M Barns, Ref. Lincoln County. Wife has lease offer in Section 25 12N-4E and I suppose they are going to the Hunton Limestone. Will the drilling be horizontal? I assume they will be but I figure you know. Your shared further knowledge pertaining to this area would be welcomed and appreciated.
rwā¦ I like the way you talk! Thatās very encouraging! To tell the truth I didnāt read the link because of lack of time but I probably am not smart enough to get the meaning of it all if I had. Thanks for āsplainingā it! 
The whole pricing discussion is very complex and interesting, and if you own oil interests, a little unnerving. A related issue right now is the increasing amount of debt independent developers are taking on. I heard one oil analyst give a talk about two years ago that suggested that the same thing was happening to the horizontal shale business as happened to the mortgage businessā¦ i.e., Wall Street found a new game to play and shoved all the money at it they could, and that leads to overdevelopment and overproduction. Then when the business is shaking out and companies start selling assets (as they have been doing), the Wall Street sharks are back taking profits brokering the asset sales on that end. Happened to natural gas.
Take the first two years of the Poteet well production. Total gas was 2,525,845 MCF. Gas is around $4 today (I understand price varies on gas content but letās just use market price for discussion). Gas price peaked at around $13 but had a sustained high at around $7. You take the difference in price then and now and it amounts to between $7.5 million to almost $23 million in lost potential revenue in just the first two years for the Poteet. Thatās why they have been backing off drilling in the dry gas areas. I expect we will see wide swings in price over the next few decades. Supply goes up, price goes down, drilling slows, supply drops, price shoots back up, rinse and repeat. I just hope I donāt have a big horizontal well completed on my land just as the price nose dives.
Robert is right that Peak Oil is real, the time frame has just shifted due to technology and may shift again with new technologies, but it is real and inevitable. One interesting side note: Iāve always wondered if there was a lot of Middle Eastern money helping fund the anti-fracking movement since our shale business is putting such price pressure on them.
My good old Mom, who is now 93 with Alzheimerās, used to worry about everyday folks who didnāt have mineral interests when the price of gas got so high. Low prices = bad for mineral owners, good for the economy.
As a ānew beeā in dealing with wells, drilling, production, etc., the discussion on possible financial pitfalls makes me reaaaaaaalllllly nervous! I understand on a surface level how this could be compared to what happened with real estate a few years agoā¦ and boy did I get hit with thatā¦ as a matter of fact, I am STILL dealing with that debt! Drilling on Oceana is almost complete and I am praying its production, whatever that might be, will be Godās gift to balance out my bad decisions with real estate!
Down another $1.17 (1.92%) this morning to $87.14. Yikes!
Donāt look at the linkā¦ Iām a āglass half fullā kind of guy. Iām not much for Debbie Downer.
Crude @ $88.62 today
http://www.bloomberg.com/news/2014-10-07/shale-boom-tested-as-sub-90-oil-threatens-u-s-drillers.html
The last time the U.S. had a domestic oil boom was in the 1980s, following the Arab embargo. It ended when new supplies overwhelmed the market. Prices dropped to $9.95 a barrel in April 1986 from $32.35 the previous August, and the annual average stayed below $30 a barrel until 2000.
I hope you paid careful attention to the article where it said Saudis need $87.63 a barrel to fund their needs? I donāt think they are going to produce more and drive the price farther down so they have to produce even more. I believe that the Canadian tar sands lose money at $70 a barrel, so that is another source I would expect to dry up before US production got annihilated. Much of the security for the Libyan pipeline is still in the hands of splinter factions. Iraq is not looking too good; I was just reading about yet another city ISIS has taken.
There are a couple of permits just granted to export condensate from the US for the first time in about 40 years, of which we have way too much and the domestic price is low but which would fetch good prices on the international market. Have you not read the news of the refiners squawking about the sale of condensates that they appreciate having an abundant cheap supply of, so they can mix it with imported heavy crude to achieve the grade of oil they desire?
This slump was predicted last year; I expected no different.
Peak oil is a reality. I expect exploration and holding by production to continue unabated, although fewer units will be fully exploited with multi-well units. There is a dwindling supply of presently economic acres to drill. Some of the acreage getting the one well and done treatment looks to me like it would have trouble breaking even, but they arenāt drilling it for today; it is being HBP for the prices of 2020 because if you canāt hold it by production, someone else will profit from it when it does become profitable. Producers cannot sit on the sidelines if they hope to grow in the future. Iām not sweating it; the future is still bright for mineral owners, regardless of the few clouds.
Well said Robert. āThe futureās so bright I gotta wear shades.ā
Bob, you make some good points and Iām not trying to nitpick but I can only dream of ever being paid for $13 gas. According to my check stubs in 30 months of production the Poteet has brought a high of $7.98/mcf and a low of $3.40. Without doing a bunch of headache-inducing math, Iām going to venture a guess of $6 average for the 30 months. Chesapeake must find it profitable considering the 9 additional Poteets soon to go online.
I just looked at my site of choice and it says WTI is $88.85. Can I have a Hooray?
Kennethā¦ we were in well service business during that last boom and bust in the 80s and donāt wish to go through the bust again! We didnāt own royalty then but it (the bust) was a determining factor in our selling the well service business which my dad had started in some 35 years before we sold out in 1991. When you can work all your rigs all the time and still lose money itās time to do something different so we did. Thatās why we always advise to put a good bit of it in savings after you pay Uncle Sam because the good times never last forever!
Richard, the closest well was in 31-12N-4E and was a horizontal to the Woodford, so I would expect Hunton or Woodford for 25. Might be more comments on the Lincoln Co forum.
The price of oil dropping doesnāt make me nervous. Tell me Iām going to have a couple of dozen of my closest relatives living with me in a 3k sq ft 3 br house from September til after Christmas like what happened after Katrina here on the Mississippi Gulf Coast and I might get a tad antsy.
Can anyone please tell me what this legal description means that I found in one of my deceased motherās leases?
All of Lots No. 3, No. 4, No. 5 and SE/4 NW/4 (a/d/a NW/4)
Stephen: On your legal descriptionā¦ Lots are irregularly sized pieces of land to correct the square Townships for the curvature of the earth. They are normally on the north side or west side of a Township. SE/4 NW/4 means the Southeast Quarter of the Northwest Quarter of the section. A section is 640 acres plus any lot corrections. So NW quarter is 160 acres, and SE/4 of NW/4 is 40 acres. But if you have an undivided interest, you may only have a smaller portion of that 40 acres. For example, if Joe had 40 acres and dies and had 5 heirs, each heir would have an undivided interest in that 40 acres, or 8 net mineral acres each. I donāt know what the a/d/a NW/4 meansā¦ havenāt seen that before.
My sister and I had calls from Robin (a female landman) at Lone Star Drilling offering to lease our minerals. We like what she offered but neither of us took good notes.
Does anyone know how to contact them? I tried to Google them but got drilling companies. I suppose it is possible a drilling company may want to participate but I found it somewhat strange.
a/d/a might be Also Described As You can go to the
Some of my interest is in lots. It is my understanding that lots were made to adjust lot boundaries to follow the shape of the creek. In the area where our interest is in 6 1S 4W, that would be Wildhorse Creek.
Does anyone have the survey for that section?
John, see the link for the blm just a few comments below. You can get the survey there. A more current one if you have a stream may be on the Stephens county website. But I look at the BLM glorecords first