Replies to This Discussion

Permalink Reply by Atlpilot on June 23, 2008 at 7:23

Can you be a little more specific as to the area of South Bossier that has been 60% leased and is being forced pooled? Does anyone know if any acreage has been forced pooled since the Haynesville Shale play has started? Thanks.

• ▶ Reply

Permalink Reply by SoBoRes on June 23, 2008 at 7:35

I live down Sligo Road, about 1 mile outside city limits. Lucky Estates and The Orchard neighborhood area. Most of the homeowners around here own no less than 3/4 of an acre. We own 1.45 surface and mineral acres (double lot).

• ▶ Reply

Permalink Reply by Atlpilot on June 23, 2008 at 8:13

Thanks. We are a little SE of Haughton close to the Webster Parish line. We were talking to two landmen prior to the news of the H-Shale breaking. Haven't heard from them since. I do know that some of the larger landowners had signed leases prior to the news breaking so don't know how we stand relative to forced pooling. Good Luck with yours.

• ▶ Reply

Permalink Reply by Snake Stewart on June 23, 2008 at 15:06

Hello,

I know that you are upset about the pooling issue but if I may interject something into your thoughts for a moment ,I believe that We can feel a little better about this situation.I certainly don't have all the answers concerning O & G but I believe I understand enough about human nature and the overpowering tug of pure greed to hopefully shed enough light to calm our fears just a tad.

Lets use the Barnett Shale numbers as this will make it easier to math out.
According to conservative figures, @$7.50 per mcf (thousand cubic feet) each acre on the Barnett Shale is valued at,after all drilling costs, on average $1,000,000 over the life of the play(30-40 yrs).That brings our total to,on average,$640,000,000 per section over the life of the play.Now,if company is willing to lease only 60% of section and leave rest to be forced pooled,that would leave 40% of section or 246 acres left.That is the same as saying $246,000,000 unaccounted for (Not under lease).If a well costs $6,000,000 to drill and the unleased landowners paid " ALL" costs to drill the well instead of just their share,that would only leave you $240,000,000 to play with.Lets say the company felt so good about this one special section that they decided to drill another 6 wells.We decided that we would go ahead and pay for all costs of these wells too! That would cost another $36,000,000.Even though according to PHK conference call quarterly meetings the cost per well would drop do to fewer testing costs and other infrastructure issues.But for this example we will go ahead and pay full price!That would leave us $204,000,000.Then of course they are going to gig us for another 20-30% just because they can for fees and internet connectivity charges,Oh yea thats one of the other companies that charge that trumped up crap!Leaving us with around $153,000,000 before taxes of course.We can't forget about Uncle Sam or Uncle Bobby now can we? Ha! Ha!

The 60% that got leased ,cost them $250 bonus +1/8% per acre ,if they got to them last year for a grand total of $48,096,000 per section.
The 40% that didn't get leased cost them $153,000,000 per section.
GADZOOKS.....According to my math(please doublecheck @ your own leisure)The oil and gas companies would have made,lets see,an additional $19,200,000 per section if they would lease us .Good Lordy.

If you are wondering about my math or are trying to do it in your head and the numbers aren't computing out just right its because I forgot to tell you how I came up with the final numbers.For the 40% left,I figured a 25% royalty instead of the 1/8 % they screwed earlier signers on ,cause nobody in their right mind would sign for less than 25% now that the cat is out of the bag. $246,000,000 (40% of section value) minus 25% royalty = $184,500,000. Then take $184,500,000 and subtract the $153,000,000 it would have cost them if they hadn't signed us and that =$31,500,000.....?????? Now how in the world did I come up with $19,200,000 in the earlier example?....Oh yea, I forgot about the bonus!Even with a $50,000 PER ACRE BONUS for 40% group for total of $12,300,000 they would still come out ahead by a whopping $19,200,000 by signing you!

In other plays the math wouldn't be so overwelming, or would it? All that was figured at $7.50 mcf which is now $13.45 mcf.So of course you would have to increase per acre worth accordingly.And also according to the newest maps,the Haynesville Shale has a much smaller footprint then the Barnett,even though it holds at least 3.2 X's more OGIP(original gas in place) per CHSPK (2 trillion cf Barnett verses 7.5 trillion cf proven on Haynesville) and those are real old numbers for Haynesville.So you would again have to increase amount per acre several fold.
Let me try to compact this wealth of "wealthy" information!
1) Gas cost twice as much
2) There is at least 3.2 X's more of it
3) On fewer acres!!!! You guy's might ought not to keep trying to shrink that map.Seems like every tim

• ▶ Reply

Permalink Reply by Snake Stewart on June 23, 2008 at 15:43

Lord I guess I am long winded or something,I got cut off.As I was saying before I was so rudely cut off by myself.....
Every time you shrink the map it costs you more money.So instead of being worth $1 Mil per acre its now $2 Mil .Less land but X's 3.2 =about $6,400,000
per acre average on Haynesville.My Lord will it ever end!!!!!!

