Replies to This Discussion

Permalink Reply by Steve P on July 29, 2020 at 15:49

sounds like a good candidate to swoop in and buy CHK.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on July 29, 2020 at 16:04

I think that Tokyo Gas's interest begins and ends with natural gas.  I doubt they would want to buy CHK lock stock and barrel.  Too many oily assets.  After exiting bankruptcy I suspect we will see a few asset sales by CHK.  Might one be their LA Haynesville/Bossier assets?  Depends on how much of their overhead can be jettisoned thru Chapter 11 and their new Haynesville ROI.  It will be interesting to see what the C Suite chooses to keep and what to attempt to sell. Maybe CHK will be in talks with Jerry again?  I think that deal came close to being done and there was no way to know then what Q1 2020 would bring.

• ▶ Reply

Permalink Reply by Steve P on July 30, 2020 at 6:54

If I were interested (and, had a billion or two lying around or had lenders standing by), I would not have wanted to buy anything from CHK knowing the company would likely be in bankruptcy soon.  Too much risk of getting a better deal later.  But "now" is later, it seems to me.  

Have you (I haven't) gone it to see what CHK's debt load looks like, and who the lenders/bond holders are?  Not sure how easy it is to get that info.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on July 30, 2020 at 7:13

We both know someone who might answer that question.  The better deal would have come before bankruptcy.  After a successful shedding of the underlying contractual obligations, the ROI should be improved on all CHK assets.  How much is anyone's guess at this point. 

It is helpful to recall that CHK, and other Haynesville Shale players, built gathering and treating systems that were later sold when the cash crunch came.  In order to maximize the sale proceeds, CHK and others, signed deals with minimum volume commitments , high per mcf charges and guaranteed profit margins for midstream operators.  Those deals maximized cash on the front end but saddled the O&G companies with onerous, long term costs.  It is certainly worth mentioning that they saddled their royalty and working interests with those increased costs while not providing them with any benefits of the sale.  Of course this was not just a Haynesville hiccup, companies did this across numerous basins.  All those assets were burdened with those lousy and expensive post production costs.  An interested buyer would want to wait to pull the trigger on a sale until CHK had shed those contractual obligations through bankruptcy.

• ▶ Reply

Permalink Reply by John Denison on August 3, 2020 at 14:58

Shale Driller Unloading Gas Fields for Pennies on the Dollar

Range Resources divesting assets acquired in biggest-ever deal 


Bloomberg / By Joe Carroll
August 3, 2020, 3:56 PM PDT

Range Resources Corp. sold its Louisiana shale fields for about one-tenth of what it paid for them just four years ago as depressed natural gas prices hammered the heavily indebted driller.

Range agreed to sell the assets acquired in its 2016 takeover of Memorial Resource Development Corp. to Castleton Resources LLC for $245 million, according to statements by both companies Monday. Range stands to reap an additional $90 million in the future, contingent on higher commodity prices.

The $335 million potential total value compares to the $3.3 billion Range originally paid in an all-stock deal for the fields. The biggest-ever deal for Range turned into a bust when the company’s geologists and engineers soured on the quality of the rocks in early 2018.

Range fell 3% in post-market trading. The sale is expected to close this month and the effective date will be backdated to Feb. 1, according to the statement. Castleton Resources is owned by Castleton Commodities International LLC and Tokyo Gas Co.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2020 at 15:07

Range bragged about their ability to drill better Terryville Complex wells and then went right out and proved that claim to be demonstrably false.  At this point it is not clear that Castleton got a great deal.  The Terryville Complex is about tapped out.  Not much room left for additional wells.  It is not a resource play, it is conventional tight LCV, and does not extend much outside of the lower two thirds of 19N-4W.  The wells in the Choudrant and Ruston fields have been considerably less productive than the legacy Terryville wells.

• ▶ Reply

Permalink Reply by Rock Man on August 3, 2020 at 15:35

Sad to see this happen but sometimes you have to say "uncle" and bail for whatever you can get.

Not the first time a company paid top dollar and ended up giving the assets away to get out and stop the bleeding.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2020 at 15:45

Petrohawk bailed on the Terryville Complex in the early Haynesville Shale land rush to raise capital so Floyd could compete with Aubrey.  Wildhorse Resources figured out the key to horizontal development and drilled hundreds of really good LCV wells, impressive volumes of wet gas.  With a limited sweet spot and three landing zones, the company drilled hundreds of wells.  I have been on one of their pads that had fourteen well signs.  Below is a cut-and-paste of Section 14, 38 producing wells.

