I received a communication from a Shale Exploration landsman this evening saying Shale Exploration is ending their Daniels County oil and gas leasing purchases on October 1, 2012. To me this seems like a pressure ploy. Does anyone know anything about this?
Could it mean they have all they want or have capital for?
Norseman, It may be a ploy but I'd heard the same. They now have a sizable lease block and they're closing down that end of it.
It is probably both. Though my guess is it's more of the latter.
Bonnie Young said:
Could it mean they have all they want or have capital for?
It could be that they figure they will have the results from drilling by then. With results, leasing will not be the same as it is today. If drilling is positive, leases will go up substantially. If drilling is negative, leasing will end.
Norseman, that seems doubtful. If they have 350,000 acres spread across most of the county, they'll need to punch ten or twenty wells to know what they're sitting on. Then regardless of their results they'll keep everything confidential as long as they can (theoretically into next summer).
If their results are negative the leasing certainly will be done. If it's positive they may renew leasing. If so, it would probably be done quietly under a different company name so as to not drive up lease prices. My guess is they had $XX set aside for this project and they're now extended as far as they want to be (or as far as they can afford).
I wonder what the requirements are in Montana for recieving “tight hole” permits. It sounds like in north Dakota they give them out without question.
If memory serves, I believe that Montana does require that you have a reason to receive tight hole status. I believe that drilling in a new area or new formation would be a good reason. ND does give tight hole status just for the asking. I have seen one fairly recent well in ND where the operator didn't bother to ask for tight hole status, I was shocked. Most ask for tight hole status even on their salt water disposal wells.
Billy Bob Jim Bob said:
I wonder what the requirements are in Montana for recieving "tight hole" permits. It sounds like in north Dakota they give them out without question.
Does "tight hole" mean the driller doesn't reveal what was found or learned about a well?
If I were in the drilling business I would try to keep everything as confidential as possible till I needed money from production.
Some information is kept confidential during tight hole status, I believe some information is going to be public record, such as production quantities which would be difficult to keep secret anyway since taxes and the lessors are paid based on production. When the tight hole status ends, I believe that 6 months is the standard, I think geological information will become public knowledge. The state may reqiure that core samples be given to the state as it's too good an opportunity to waste scientifically speaking. I know ND wants core samples if there is not a nearby offset well that they already have samples for.
Don Leroux said:
Does "tight hole" mean the driller doesn't reveal what was found or learned about a well?
If I were in the drilling business I would try to keep everything as confidential as possible till I needed money from production.
To The Viking, well I have received calls also, what I have learned is that the deal with Apache expires on Oct 2 .. so anything they lease now they get a big override , from what I hear Shale Ex. will still be around but so will other companies ... there is a well being drilled at the moment north of Four Buttes , they are going into the Bakken and the second well from the same sight is going into the Three Forks... there are three different locations being prepared at this time north of Scobey.. so I guess what I am trying to say is there is a push to lease lately ,what my friends and neighbors are speculating is that they would like to tie up leases before they hit.. which could be sometime in Oct. ... one more thing , I was told by SE back in late April they were going to stop leasing on June 1 ... and that of course didnt happen... Any way hope this helps ....
Are you saying Apache is getting out of the deal? Also, do you live in Scobey or the area?
Thanks Egl. I do need some interpretation however. Does the expiration of the deal between Shale Exploration (SE) and Apache on October 2 mean that up to Oct 2 SE purchased leases go to Apache but after Oct 2 SE is free to sell leases to any other company? What does "so anything they lease now they get a big override"? Does it mean that any leases struck now by SE before Oct 2, SE get a bonus from Apache or ???
So Egl, you were told in late April that SE was going to stop purchasing leases in on June 1. I heard from another good source that they were told that SE was suspending lease purchasing on July 1 but are still purchasing leases. This suggests that the October 1 deadline may not be so firm either.
So Egl, you have not done a lease on your Daniels County mineral rights and are waiting to get a better deal once oil production is confirmed??
Viking, SE needs to lease as much as they can before a well is drilled. If a couple of good wells are drilled, lease prices go up. If a couple of poor or dry wells are drilled interest in the leased acreage will go down, it will become difficult to flip and people who leased to SE, if they haven't been paid already, may be informed that SE no longer is interested in leasing their minerals, just another deal that fell through. If you lease, at least make sure you get paid before they get their hands on your lease so they can't use it as an unpaid option.
Here is an attempt to try to explain what EGL and others are posting. I don't have inside info, just sharing my understanding of the business;
Shale has been leasing on behalf of Apache Corp.
Apache has decided they have enough acreage for now.
So Shale isn't buying any more for Apache as of October 2.
Shale may buy for itself later, but that is far from certain.
An "override" is a portion of any future oil produced. It is in effect a bonus paid to Shale.
The "October 2" deadline is probably real, but it may be a smoke screen to push people to go ahead and lease. Either way, mineral owners face the same uncertainty they always face, "Should I lease now, or should I wait and hope for better offers?" Personally I doubt the well drilled near Four Buttes is a factor in their decision. More likely it is the fact they have 300 to 400,000 acres in hand. Good Luck with your decisions.
Hey Mr. Viking , what Eastern MT above explains is almost exactly whats up.. He just put it in plain english, I am just a dumb farmer,,, from what I understand back in Jan. SE made the deal with Apache , it closed in March, and also friends say that the lease that is bein used by some other companies are SE leases... and yes there are mailings going out and somewhat high pressure sales tactics are bein used.. Now , I have a ques. for Eastern MT, a friend was told by a landman that he needed either to make a deal or Apache might not drill on his place or they might change there unit plans because they dont have the lease... does this make sense??? to me wouldnt they go by the giological info. that shows best possible results for not only unit planning but drilling as well??? any expertise you can shore would be appreciated Thanks one more thing the landman also told him that Apache was narrowing there area down to 12 townships..wow
I was told by SE that it was 12 priority areas...not necessarily townships. Maybe I understood it wrong.
It might makes sense. If they don't have a majority control of the minerals they won't drill.
On the other hand, yes geology will dictate where a company drills. However, if they believe "my" area is a good prospect, and I own the minerals under Section 3 but won't make a lease deal with Apache Corp... Apache could go ahead and drill next door under Section 2 or Section 4 instead (if they'd leased those sections).
It is a fact, that if they don't have a majority of leases under "my" section 3, they won't be drilling there. So if your friend owns 320 net acres under the section (640 acres), your friend's decision to lease, or not lease, might determine what happens. Yet if your friend owns 10 net acres, their lease may not dictate if Apache can gain a majority interest under the entire 640 acres.
Egl said:
I have a ques. for Eastern MT, a friend was told by a landman that he needed either to make a deal or Apache might not drill on his place or they might change there unit plans because they dont have the lease... does this make sense??? to me wouldnt they go by the giological info. that shows best possible results for not only unit planning but drilling as well???
SE is Shale Exploration. Not sure how they determine what is a "priority" area...but I'd say it's a seismic (sp) test of some sort. I was told that back in July and I have no idea how to get them to tell anyone where those areas are. My guess is that's a closely guarded secret.
Well okay, we received firm confirmation that purchases of oil and gas leases in Daniels County by Shale Exploration ceased on October 1, when we tried to do a lease with them after the October 1 date. Apparently it was a directive from Apache who now owns all the rights to Shale Exploration leases. Whether this was part of the Apache purchase agreement, is a temporary moratorium on leasing, or whether Apache will be purchasing leases directly is not known. However, I suspect that Shale deals that were struct before the October 1 date will be completed by Shale Exploration but no new deals will be made.