All jokes aside.These numbers are as true as the Big O & G quotes I have compiled them from.Can it be off a little here or there.Probably so! Thats how the game is played! Its the "JEWEL of the NILE" at those Stockholder meetings and the worst ,rat infested,lawn needs mowing,piece of worthless crud land they have ever seen to you and me!They don't really want to lease it they just feel guilty about you feeling left out and all! Its only BUSINESS,aint that right boys!

In closing(finally) . . . . . . To SoBoRe and to Atlpilot the answer is............No!!!!I do not think that it would be financially feasible to force pool if the amount of value is as "THEY" have stated.It would be financial suicide to leave that kind of money on the table.That being said it is simple anadulterated GREED that will keep them devaluing and degrading you and your property! Or at least trying to anyway.There is no other explanation for this behavior.Please doublecheck my math as I am using my fingers,had to kick off the ole shoes to use the toes a couple of times.I await the skeptics with open arms! If you didn't enjoy this presentation then.......Get out there and lease that land! Didn't you just see how much you guy's are losein'.Hurry up cause we are ready to get paid!!! HA! HA! Good Evening to all!

• ▶ Reply

Permalink Reply by Scott on June 23, 2008 at 17:02

Well said snakestewart...

• ▶ Reply

Permalink Reply by Atlpilot on June 24, 2008 at 1:28

Good answer Snake, and I agree with you. I also don't think that it would be in the O&G companies best interest to "force pool" high percentages of a section, and that is why I still have the question out there "has anyone been force pooled in the HS play yet?" I appreciate your comments, and those of others as "knowledge is power" and right now the internet may be our best friend in the quest for fair and equitable treatment for all parties in this business transaction.

• ▶ Reply

Permalink Reply by James CD1 on June 24, 2008 at 3:59

Do the O&G companies have to give you the option of leasing
or refusing? I have some property that was leased in 1985
and the well is still producing (not much) and I was never
asked to sign or not( I didn't even know about it until about 2 yrs ago)
I have other property and don't want to get in this situation again!

• ▶ Reply

Permalink Reply by Snake Stewart on June 24, 2008 at 11:14

Hello Mr. James, As far as I can tell they do not have to give you that option.If you leased back in 1985,it does not matter about the term length of contract because you are being "held by production".You would never have to be approached again concerning that piece of property because of production.Even a very small amount can hold you.A couple of my Shale friends have been getting a quarterly check to the tune of a few bucks a month.Another friend received a one time royalty payment check for $19 last year that would "hold by production".Once you start getting royalty payments you are now in royalty phase and can be held forever ,plus 10 years in State of La.

• ▶ Reply

Permalink Reply by Jeff Simmons A2 on June 24, 2008 at 16:14

Snake, My wife and I have 25 acres in southern webster parish that has been in production for over 25 years. The way the original lease reads is from surface to core. The lease has been subleased several times through the years, and the deepest any well in the section has been drilled is just over 9000 feet. The original company has since gone under and it seems that the original rights should revert back to the owners. The depth I think here is the question. Samson has the rights now but I'm not sure they have the technology to go the extra deeps to hit the shale. Any thoughts?

• ▶ Reply

Permalink Reply by Snake Stewart on June 24, 2008 at 17:45

Hello Mr.Simmons, Once land is held by production, it doesn't matter who the original Lease was held by.Just as they, the "subleaser" ,were bound by original lease,so were you bound by subleased production. Surface to the Core is wording that is in favor of the holder of lease if I am not mistakened.Someone please chime in on me as I am not completely sure about this.I think it does away with the chance of a depth clause.

Many of the people I know on Heflin side of the Lake are held by Samson or Mr. Nelson.These groups(Samson/Nelson) are not going to pass up the opportunity to make money.They may only lease deeper rights or may sell out all together,which really shouldn't make that much difference to you,one way or the other.

Due to the fact that you are held by production and not available to get bonus money anyway,the next best thing is to get Haynesville production royalties which should substancially increase your monthly checks! If you are already drilled and receiving checks then that tells us that you already have a lot of the infrastructure in place(wellsights,roads,pipelines ,etc.)They could come right in and begin work much faster then they could in virgin territory.Make no mistake,the big boys will get to your gas.

I have heard a rumor of Samson letting some out of leases due to difficulties with production years ago and the inability to make well productive again.I really don't see a company saying I'll let you go and lose all of that money from shared interest or outright sale to larger outfit.I could be wrong but I just dont see it.As in your case they wouldn't see big bonuses but would still see increased output on royalties.

Only other bad thing could be royalty % is lower then it would be if you could resign.Guy I work with under small lease actually wants them to drill because his royalty is 5/16 %.A much better number then most are settling for.Hope this has been some help.

• ▶ Reply

Permalink Reply by lerad skrap on August 7, 2009 at 11:12

I enjoyed reading your perspective. I'm a newbie at this.
Keep up the good work.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page