Replies to This Discussion

Permalink Reply by Kaufman on September 8, 2013 at 6:42

Everyone has an agenda, especially those who purchase mineral rights. Good for you to point out what landowners could be sitting on. If anyone is in the zone they can be in the same position as XTO. Sit back and wait if it can be afforded. Do not sell your minerals, or be quick to sign an agreement.

Permalink Reply by Rock Man on September 8, 2013 at 6:46

Suggestion for your gross revenue calculations of $5.7 MM for the well you reference.

Deducting royalties, taxes, oil and gas handling, processing, lease operating expenses, pipeline hook up and other expenses will probably reduce the gross revenue by 40-45%.

A rule of thumb used by many O&G people is to take whatever O&G prices you are using and only taking about 60% of that number to estimate net cash flow.

Just my opinion on this issue, but this gives one a much more realistic viewpoint as to well payout and what is economic.

Permalink Reply by tony allen on September 8, 2013 at 6:56

Thanks for the information Mark P.

 

 

Permalink Reply by tony allen on September 8, 2013 at 7:30

I would still like to have a piece of that well, working interest or mineral owner.

Permalink Reply by tony allen on September 8, 2013 at 6:51

Lynn,

Thanks for your post. As you said "many others try to give positive info", I would just like to mention  a few more by name. Obed Odom is a mineral owner that has brought very valuable and timely information on a consistent basis. Mr. Aubrey Sanders has taught me more about the O&G business in the last few years than I would have learned on my own in a lifetime. These two gentlemen have no hidden agendas and have only been here to help others and gain information that they would not know otherwise. Yet they have both been attacked in the past to the point that you rarely see Mr. Sanders post or give his opinion. That is HUGE loss to this site and all mineral owners everywhere. I agree with you about the other the other positive posters as well.  

Permalink Reply by Gatrpaw on September 8, 2013 at 15:35

Thanks for your support and encouragement Lynn and also asking the questions that needed to be asked. You have certainly got people to thinking who they are listening to and why they are often being told what they are. Certain people are on this site 24/7 ready and willing to pounce on positive encouragement to landowners in certain areas of rumored or new activity where there are greater possibilities of leasing potential for insiders. I also did some research and found that coincidently, areas where positive info is easily given...all the land is already HBP'd or it has already been widely publicized as being very strong in oil and/or gas potential. Go figure.

I remember a few years ago the select members of GHS trying to discredit me and doing everything possible to discourage me from posting when I first said that some companies were going to look at doing horizontals in sand formations such as the Cotton Valley. They tried to do this by stating that it was unreasonable and "non-economical" to drill horizontal wells in sand formations such as the Cotton Valley. Two or three at a time would get on the site and slam everything positive said about it. I often wonder how those landowners are feeling now about what was said then. I am also glad that Indigo, JW, Devon, BP, Wildhorse, Memorial and other operators didn't read this site and listen to the experts here!! They are drilling more of these wells than Haynesville shale wells now !!! 

A wise petroleum geologist said to me...... With today's technology and resources there are practically no unknown oil and gas fields. Only unknown potential of those fields. If they are leasing land in certain areas they are not looking for oil and/or gas...they are looking at it. It is possible when they look at it today that it may not be economical or feasible to produce now or ever but, it doesn't mean that some day technology and economics will once again make someone want to take another look.

 

Permalink Reply by Skip Peel - Mineral Consultant on September 9, 2013 at 1:33

David, that's revisionist history that cannot be verified because you deleted all your previous posts..  I remember things differently.

Permalink Reply by Francis Mayo on September 30, 2013 at 13:09

Yes, very interesting operation. GD and few other trouble makers were thrown in the pit. Business is business.

Disclaimer: I refuse to take things seriously, especially matters on this board. Fun to monitor and see the way it moves. Pretty transparent, right?

Permalink Reply by Skip Peel - Mineral Consultant on September 9, 2013 at 1:31

tony, I used the term "possibly" on purpose.  I do not know the well cost and it would be unprofessional to declare the well economic based on the AFE for some other well.  There is also the matter of the considerable expense to build a pipeline to this wildcat. If it is deemed to be a great well we should see others drilled now that the pipeline is in place.

Permalink Reply by tony allen on September 9, 2013 at 3:52

Mr. Peel,

I did not say it was a great well, just that it had grossed at least 5.7 million and even using Mark P's 60% rule as net cash it has still generated over 3.25 million after all taxes, royalty burdens, pipeline hook-up and operating expense. Given that it was an open hole completion with out the fracs, tubing, rods, and all other associated cost, I can assure you their AFE was less than 3 million. So it is in the black after only 7 months of production and is still flowing at a very good rate and a good decline curve. I don't know what the eventual EUR will be but this well is economic. XOM will be the one to decide when any new wells are going to be drilled. Since they are "gone" maybe they will change their mind if they ever come back.

Permalink Reply by Skip Peel - Mineral Consultant on September 9, 2013 at 1:27

Lynn, you infer that I am doing something to mislead or cheat members of the site.  That is not accurate.  In 5 years there has not been one specific, substantiated complaint by any member that I cheated them or gave them misleading information.  There are  hundreds however who could relate the times that I have helped them.  Over 491 in fact.  I have always performed simple research, answered basic questions and offered advise at no charge.  That's what I came here to do over five years ago.  Yes, I get information in return from the comments of members and appreciate their willingness to share that information.  I understood before making my first post that I would take fire occasionally from some in the industry and some who were not.  I also chose to use my real name and state my occupation because I thought that was the most transparent and honest way to participate.

  As part of my land services I do on occasion broker minerals but I do not promote that service on the site as it would be a violation of Keith's rules.  Keith and I know each other and he is aware of what I do for my living.  As to the Brown Dense: I have never optioned nor have I ever offered to option minerals under the leases of the LSBD operators or their land companies in any parish or county.  The reason I know a good deal about that exploration and those companies is that I maintain a tracking spreadsheet for clients who wish to monitor the activity.  Owing to the less than positive results to date I have only one subscriber to that spreadsheet and my one and only industry-related client which is a midstream company.  They also subscribe to my other tracking spreadsheet as they look for opportunities to do what they do, move and treat natural gas.  That is the total extent of my "other oil & gas activities".  I will state again here what I have stated previously on a number of occasions, I do not make posts which may be considered negative about a prospective area in conjunction with soliciting business of any sort in that same area.  I will also take this opportunity to restate that hype surrounding the Brown Dense has caused many who come to GHS for information to have erroneous opinions of the prospect and, in some instances, to allow that narrow focus to obscure the fact that there are other, more worthy, geologic targets in those parishes and companies taking advantage of that obsession with the Lower Smackover to negotiate leases covering those unmentioned targets.

Lynn, in your research have you run across an instrument in the public record that you would like me to comment on?  Caddo, Claiborne or wherever?  If so please provide the jurisdiction and instrument number so that everyone who has remote access or would care to visit the clerk of court's record room can see the documents for themselves.  Or you could simply post a copy in this discussion thread.

Permalink Reply by Bubba on September 9, 2013 at 3:50

Tony,

The AFE for the offset to the W-B #2 Exxon well was $2.7 million, however it hasn't been drilled yet. So that is probably a good analogy for expected costs of a vertical with no frac. My economics on the W-B #2 well, using a 95% initial decline, 1.2 b factor and 10% terminal decline results in a PV10 of just under $10 million with undiscounted cash flow of $12.5 million. Roughly a 5:1 ROI not including the pipeline which was reportedly less than $1 million. In other words, very economic.

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