Replies to This Discussion

Permalink Reply by Robert Bickley on July 15, 2022 at 10:33

What survey is this located in?

Permalink Reply by Rock Man on July 15, 2022 at 11:33

Checked all my sources including Tx RRC site.

As you know, multiple wells permitted on this pad. See attached list and map. All 7000-7500' laterals. Well coding pointing to a mix of Haynesville Laterals and shallower Bosser laterals (probably in upper HV). Stacked laterals.

At least three of the original laterals have been drilled and cased to TD as of March 2022. Thinking the 4th was also drilled out (nothing on file yet). Operator was using same rig to drill each well on pad back-to-back.

No completion info yet on file. And no production (even in pending category) listed as of May 2022 Tx RRC filings.

Suggest one keeps checking the Tx RRC every month to see if any new data is filed.

I would expect this first four well set of wells to putting out 80-100 Million cubic feet of gas per day when the get started.

Attachments:

• Sacagawea Hz Permits San Augustine Co.pdf, 3 KB
• Sacagawea Hz Permits Plat_Same Pad.pdf, 662 KB

Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2022 at 11:40

Thanks, Rock Man.  Mineral companies focused on Haynesville/Bossier acquisitions don't wait for completion results.  They've already modeled projected production, excepting mechanical failures, from off setting wells.

Permalink Reply by Rock Man on July 15, 2022 at 11:44

That makes sense. Just plug in pricing assumptions and go from there!

Permalink Reply by James Michael Nations on July 15, 2022 at 12:36

Thanks so much

Permalink Reply by Benedumtreesoilwell on July 15, 2022 at 21:44

Whittons- you better not sell.  

Permalink Reply by James Michael Nations on July 16, 2022 at 4:55

I don't plan too, but it is hard to turn down 1.4 million. I promised my mom and her twin sister that I would never sell. A promise is a promise.

Permalink Reply by Skip Peel - Mineral Consultant on July 16, 2022 at 5:04

I understand but my usual response is, were they geologists?  Or in some other way knowledgeable about the O&G business?  My standard comment to those considering a sale is, what would you hope to accomplish with the proceeds?  If you are financially secure, don't have big expenses coming in the near future (college tuition for example) or don't have a better place to invest the money, don't sell.

Permalink Reply by James Michael Nations on July 16, 2022 at 5:25

Thank so much. At from hearing from everyone makes it easier to hold on

Permalink Reply by Rock Man on July 16, 2022 at 5:37

As usual, good points by Skip on selling minerals. Big check is nice but what is tax hit on that amount?

Long term cash flow will decline over time, but solid mailbox money.

One can easily take production curve / decline profiles for Haynesville wells in thie area and project monthly cash flow payments using whatever price deck you want.

Permalink Reply by Skip Peel - Mineral Consultant on July 16, 2022 at 6:05

The two facts that inform a decision to sell are tax burden and the concept of "the present value of a dollar".  An asset held for longer than 365 days qualifies for long term capital gains federal tax, either 15% or 20% depending on the amount of the sale proceeds.  The curious can look up those limits on the internet.  The amounts vary by filing status.  For those in states with no income tax, that's it - 80% net.  For those in states with an income tax, add the rate.  I think the top Louisiana rate is currently 4%.  Disclaimer:  I am not a tax accountant.  The present dollar concept is that a dollar today is worth than one tomorrow, or next month or next year owing to inflation.  A $100,000 in January '22 might be worth $90,000 next week.  Inflation.

For those that wish to attempt to model income over time, the publicly traded Haynesville operators discuss decline rates in their corporate presentations.  As to a price deck, mineral companies that I have some knowledge of use the Henry Hub "forward strip".  It's a crystal ball but there is no other option that is widely used as far as I know.  How far out in time a buyer uses those monthly prices in a value equation using the forward strip is I believe a variable that is not standard.  I'll post a link to the HH futures at the bottom of this reply.  After all those calculations, an investor will discount the result. 

To be clear many of the companies making offers to buy your minerals are middle men.  A client engages them to make structured offers and provides a budget and other criteria.  Those companies that send letters and make phone calls are looking to make a mark up on whatever they can get a seller to agree to.  From my experience, likely in the neighborhood of 25%.  Think of those mineral companies as we do land companies that seek leases on behalf of a client.  The mineral company is constrained by the criteria of the investor but has some options on how to approach prospective sellers and what to offer.  It makes little sense to make the best offer first.  That doesn't maximize the profit margin.  Likewise, no seller should accept the first offer as the best.  The art is in the negotiation and the ability to create competition between buyers. 

https://www.cmegroup.com/markets/energy/natural-gas/henry-hub-natur...

Permalink Reply by Bill R on October 27, 2022 at 6:23

Well now... good news in the way of Money in the Bank...

Three Sacagewea Wells paid off... Aethon posted on EnergyLink and put some change into my Bank Account today!  RCC makes it look like some more Wells are close too, so could be a few more coins headed that way too! 

Good news in San Augustine again! 

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