Replies to This Discussion

Permalink Reply by 2G Oil on February 27, 2009 at 12:17

Touche, discussion edited.

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Permalink Reply by 2G Oil on March 2, 2009 at 6:17

The statement is more for contemplating lease development risk being on a continuum and how it relates to mineral owners, specifically those that choose to be force pooled, the topic of the forum. If everyone chose to be force pooled, then nothing would ever be drilled. Had old lease forms not been originally drawn at an 1/8th, then some valuable information would have never been collected in the search for easy oil. Now that technology has improved, leases are being agreed to at a quarter royalty, but only after experimenting at great cost to working interest owners on the 1/8th acreage (generally speaking, of course, some science projects are presently conducted with less revenue available to WI owners, but most of the information having been collected under 1/8th). My point being, that our search for oil and gas is a part of a working process in history, the risk of which does change but the engine remains the same. Working interest owners, in an effort to unlock and maximize value under a lease, are by that circumstance and effort, at greater risk of going bankrupt than mineral owners. The leased mineral owner throughout history, regardless of their place along the continuum, contributes to the effort. An unleased mineral owner, choosing to be force pooled after good faith offers to lease have been extended, is parasitic to the process.

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Permalink Reply by Jay Murrell on March 2, 2009 at 12:51

2G:

I called UMI's goats, but parasitic is more descriptive.

JM

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Permalink Reply by lanadan Ds3 on March 10, 2009 at 22:46

As usual with you, you have fired your best sarcastic shot. Now go crawl back under your rock.

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Permalink Reply by lanadan Ds3 on March 10, 2009 at 23:02

You state ". . . after good faith offers to lease have been extended. . . ".

Please explain just how an OG company can go from a 5 figure bonus offer to $1,000 to $2,000 IN LESS THAN a 48 hour period and call that "good faith"?

I call it "arbitrary and capricious" and I am sure that they will get some to bite that stink bait. Not this MO!

I think you are losing sight of a very simple fact. Just WHO owns the mineral rights? I have something that the OG folks want, not the other way around, and if I DECIDE that what they are offering is not fair and equitable compensation, then I WILL NOT agree to such going on's.

"Parasitic"? I think not. How about words like "prudent", "fair-minded", etc.

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Permalink Reply by 2G Oil on March 11, 2009 at 4:43

KB,

I observe and analyze the economic world by making comparisons and forming analogies to the biologic world. In business school, they teach you models and give you assumptions, all which work well in a static world. This does not work well in a dynamic system. For me organizations and organisms are not much different. To be clear, I was using a descriptive term in an analogy.

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Permalink Reply by 2G Oil on March 11, 2009 at 4:21

Lanadan Ds3,

To answer your first question, the government allowed Lehman Brothers to fail. When this happened a whole lot of counterparty risk entered the economic system, hedges on everything from natural gas to credit default swaps went bad. An OG company that thought it had prices locked in at $9.50 per Mcf, saw the other side of that trade fade to nothing, and that means back to selling gas at market prices. There were other circumstances that led to further deterioration in lease bonus, like growing uncertainty in rolling out corporate debt, a process that was routine before the credit crunch. All of a sudden, something like the Haynesville Shale goes from earnings and reserve growth engine to cash flow and asset albatross, overnight. It seems hard to imagine, but it happened. Now, the industry can't lay rigs down fast enough. The market changed.

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Permalink Reply by Two Dogs, Pirate on March 11, 2009 at 14:39

I heard during the summer that Encana had brought one of their crews down from Canada and they all drug up because of the Louisiana heat and humidity. Hope their rig works better in our climate than their rig hands.

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Permalink Reply by lanadan Ds3 on March 12, 2009 at 22:00

KB,

2G Oil asserts ". . . Now, the industry can't lay rigs down fast enough. . ." Oh, really?"

FYI: In our T&R alone there are 5 rigs up and running, all drilling horizontals. Out of the 36 sections (excluding those under water in Toledo Bend and those that are HBP), 15 out of a remaining 20 are currently being (or have been) unitized, permitted, and are in the process of being drilled, or will be in the near future.

Like my Grandmaw used to say, "SUMPINS' UP"!

Also, this part of the country (S/W DeSoto) is being criss-crossed with pipelines from relatively small feeders to 16's and one 30" that I know of.

"SUMPINS' UP!"

Furthermore, driving in the little town of Logansport (again, S/W DeSoto), has become a nightmare with almost bumper-to-bumper traffic at times! (what with all the O&G related vehicles -- water trucks, flat-beds carrying pipe and other equipment, welding rigs, and other oil field service type vehicles, etc.)

"SUMPINS' UP!

And by the way, check out the recent requests for hearings by Eagle and Elora on a whole bunch of proposed units in the Converse field in N/W Sabine Parish.

" SUMPINS" UP!"

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Permalink Reply by Jay Murrell on February 27, 2009 at 12:18

Buck:

I guess I'm just not as smart as KB cause I don't understand your Custer reference. Could you please elaborate?

Thanks,
Jay

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Permalink Reply by Jay Murrell on February 27, 2009 at 13:02

OK

Lemme try this.

Buck:

Why is 2g's question dumb?

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Permalink Reply by Jay Murrell on February 27, 2009 at 14:26

I think 2G's question opens the door to a discussion of the how risk is quantified. I haven't come across much dialog regarding risk and how it factors into what an oil and gas property is worth.

Is it fair to say that until oil or gas is reduced to possession it is not worth anything?

Your thoughts.

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