Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on February 1, 2014 at 9:08

Operators seem to do a good bit of testing landing depths and frac cylinder designs in early wells.  The depth definition for both the HA And CV in this area of the Caddo Pine Island Field are about 1000' vertical feet of rock if memory serves.  That's a lot of interval to explore. 

There is an additional petrophysical characteristic that will have to be addressed in this northern periphery of the Haynesville Shale - clay content.  The early Haynesville Shale wells in this general area produced at a third to a quarter of what the average well of that time produced south of I-20.  Higher clay content makes the shale less brittle and more difficult to frac.

Permalink Reply by jim weyland on February 1, 2014 at 9:57

yeah, i don't think they it the brown dense for nothing. i'm sold it's a silty (clay) limestone or dolomite, i can't recall which.

Permalink Reply by Skip Peel - Mineral Consultant on February 1, 2014 at 10:10

jim, I don't understand the Brown Dense reference as the APC Jitterbug project is a CV/HA play.  There was some speculation about the Brown Dense when the leasing initially got underway but that was coffee shop talk with no factual basis.  The general lack of knowledge by many of the land owners in N Caddo was certainly a surprise to me.  The lack of interest continues to be reflected in the relatively few members who post in the N Caddo Group.

Permalink Reply by jim weyland on February 1, 2014 at 10:25

when we were being leased we dealt with two outfits fronting for apc.

as an aside, i was surprised that with two contiguous sections we dealt with two outfits, one for one section and another for the other section.

both agents cited the brown dense as what apc would be going after.

but, maybe the leasing agents were taking their coffee at the aforementioned coffee shop.

Permalink Reply by Skip Peel - Mineral Consultant on February 1, 2014 at 10:33

Maybe.  They certainly didn't know what they were talking about as a review of the units formed to date would clearly demonstrate.  It escapes me what they hoped to accomplish by associating the lease offers with the Brown Dense. Having more than one land company acquiring leases for a mid-major like Anadarko is common.  They employed 4 separate land companies to assemble the N Caddo/Bossier acreage, 5 if you count another land company which represented them is acquiring one or more state leases.  One had only to look at the portions of the Anadarko presentations that dealt with their CV and HA development in E TX to get an idea of what they were after in N Caddo. 

Permalink Reply by jim weyland on February 1, 2014 at 13:07

skip, 

two questions/requests, sir, 

a) can/would you provide me with the site address, you've mentioned before, where on a weekly basis la rig employments/engagements are shown, and;

b) can/would you direct me to the site or sites  where i can find the la rules/regulations and/or governing law regarding the payment of severance tax.

specifically, i'd like to learn about what all hydrocarbon substances are recognised as taxable, and how, and their rates of taxation.

note: bonus points for a state site giving examples of their calculation. 

i'm especially interested in this second matter because i've seen posts on this site that suggest to me that the pelican state may not be properly recognising liquifiables and other post wellhead/lease site hydrocarbons upgrade values for tax purposes.

imo, the state is the roi's best friend. if the state is getting accountably paid, then then the roi should also be getting accountably paid. 

jim weyland

p.s. a third question, if the state was/is a lessor in a drilling and spacing unit, would their payment records and calculations thereto be subject to a state freedom of information type law?

Permalink Reply by Skip Peel - Mineral Consultant on February 1, 2014 at 14:07

http://www.rigdata.com/index.aspx

http://dnr.louisiana.gov/assets/TAD/data/severance/la_severance_tax...

My contract with Keith limits the number of questions that I answer per discussion reply to two.  Not really!  LOL!  Where should I send your bill, jim?

ps.  I believe that the information regarding state royalty income is available in the SONRIS databases and does not require a freedom of information act.  I can't point you to it because I never use it.  My clients are land/mineral owners, not the state.

Permalink Reply by Two Dogs, Pirate on February 1, 2014 at 14:52

You want to see the biggest screwing, then look at the Fed BLM leases.

Permalink Reply by jim weyland on February 2, 2014 at 10:07

skip, thanks for the requested links.

having now read the severance tax document, i am very disappointed and surprised as to the manner which the pelican state elects to levy the tax on gas volumes, not heat content, and to completely ignore the value of the liquifiables altogether. .

i'm cool with the % of market value methodology for crude/condensate. that's how severance is calculated in other jurisdictions. I believe TX gets 6.25% on oil bbls and gas MMBtus

by taxing at a fixed rate per Mcf, the state is ignoring that the value of the gas is in the btu's not the volume. 

an addition the state is giving a pass as to the value of liquifiables, i.e. those substances separated from the gas stream as ngl's via j-t field plant or by central lean-oil plants or by central cryogenic plants. imo, those extracted substances should also be per taxed as a % of market value

i believe the state is in essence giving away untold millions of tax $ per year in ignoring just the liquifiables altogether and by taxing gas at a fixed rate per Mcf.

IMO the state needs to, at least, catch up with the 2nd half of the 20th century. Gas quit being sold on an Mcf basis many, many decades ago.

note: an exception being gas sold by utilities.in that case it's important to understand that gas is of standard quality, commonly 1000 Btu/cf., altough some of their tarrifs allow delivery of less than 1000 Btu gas. and, in those instances, the customers are getting clipped. after all the utilities are buying pl quality gas nominally 1000 Btu/cf. So they buy 1000 Btu gas and tender you 950 Btu via the gas being commingled with a bit of nitrogen (inert). 

Just think about this hypothetical example of gas taxation based on market value, let's say a well is making 1000 Mcf/d of gas having a Btu content of 1250 Btu/cf. And, let's say the gas' market price is $3.00/MMBtu. 

and for this simple example let's ignore the very significant price uplift from the ngl's, after all, all things being equal, that's why they're being taken out.

OK, 1000 Mcf/d by the state's methodology the tax on gas would be 1000 X  $0.118 tax per Mcf equaling $118 tax.

Now let's calculate it on a market value basis, taking the caloric value of the gas into account:

1000 X 1.125 = 1125 then times a market based tax rate, let's use the TX gas tax rate of 6.25%

1125 X .0625 = 70.3125 now times the market value of the gas

70.3125 X $3.00 = $210.9325

Remember this example doesn't take into account of the processing value uplift ( which with current ngl prices, gas prices and 1250 Btu/Cf gas would be significant)

a last thought, if the state taxed on a market value basis, the RIo's would be able to get the full value of their share of production. they'd be able to get statements of Ngls, ect. and their values.

jim

Permalink Reply by Skip Peel - Mineral Consultant on February 2, 2014 at 10:34

Good points all, jim.  I regularly attempt to point out specific instances where the old rules and regs are not adequate or rational considering the nature of E&P today.  The instances of energy companies pursuing liquids and NGLs are increasing year over year as much of the shale and other tight plays are economic because of the liquid fractions.  The state and private royalty interests should be concerned about how those liquids are accounted for and valued.  To go along with your good explanation here is a chart that helps to show the dollar value of NGLs.

Permalink Reply by caddo lake on February 7, 2014 at 14:02

 Trinidad 133 moving onto location @ Hwy 169 & Haygood Road. Should spud this weekend.

Permalink Reply by jim weyland on February 7, 2014 at 15:11

thank you, sir, for the heads-up.

jim

p.s. some of my best life memories are from times fishing the lake with my grandfathers out of the jeem's bayou club

                                               

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• Next ›
• Page