GoshDarn on June 28, 2012 at 6:28

Skip, when it comes to government contracts (which includes O&G leasing for various gov. entities) -- the term "fair" is quite specific to the regulations per legal oversight.

Again, the state bid laws, along with fed bid laws -- are way serious when it comes to the administration of such (so as to protect the rights of the public citizenry and their assets).

The term "bid rigging" is yet another issue.

So, the defined term:  "fair and reasonable" -- is, in fact, specifically written into many federal regulations for the contract administrations (Contract Specialists) to comply with.

Whereas the purchasing agents and bid administrations working for the Great State of La. under the Office of Admin. (via the governor) have state laws which have to be clearly adhered to when it comes to state bids for the various state depts. 

Ergo, the law is the law and quite specific.

So, the term "fair" to you per your POV as an indie landman is taken to mean such and such -- whereas the term "fair" (as a legal term) might be taken to be a precise legal term, and thus defined differently per a judge in court.

And, from what little I know, I see that you've been invited to testify in court at least once (that I'm aware of).

So, you might ask a lawyer how he defines the term "fair" or ask a judge since, as far as I know, you're not a lawyer. 

Permalink Reply by GoshDarn on June 28, 2012 at 6:39

Dion:

Think of it this way.  You're on the record.  There's also a psychology (call it an investigative method) to researching facts and/or biz procedures/processes.  Plus, GHS is here to educate.  That's the point.  Plus, we hope the truth is told, too.

We hope.  (And you do, like I've repeatedly stated, certainly appear to be honest.  Get it?) 

Note also that you may want to read your own decay into mudslinging (bad term, of course) and the words you employ and realize that egos do come into play and reactions are responded to.  Yet, it's not personal.  (Get it?)

But hey, it's the dang Net.  Think what you will. 

Permalink Reply by Dion Warr, CPL on June 28, 2012 at 16:28

GD:

I am on the record. And yes, there is a process conducted by the press, the public at large, and by members on forums like this one that inject facts, anecdotes, point of view, agenda, bias and conjecture into the cauldrons of discussion and debate and attempts to resolve such issues as "fairness". As I think Skip well points out: fairness in the context of a contract, when adjudged to be legal and binding, is what is agreed to by the parties, as each party may be advised by learned counsel as they may elect to consult same. Fairness in the context of public opinion is all about perception. Not to put words in your mouth, but it would appear that for you, fairness is somewhere well north of what your family had settled for as sufficient for generations of oil and gas deals, and the high water mark as set out by the frenzy which was largely initiated by contractors and employees of AKM, minus all of the burdensome and objectionable "vig" and inventive accounting ascribed to same (sometimes it's not worth taking the offer from the guy with the biggest briefcase).

I am on record stating that this number is probably higher than the pre-2008 number, but lower than your number. Why? Because I think that the best deal allows for orderly development, at a reasonable pace, without the explosions and implosions of the bubbles of boom and bust. My view is that boom and bust is fair to no one. It does not promote fair and equitable development to the benefit of all concerned, and breeds mistrust and apprehension in the pursuit of same. The dramatic and nearly instantaneous collapse of activity is as much of an indicator of the unsustainability of such bonus offers far and above what could be supported by reasonable development. Regardless as to whomever wants to believe that, the market certainly confirmed that by the vicious snap of the chain of the laws of supply and demand.

Fairness IMO is also measured by reasonable developmental timelines as well. The damage done to ROI caused by excessive acquisition costs, downward economic forces and severe upset to the balance of supply and demand created by the secondary rush to HBP vast amounts of lease acreage bought at high value have served to crush any widespread incentive to progressively develop the area. The effect is obvious - vast areas of prime prospect areas held by single completions, with no short-term prospects of widespread secondary development: read, leased for sometimes really high bonuses, many times not, hastily HBPed by one well, with little prospect for a second well (except for those operators with little other options to drill anywhere else), and stuck long-term with little other cash flow in your current agreement.

Meanwhile, in areas not held by production, the mineral owners and companies are now so far apart in views of "fair" or acceptable terms and so mistrustful of each other that countless other possible viable prospects are mothballed by sour grapes and real or perceived excessive cost of reacquisition by industry. That can kill even the most worthwhile plays in areas where such sentiment sets in for years and decades after the fact. What does it mean to the mineral owner? You still own your Haynesville minerals, but left with no company that would be inclined to touch them with a ten (thousand with a 4600' lateral) foot pole.

Permalink Reply by GoshDarn on June 28, 2012 at 16:58

No worries, DW.

Too bad CHK didn't hire you instead of Mark O'Neal (and the associated landmen who were working for Mark and who came a callin').

Yep, a very messy situation, to say the least.  Don't know if you know it or not, since you come and go to GHS and since you seem to do most of your work in S. La. -- but ECA carved out Red River Parish (more or less) to the west; and, for whatever reason, didn't choose to compete with CHK in NW Natchitoches Parish with any lease offers whatsoever to the east.

