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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 7:58

Jessee, I suggest you contact Hunter Energy directly.  (318) 255-2400  I can't imagine any other company being interested.

HUNTER ENERGY CORPORATION

Business Corporation

RUSTON

Active

Previous Names

Business:	HUNTER ENERGY CORPORATION
Charter Number:	34333497D
Registration Date:	6/5/1989

Domicile Address
	111 KILLGORE ROAD
	RUSTON, LA 71270

Mailing Address
	P. O. BOX 1689
	RUSTON, LA 712731689

Principal Office Address
	111 KILLGORE ROAD
	RUSTON, LA 71270

Status
Status:	Active
Annual Report Status:	In Good Standing
File Date:	6/5/1989
Last Report Filed:	5/7/2019
Type:	Business Corporation

Registered Agent(s)

Agent: STEPHEN OTIS SMITH Address 1: 111 KILGORE ROAD City, State, Zip: RUSTON, LA 71270 Appointment Date: 6/5/1989

Officer(s)

Additional Officers: No

Officer: STEPHEN OTIS SMITH Title: President Address 1: 111 KILGORE ROAD City, State, Zip: RUSTON, LA 71270 Officer: STEPHEN HUNTER SMITH Title: Vice-President Address 1: 111 KILGORE ROAD City, State, Zip: RUSTON, LA 71270

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Permalink Reply by Ann Edgerton Darling on January 26, 2020 at 8:40

Skip,

Can you contact me on a private page.  I have a couple of questions for you.

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Permalink Reply by Jesse Joyner on January 26, 2020 at 8:50

Thanks, Skip. With low NG prices (which have dropped even lower these last few weeks), the recent leasing in the Ashland Field has made absolutely no sense to me, although there has been some legacy shallow oil wells in the NW vicinity. Now, since CHK seems to be out of the picture, would you want to go way, way out on a limb and make a wild guess as to the real company that's been engaging Hunter to lock up this land? Years ago, I saw Hunter start early leasing on some Bistineau locations that eventually had spudding/aggressive operators show up from out of the shadows once the real, higher-money leasing had started in earnest.

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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 8:58

Jessee, I agree this is a surprising offer.  Here are my thoughts based on what I know, what I suspect and what Rock Man has offered as to the nature of Haynesville Shale prospects in the Ashland Field based on the few existing wells.

I can not see any existing Haynesville operator having an interest in more dry gas under the current and anticipated short term projections for natural gas.  I will point out one somewhat recent exception - Comstock in the Greenwood-Waskom Field, Caddo Parish.  I suspect that the reason that this NW extension to the defined play area occurred because of NextEra and the company's interest in acquiring natural gas supplies for their electric utility business.  NextEra put up the capital and Comstock acted as the operator of the units/wells.  I don't think this would have happened if it was just a Comstock decision.  So something like this is a possibility in the Hunter Energy/Ashland Field case.

There are land focused energy companies that usually do not operate but speculate in leases, put together development blocks and then pitch operating companies for an overriding royalty interest.  In order to get a good pay day and to put together a package that stands a chance of finding a willing operator, the lease terms must be favorable for both, not necessarily for the individual mineral owners.

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Permalink Reply by Jesse Joyner on January 26, 2020 at 9:07

Skip, I might be wrong, but your thoughts did not fully transmit. It looks like there was a glitch. 

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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 9:09

I was editing, sorry.

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Permalink Reply by Jesse Joyner on January 26, 2020 at 9:41

Thank you, Skip. Much appreciated as always. So it seems to be a bit of a puzzle. Nevertheless, I suspect if there's any legitimacy to the Ashland offers that we might know more in the next few months per the new fiscal-year leasing budgets kicking it. FYI, I dealt with a Samson landman quite a few years ago before the hush-hush HA cat had jumped out of the bag, so to speak. The Samson kid had a fat head, a big ego, was too pushy, and was basically a spoiled citified ass. I refused to lease with Samson per his bad attitude and peanut lease terms. Later, it turned out to be a wise move on my part when the big-money HA terms fell out of the sky. That said, in the past Hunter has employed a much more reasonable attitude. They seem to have a levelheaded, country/farmer-friendly style.

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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 9:46

My guess is that Hunter Energy is not a speculator but is representing a client.  Now the question would remain, is that client a speculator or an operator.  I don't think we will see anything of substance happen this year.  I think that regardless of the other lease terms, Hunter Energy will require an option to extend and that the client has no intention to pull the trigger on anything in the short term.

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Permalink Reply by Jesse Joyner on January 26, 2020 at 9:56

Sharp call, Skip. Makes sense. The only ray of hope that I see is the higher NG future price for the fall/end of 2020. Yet the Permian glut could bring those Wall Street speculations down below $2, too. So I guess GHS is going to have some eyeballs watching to see how this will eventually play out. 

Permalink Reply by Bob Zimmerman on January 26, 2020 at 9:15

It is possible some of these LNG companies are prepared to ship product at below cost simply in order to lose less money than shutting down their wells. Some others have contracts to deliver at contracted rates. Sort of like the old take or pay scheme during regulation of natural gas.

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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 9:29

All LNG exporters of which I am aware acquire their natural gas on the open market with the partial exception of Tellurian.  Tellurian operates some Haynesville Shale units that were original Samson Contour drilling units.  Those units only had the original unit well needed to hold leases in force.  Tellurian has since drilled a few wells.  I suspect they acquired some mid-stream commitments along with those producing units and need the barest minimum of production to cover commitments and overhead.  We have discussed on several occasions the fact that Tellurian claimed that they were going to be able to source gas at $2.30/mcf.  That sounded like a potential problem for Tellurian lessors getting paid less than the current market value at the time.  Things change but then again all that matters is what Tellurian is paying compared to the open market once they start sending their gas to their export facility.  As to shipping below cost, I guess that might be a short term possibility I just don't think it could be sustained for any length period of time.  Shipping commitments might push them into bankruptcy in short order.

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Permalink Reply by Skip Peel - Mineral Consultant on January 26, 2020 at 10:39

There are always plenty of those who wish to project/model future prices.  Although the NG futures price is a basis for paper trades, not physical gas sales, it is somewhat of a barometer of market trends/expectations for prices in future months.  As of today the first monthly futures price above $3.00 is for February 2030.  It's $3.005.  That's too far in the future to put much store in the price but I don't think there will be a substantive price improvement for several years.  At this point I'd be happy for a meaningful improvement by fall/end of 2020 but I'm not betting on it.  And I tell my clients that.

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