Big Daddy, there are ging to be rumors, we are dealing with people after all. You have to stick with the facts. Apache/Shale leased up alot of acres. I haven’t heard of alot of seismic being done. Apache has drilled so few wells that while they might have a little better understanding than they had 1 year ago, they still don’t really know whats there beyond a mile or two from the wells they did drill. Hard information is scarce.
I would say that Apache probably didn’t hit a home run out of the park with the first few wells. If you look at the first 2 years of the ND Bakken boom, you might wonder why they kept on, it sure didn’t look promising 2002-2004. The big corporations are buying and selling leasehold all of the time. If Apache wanted to sell, it could just mean that they were too committed elsewhere. Marathon does exactly the same thing.
The Bakken may be poor or even non-existent in Daniels but the Bakken is not the be all and end all. There are other formations. There are verticle wells that produce over the same 30 years period the same amount as a average good Bakken well. The exact same area that would not support a land grabbing 10,000 ft lateral could support a profitable short lateral on 1/4 section spacing, unfortunately such a well wouldn’t help the operator hold large amounts of untapped acreage. The operators aren’t just there to drill some wells and get production today so they can make a profit, they want to have their cake and eat it too, with profit today and large amounts of untapped acres to drill in the future. That’s alot to ask from a well.
I’m not fond of them but, if you look at what a smaller company like SM Energy does, they are interested in production, wherever they find it and will drill the well to fit the area, not that they are immune to the land grab but they appear to be small enough to realize that it’s all money, that you need not make a killing on every well, that a good profit is good enough even if it doesn’t help you hold 4 to 8 times the acreage for future use.
I think you can actually have oil that can be produced at a good profit that will not be produced because it does not fit the business model that the operator wants to impose. If that is so, I hope with the information from the test wells that leases will be assigned to operators who will want to drill for oil, production, money and not have to hold 2 square miles with a well that could not possibly drain the spacing.
Apache will have to report what they found eventually and every well could be a failure, but you can fail for reasons other than that there is no oil. Any production at all could be encouraging. Hopefully we will know more soon.
Thanks again for your educated response, sometimes I think its best not to listen to all the rumors and half statements or statements that are meant to steer peoples thinking in one direction or another. There has already been many ups and downs reported and I don’t think that part is over yet.
Good Day
Thank you Eastern MT and Billy Bob Jim Bob, Its good to hear from people that have a good working knowledge of this whole process because I certainly don’t, I can however count money, I’m waiting for that to happen as part of my retirement plan, not counting on it though.
There’s alway Social Security,or is there?
Have all of you spent a winter or a weekend in the winter in Daniels County? If you have spent any time in Daniels County in the winter, you might just shut things down until spring to. Can you say weather! No, you can’t until you’ve been there. Just another part of the puzzle.
I have a friend who’s family homesteaded on the highline. His father passed away one winter and his mom was remarried shortly after with dear old dad’s body still in the barn waitin for the big thaw.
I remember my mom telling me about how they use to keep dead bodies stored in out buildings till spring so they could dig the grave, yes, Daniels county is not a winter vacation destination, good folks there though.
Our mineral rights are on the Carl Miller homestead, some on the highline and on the Canadian border and some in other places in Daniels. Maybe my kin and your kin were neighbors.
Is anyone hearing anything on new drill sites or results on wells dug?
No well results have been reported yet. However, one recent ‘clue’ is less than positive. The most recent BLM mineral auction included one Daniels County tract. That lease went for just $4.50 per acre. This suggests a staggering lack of interest up there. Hopefully the well results will be positive and rekindle interest. We will see.
BTW, one can listen to the entire audio recording by clicking a link at the apache website.
Very interesting Eastern MT.
BTW, I would also say there’s another clue to be looked at. Last week Apache had its quarterly earnings teleconference to discuss its first quarter results. One person asked about Bakken activities (and got answer “we weren’t doing any drilling in Q1…” But like the dog that didn’t bark, there were other clues… specifically, the first quarter writedowns they reported did not include their interest in Bakken. It’s possible they wouldn’t disclose this because such a writedown would be immaterial. (Not big enough to matter.) But there were talking about $40M write offs and obviously given the questions about Bakken, people view that Apache investment as material. So it is interesting and noteworthy that they didn’t write down or write off the money they’ve spent in the Bakken as a loss.
For what it’s worth.
Thanks Stephen. What you posted may be another “clue”. Though as you point out it is near impossible to tell what those comments mean. That is considering Apache’s size, and comparatively insignificant small size of the Daniels Co project. Either way we should know something by late this summer when well results are posted.
I’m a tax accountant not an auditor… so I possess only a basic knowledge of SEC regulations and rules for writing off assets Apache has already invested in in Daniels County. That said, on the conference call Apache felt it needed to report writedowns in the $40,000,000 range and obviously the security analysts on the call were interested in their Bakken play. Accordingly, I’m assuming Apache needed to look at their Daniels County investment for possible writedown if the drilling results weren’t successful.
I assume e.g. that they paid more than $120,000,000 for the options (say 300,000 acres at roughly $400 a acre. And didn’t they drill five wells at a cost of $7,000,000 or something each so another $25,000,000 to $30,000,000? And there would have had other costs (like the local water storage stuff, etc) that probably pushed them close to $200,000,000.
So I think the numbers seem to be large enough to be material.
BTW, another possibility is that they didn’t really pay that much for the lease options… that of the $200,000,000 or whatever that’s been invested, Apache is say $30,000,000 of it and Shale is still “in” the deal for the reminder.
Who knows… As you say, it’s a wait and see deal
Should have said my husband and I. Sorry.
My husband drove to Scobey from Indiana and no one in Scobey seems to know much. We spent four hours looking for the pads and never did find any of them. Shale has a local young man working their office, doing what, no one seems to know. One man told us Shale sold Apache a bill of goods, but it seems highly unlikely that a company like Apache wouldn’t do their homework prior to spending millions on wells. Rumors in Scobey seem to be either Apache is selling or they’re coming back June of 2014. One man said they pumped 1000 barrels of salt water and 40 barrels of oil out of one site and stopped all activity due to a lack of infrastructure to move the salt water and/or oil. Again, wouldn’t Apache know that prior to moving in? All very strange to me.
Bonnie thanks for the update. I have nothing to add about what may happen there. Regarding your thoughts on Apache, I agree they would have done some homework before buying into Shale’s leases. However, the oil business is a still a risky one. They can look at geology all day long yet won’t know what can be produced until they punch in a well and try to produce it. Even when they ‘know’ oil is present in the formation bringing it to the surface is sometimes a challenge. Over the next couple of months we’ll have a better idea of where this is headed by watching for Apache’s activity (or lack thereof).
You are correct, our lease is for 5 and 5. So, I expect if our current leases were to expire, the price may be much larger the next time around. It seems the U.S. is getting more interested all the time to use our own oil and of course I suppose there is no hurry at this time as the pipeline is not approved just yet. I think we would see some action right now if there were any plans for further drilling this year, so, it looks as though they are just sitting on it for now.
Thanks Mr. Kennedy, I deem you as a subject matter expert.
Big Daddy, you flatter me. I’m just putting myself in the place of the operator and like an actor asking, “what’s my motivation?”
I think I remember that someone said that there will be some kind of report on Daniels county well results, does anyone have the site address where that will show up and the suspected date of it?
It seems to me that if it was good more drilling would be happening now, the weather is certainly not stopping the drilling.