Zero.

Interesting, is it not?

Plus, HK also stayed away, and there was repeated gossip by different sources (going back to the heyday of leasing) that there was defined colluding going on . . . specifically in La. between CHK and some of the other operators.

Yes, price fixing was the word on the street. 

Repeated sources coughed it up.

Ergo, if that guy up in Michigan with the 20,000 acres turns out to have a solid case against CHK and ECA -- then there's at least a possibility that a jury of peers might feel the same way in regards to possible similar circumstances in La.

So, who knows what the future might bring.  Wouldn't be a bit surprised that some sort of something could end up in court. 

We can wait.

 

Permalink Reply by Dion Warr, CPL on June 28, 2012 at 19:07

GD:

I dunno. I've never solicited work from CHK, they've never contracted for my services, nor have I been contracted to anyone to do work for CHK. I've never worked for Mark, but I can't say that I wouldn't be averse to discussing it if the topic ever came up. From my affiliations and contacts with AAPL and our local landman chapter, I've never heard of any allegations of misconduct or unethical conduct involving him. You obviously feel differently about that, and the only thing that I can suggest to you is to contact AAPL about your concerns. Members sign on to a code of ethics that the organization takes quite seriously.

Messy situation? I agree wholeheartedly. I was fortunate to have been working steadily in another area during the time that things became quite messy. For better or for worse, deserved or not, many an industry person, from companies down to the field landmen were painted with a broad brush in an ugly color, which for some I think if certain landowners and mineral owners had their way would have the consistency of tar with a healthy measure of feathers thrown on top for good measure. IMHO, even the best actors can have their reputations sullied in such a contentious, pressure-filled, and hostile environment.

Notice I said that I doing any leasing in the area for any client. I am least familiar with the leasing situations occurring in the area at that time, assisting with friends and in-laws with their leasing situations, as well as giving advice to some members of this forum who sought my advice and/or assistance (not initiated or solicited by me). I have also had occasion to work for industry clients having holdings within certain areas within the HS in a due diligence capacity, and not tied directly to leasing. So I feel well versed enough about general events as well as specific areas to comment on your post by saying this: inductive reasoning founded on anecdote, hearsay, group think and innuendo does not make for the most compelling case. The fact that not all of the companies leased competitively against each other in all of the areas does not point to collusion; on the contrary, it points to a conclusion that each of these companies viewed the area and its high-value targets at least slightly differently. Many of them fought vigorously in the so-called core areas; that much the G&G groups came to similar conclusions upon, and thus competitive bidding would naturally have been most fierce there. But one need look no further than each company's initial core maps and projections to note their differences in lines of thought, and their leasehold positions by and large appear to reflect their convictions in such beliefs.

Specifically, ECA, for instance, had staked their core near Martin in Red River Parish from almost the beginning, and always appeared to have highlighted a more southeast trend and core area than their competitors. In general, they proved to be more averse to bidding up in their buy areas even in the face of competition, and certainly stayed very disciplined and conservative in their offers when facing no competition. Please, go back and examine this for yourself.

Specifically, I am at a loss to respond to the idea that HK "stayed away" from CHK. Perhaps you are merely limiting this to NW Natchitoches, but my reading of the leaseout was that competition between HK and CHK in their bidding wars was a primary mover in the increase of bonuses to stratospheric heights in many areas. CHK may be aggressive, but even they wouldn't bid against only themselves. Again, my reading of the initial projections were that HK had a more Desoto/N Sabine bias in their thinking, with some healthy acquisitions north and northeast of the Elm Grove structure and buyouts of KCS and WSF positions in the same vicinity. Again, I don't see such a move as being evidence of a conspiracy to fix prices or collude.

To sum up, just because not everyone got what they wanted, or not everyone was having their door knocked down everyday by the next bidder with the next higher offer doesn't conclusively prove collusion; just because someone playing the slots on a machine that's due to pay out that doesn't, doesn't make the only plausible explanation be that the machine is rigged. Even having it be the "word on the street" won't make it true.

Anyway, good night and good tidings to you. I feel like we've talked enough to be beyond being offended, and can just agree to disagree, or maybe just meeting at the same fence from opposite sides.

Permalink Reply by GoshDarn on June 28, 2012 at 19:25

Good analysis, Dion, i.e., an honest appraisal.

True, HK was aggressive.  And true, my take on it was simply focusing on certain intel as to the specifics of NW Nat. P.

Have dealt directly with landmen from HK, KCS, CHK, and a number of the other operators (per the numerous bits and pieces of the complex family mineral estates that I manage and negotiate).

Boots on the ground in RR P. per family leasing there to ECA in multiple hundreds of acres.

So, have a reasonable amount of solid sources and connects, even deep into B.R. and S. La., too.

Plus, know a good bit more than I'm explaining about certain folks, also.