Section	Township	Range
014	19N	4W
Count	Well Serial	Well Name	Well Num	Field ID	Org ID	Parish	Upper Perf	Lower Perf	Total Depth	API Count	LUW Code	LUW Type	Well Status
1	35157	T L MCCRARY UNIT B-31	001	4499	9999	31	8912	8924	9200	1			30
2	75727	TAY SUC; T.C. COLVIN	001	4499	1193	31	9524	9596	10039	1			30
3	100605	ANNA D. WRIGHT ET AL	001	4499	1194	31	6909	6915	8215	2			30
4	101533	T L MCCRARY ETAL	002	4499	9999	31			7100	1			29
5	102341	ANNA D WRIGHT ETAL	001-D	4499	1194	31	7942	7957	8215	2			30
6	195613	HOSS E SUR;LA METH ORPHAN 14	001	4499	C332	31	7892	7927	9100	1			30
7	236416	LCV RA SUNN;T L MCCRARY 14	001-ALT	8891	R3800	31	9588	10861	11105	1	615036	2	10
8	236600	LCV RA SUNN;T L MCCRARY 14	002-ALT	8891	R3800	31	9550	11074	13414	1	615036	2	10
9	236766	LCV RA SUI;KING 14	001	4499	R3800	31	9650	11085	11170	1	615099	2	10
10	237075	LCV RA SUI;LA UNITED METH 14	001-ALT	4499	R3800	31	9537	11174	11395	1	615099	2	10
11	237076	LCV RA SUI;WRIGHT HEIRS 14	001-ALT	4499	R3800	31	9650	11280	11432	1	615099	2	10
12	237137	LCV RA SUI;LA METH ORPHAN 14	001-ALT	4499	R3800	31	9120	11002	11223	1	615099	2	10
13	237138	LCV RA SUI;CONSOL CRESCENT 14	001-ALT	4499	R3800	31	9592	11020	11225	1	615099	2	10
14	237183	LCV RA SUI;WRIGHT HEIRS 14	002-ALT	4499	R3800	31	8536	11210	11302	1	615099	2	10
15	237254	LCV RA SUI;KING 14	002-ALT	4499	R3800	31	9588	11112	11251	1	615099	2	10
16	237341	LCV RA SUI;T L MCCRARY 14 HK	001-ALT	4499	R3800	31	9778	11079	11240	1	615099	2	10
17	237342	LCV RA SUNN;T L MCCRARY 14	004-ALT	8891	R3800	31	9564	10994	11175	1	615036	2	10
18	237620	LCV RA SUNN;T L MCCRARY 14	003-ALT	8891	R3800	31	9581	10991	11150	1	615036	2	10
19	237766	LCV RA SUI;T L MCCRARY 14 HK	002-ALT	4499	R3800	31	9465	11050	11235	1	615099	2	10
20	237767	LCV RA SUI;T L MCCRARY 14 HK	003-ALT	4499	R3800	31	9591	11042	11245	1	615099	2	10
21	237925	LCV RA SUI;T L MCCRARY 14 HK	005-ALT	4499	R3800	31	9677	10997	11180	1	615099	2	10
22	237937	LCV RA SUI;T L MCCRARY 14 HK	004-ALT	4499	R3800	31	9600	11074	11200	1	615099	2	10
23	242471	LCV RA SUNN;T L MCCRARY 14	005-ALT	8891	R3800	31	9666	11050	11260	1	615036	2	10
24	243182	LCV RA SUI;KING 14	003-ALT	4499	W192	31			11331	2			03
25	244334	LCV RA SUI;KING 14	003-ALT	4499	R3800	31	9494	11202	11434	2	615099	2	10
26	244387	LCV RA SUNN;T L MCCRARY 14 H	001-ALT	8891	R3800	31	11802	16346	16490	1	615036	2	10
27	245789	LCV RA SUI;LA METH ORPHAN 14 H	003-ALT	4499	W192	31				1			03
28	247292	LCV RA SUI;TL MCCRARY 14-11 HC	005-ALT	4499	R3800	31	11110	16985	17097	1	615099	2	10
29	247293	TL MCCRARY 14-11 H	006	4499	W192	31			10124	1			29
30	247480	LCV RA SUI;TL MCCRARY 14-11 HC	001-ALT	4499	R3800	31	11182	15392	15587	1	615099	2	10
31	247481	LCV RA SUI;TL MCCRARY 14-11 HC	002-ALT	4499	R3800	31	11382	15392	15474	1	615099	2	10
32	247482	LCV RA SUI;TL MCCRARY 14-11 HC	003-ALT	4499	R3800	31	11175	15795	15960	1	615099	2	10
33	247483	LCV RA SUI;TL MCCRARY 14-11 HC	004-ALT	4499	R3800	31	10779	15589	15726	1	615014	2	10
34	248022	LCV RA SUNN;MCCRARY 14-11 HC	007-ALT	8891	R3800	31	11240	17607	17732	1	615036	2	10
35	248023	LCV RA SUNN;MCCRARY 14-11 HC	008-ALT	8891	R3800	31	10306	17458	17597	1	615036	2	10
36	248045	LCV RA SUNN;MCCRARY 14-23-26HC	001-ALT	8891	R3800	31	11386	18396	18450	1	615333	2	10
37	248314	LCV RA SUNN;MCCRARY 13-24-25HC	001-ALT	8891	R3800	31	10890	17795	17962	1	615036	2	10
38	248344	LCV RA SUNN;MCCRARY 14-23-26HC	002-ALT	8891	R3800	31	10828	17397	17765	1	615036	2	10
39	249001	LCV RA SUNN;MCCRARY 14-23-26HC	003-ALT	8891	R3800	31	11159	19148	19285	1	615036	2	10
40	249002	LCV RA SUNN;MCCRARY 14-23-26HC	004-ALT	8891	R3800	31	10710	18862	19000	1	615036	2	10
41	249003	LCV RA SUNN;MCCRARY 14-23-26HC	005-ALT	8891	R3800	31	10734	18686	18870	1	615036	2	10
42	249004	LCV RA SUNN;MCCRARY 14-23-26HC	006-ALT	8891	R3800	31	10978	18926	19082	1	615036	2	10
43	249005	LCV RA SUI;MCCRARY 14-23-26HC	007-ALT	4499	R3800	31	11062	19214	19352	1	615099	2	10
44	249006	LCV RA SUI; MCCRARY 14-23-26HC	008-ALT	4499	R3800	31	11014	19003	19119	1	615099	2	10
45	249917	LCV RA SUNN;MCCRARY 14-11 HC	009-ALT	8891	R3800	31	10405	17712	17829	1	615036	2	10
46	249938	LCV RA SUNN;MCCRARY 23-26 HC	001-ALT	8891	R3800	31	10419	19928	20046	1	615036	2	10
47	249939	LCV RA SUNN;MCCRARY 23-26 HC	002-ALT	8891	R3800	31	10877	19248	19395	1	615036	2	10

