Replies to This Discussion

Permalink Reply by Two Dogs, Pirate on August 27, 2013 at 16:59

Work in the O&G industries and make good money until  they go on their 10 year boom and bust cycles. I feel we are moving into a bust cycle even with oil nearing $110 per barrel. 

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Permalink Reply by Keith on August 28, 2013 at 1:03

Two Dogs, I too believe that we are headed to pop this bubble especially in our shale plays such as the Eagleford and the Bakken. It's just a gut feeling but it's kind of long in the tooth.

Now as far as 10 year cycles check your long term rig count versus oil price charts you'll see the cycle is getting shorter and shorter between boom and bust. It was claimed by my bosses that it's prejected to be so short in the future that they can't lay off people like they once would, because they won't be able to keep them them off the payroll long enough to make it worth doing. If this is the case you could see the industry shift to contract workers more than ever.

My prediction is possibly a real good oil price spike before October 30th with a middle east war coupled with a hurricane or two. It will be followed by the downturn in price and then on land drilling for oil. Now with a near 70 percent decline rate in shale wells I think the the downturn will be just long enough to damage the Eagleford and the Bakken's ability to get hand back as quickly as they would want to.

 As far as my work area (deepwater GOM) I think we would be wise to pick up all the good workers in the Shale plays that get displaced and hold on to them. Deepwater drilling has long term rig contracts and a longer time horizon for dealing with shorter wave cycles in energy prices.

How will this affect land owners dealing with energy companies? I think we'll have to hold on for a rough ride, but in less than two years someone has to drill or get off of the pot on my land. It's all good.

 

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Permalink Reply by Henry on August 27, 2013 at 23:13

I came across this last night... it makes what CHK is doing in the Haynesville look downright kind to royalty owners.

http://www.reuters.com/article/2013/08/28/us-chesapeake-marcellus-i...

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Permalink Reply by JHH on August 28, 2013 at 0:34

Great article Henry!  Have not been to the site in a while.  It's been very quiet over here in East Texas.  jhh

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Permalink Reply by Henry on August 28, 2013 at 23:18

Even the Washington Post comes out against CHK on this issue....

http://www.washingtonpost.com/opinions/fracking-contracts-can-leave...

And here's a link to the ProPublica article...

http://www.propublica.org/article/unfair-share-how-oil-and-gas-dril...

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Permalink Reply by Kaufman on August 29, 2013 at 2:12

Yes, so sign a lease and get 200-300 bucks an acre for the possibility of getting screwed sometime within the next three years with an option to get screwed for the same amount of consideration for an additional amount of time. These guys got them a big scam.

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Permalink Reply by 1kw6x71km1v37 on August 29, 2013 at 5:26

Costs necessary to get wellhead gas to a buyer should be paid by the operator, the lessor remaining free of all charges to drop out the water and oil and compress gas for transmission to the buyer.

Point of transfer can be at the wellhead, or miles away at a gathering plant, or hundreds of miles away at the end user. Typical examples would be Haynesville Shale gas sold directly by the operator to a school system in Kansas City or to an aluminum plant in Tennessee.

A lessor who still owns his gas at this point can be liable for the cost incurred at a gathering plant to turn wellhead gas into pipeline grade gas and deliver it to the customer.

But, lessor must also be paid royalty calculated on the actual point of transfer of the gas from the operator to an unaffiliated-in-any-way arms-length transaction buyer. This is the point at which some really profitable lying can start.

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Permalink Reply by Keith on August 30, 2013 at 15:10

http://www.reuters.com/article/2013/08/30/chesapeake-marcellus-idUS...

 

It looks like Pennsylvania might TRY to move in the right direction.

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Permalink Reply by G.L. Jenkins on August 30, 2013 at 15:33

the best way to handle the problem is not to lease your property. The Joy of having them beg is worth more than any royalty check.

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Permalink Reply by ROBERT STEVENS on August 31, 2013 at 3:53

Beg?

You better own the whole section or the 2 sections involved in case of a slant well to stop the drilling.  The days of 10, 20 or 40 acre well leases are over.  This applies to highways, Electric Lines, Pipelines, etc.  Still I would rather be a land owner than not.  Obama still is working on share the wealth though.

Just look at "Brown Dense Rumors" and see how Oil Companies (Will Drill) handle small acreage owners and the big lease owners.  And the Drilling Company handles the expense account. 

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Permalink Reply by Kaufman on August 31, 2013 at 4:01

If a landowner holds anything approaching 10% of the surface and minerals of a large two section unit, the landowner can actually have leverage and influence a unit application or pursuit of a permit. If enough landowners realize this, there will be some begging. It will be reluctant and not outright pleading, but it will be very inconvenient for the arrogant sobs. It pays to not sign, especially with the first few visits. These people are not gods, though all seem to think they are.

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Permalink Reply by G.L. Jenkins on August 31, 2013 at 4:08

I think I am in a good position, I only have 40 acres and it is surrounded by homes sitting on 2 or less acres. Not sure what a slant well is but might it be a well drilled from off the property which slants to the property I own.

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