Current Oil Climate

Does what DC has done make oil leases more valuable since it sounds like no more will be allowed or does it have any affect at all on the value of my lease. Thank you

There is a thread in the Naro group on this site about this. Since companies have been stockpiling permits in anticipation of Biden being elected there is a thought that over the next two years it will actually cause a boom on the New Mexico side because the permits are only good for two years. After that, if the ban sticks, then maybe the Texas side will benefit.

It makes me pretty nervous to see drilling bans land on my next door neighbor, regardless of who benefits. And don’t be fooled, a leasing ban, is a drilling ban, is a fracing ban, no matter how you slice it.


So what does it mean for wells already drilled/producing? Can companies still function without being able to drill more? Will they plug the existing wells, or what?

It doesn’t affect existing wells - yet. However, with the decline curve on shale wells, if you enacted a nationwide drilling ban, production would plummet.

If companies cannot replace declining production by drilling new wells, companies would shrink rapidly and most would go bankrupt due to debt service levels.

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Sounds like a bad business model to me. Or someone that believes in a perpetual motion machine.

Once the Federal Government decides to they will do what they will with properties under their jurisdiction. In the State of Texas there is not much federal property there, but in New Mexico, possibly Oklahoma, the Dakotas, California, Wyoming, and Montana (?) any undeveloped acreage will probably be shut down.

I am not sure about currently leased and developed acreage of federal leases, but would not be surprised if they were shut in, plugged, and abandoned under the current political administration. Should that happen it will only make the private properties even more valuable.

My best regards,

Stephen Watkins

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Stephen: Don’t forget that the EPA has jurisdiction on ANY lands and tighter restrictions on drilling fluids including fracking fluids can have the same effect as a moratorium on drilling period.

Thank you all for the helpful information

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