 

• ▶ Reply

Permalink Reply by Rock Man on August 3, 2020 at 15:52

Good summary

So subsurface changes in geology and reservoir quality are the key to the prospectivity in the Terryville Complex?? I bet many thought that this was a more blanket geology / extensive system of "good rock".

As always, the rock is the key to plays like this. And some companies don't have the expertise or creativity to dive deep into the rock and figure it out.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 4, 2020 at 0:52

The Complex is heavily faulted in the northern third of the township.  South of the township is the city of Ruston which makes development more difficult.  Range leased some large tracts within the city limits which were never drilled.  Wells drilled to the east (Choudrant Field) have not been as prolific but might be economic in a better commodity price climate.  There are also a handful of wells south of Ruston in Jackson Parish.  Those wells are also not as productive as Terryville.  The same productivity decline occurs not far west of the township.  I visited several of the pads for well tests west of the Complex and none were ever completed so I surmise that Wildhorse did not find what they were looking for.

• ▶ Reply

Permalink Reply by Rock Man on August 4, 2020 at 3:09

Thanks for those details. Was a 3d shot across the area to help with the fault interpretation?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on August 4, 2020 at 3:12

Not that I am aware of.  I believe there is plentiful well control that defines the fault line.  It appears on a number of geological maps of the Terryville Complex.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page