In any event, I'd recommend you, from what little I do know about you professionally . . . e.g., via your thinking via your thought patterns via your responses and via your good will of not succumbing to non-pro runaround.  And, of course, this opinion is only based upon the number of years that I've read your posts.

Also, I do think KB would also recommend you, is my guesstimate.  And I truly respect KB's honesty and serious concern for truth.

Again, no worries.  Your sharing is much appreciated.

Take care.

GD 

 

 

Permalink Reply by Henry on June 26, 2012 at 22:53

Layla -- Why watch re-runs on TV this summer, when you can watch the new version of "Dallas" (TNT, Wednesday nights)?  JR Ewing lives again!  I don't know whether JR or Aubrey is more entertaining.  Each week now, we get to see both of them embroiled in crazy, questionable schemes.  The only difference is Aubrey's schemes are real.

Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2012 at 6:49

I am not speaking of government contracts as few GHS members fall into that category.  Mineral owners don't get state leases. Nor do their private transactions fall under the definition you espouse.  When the term "fair" is used in site responses it is almost always in reference to how an individual defines the term.  Trying to shift the discussions to state leases will not work.

I have great respect for Dion as his actions here on GHS for a number of years show him to be experienced and professional.  He represents industry clients.  I on the other hand I represent mineral owners.  Yes, on one occasion as an expert witness for a private land/mineral owner plaintiff in litigation against an industry defendant.  So when those of us who perform land work for a living as professional competitors take exception to your incessant demonizing of the industry as a whole with little proof by way of comments that you actually know anything about leasing or the law, I hope the membership will take note.

Do you, Get It?

Permalink Reply by GoshDarn on June 28, 2012 at 7:08

Yes, many do get it, Skip.  And you might be surprised by how many of us actually do get it, too.

But again, no one is demonizing anyone one.

Please check out the thread topic.

Last I checked, no GHS member started this CHK scandal, yet many of us have had land in leasing negotiations with CHK and Mark O'Neal's landmen very specifically.

Maybe you're forgetting the "Ashland" threads, Skip.

Maybe you're too busy or too stressed.

We have big dogs in this big legal fight, Skip.

Do you?

Think, Skip.

But, hey.  Post what you will.

Most of us are here to learn and to manage our mineral estates.

Oh, and you yourself have used the state lease bids and awards as intel and references to landowners -- repeatedly.

So, if you don't connect the dots as to why state leases are important as a barometer to "fair" bids or a rough idea of value -- be that as it may.

Feel free.

Then again, I'm guessing you never worked for the feds or the state as a contract administrator, nor have you ever had a state job.

I'm guessing.

Yet, I'll give you odds that state folks are reading GHS. 

Permalink Reply by Skip Peel - Mineral Consultant on June 28, 2012 at 7:15

Yes, I will continue to respond when I see comments that are potentially harmful to mineral owners.  More than a few have ended up seeking my counsel after mistakes engendered by poor advise from anti-industry members of GHS.  I don't use state bids as examples of what is fair.  I point out that the bids are the only public record of bonus offers which can be used in negotiations by mineral owners.  IMO, working for the feds or the state is no substitute for actually having experience with managing minerals.  Whether state folks read GHS or not has absolutely no relevance to the discussion.

Permalink Reply by GoshDarn on June 28, 2012 at 7:27

Duly noted, Skip.

And you have done a tremendous amount of good on GHS, and most of us ol' GHS timers respect your effort and time investment (as I have several times posted).

Also, you have repeatedly stated you own no land and/or have never signed a lease (or some such statement).

Well, some of our families -- like I've posted, going all the way back to before you ever signed on GHS -- some of us old La. families have been signing leases back to the early 1900's and the very first oil boom.

I've been negotiating leases and inking deals for over 25 years and manage a complex mineral estate/s.

Plus, I have worked for various gov entities.  And most know there are excellent members with varying backgrounds who have the best of intent to help others and not just to feather their own nests or to make any money at all off the other members.

Via private advising, I have for years helped many members via private e-mail. 

No charge.

Never.

And even certain members have offered to pay me, but I have always refused. 

Total freebies.

So, Skip, there might be much you don't know.

Take care.

 

 

 

 

 

Permalink Reply by Hopeful About Natural Gas on June 28, 2012 at 19:59

GHS is a unique collection of owners, professionals and ________s.  A blog about o&g could be a perfect place for professionals to fleece newbees who come looking for advice - yet I have never seen any hint of that happening on GHS.  Instead, the industry folks seem to try and outdo each other for accuracy.

 

New people have gotten thousands of dollars of good advice, simply for a polite post asking for help.  There have been a handful of times where someone was clearly mining the membership for their business and those were quickly squalshed by other professionals.  Maybe it's the balance of people from different parts of the industry but from a common region that makes GHS work?  Maybe GHS is simply unique.

 

 

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