Comment

Comment by petej on December 11, 2012 at 11:26pm

Jim,

Please address the "not one dominant player" comment. NW = Halcon, NE = Shell, SW = Hillcorp and SE = ?. This is all about geology and hbp. This is not about county lines this IS ABOUT GEOLOGICAL LINES. Mercer County could easily have been quartered 10 months ago from the geo maps.

This should be a 5 to 10 township group play not a county by county play! Geology, geology, geology, just as inreal estate; location, location, location!

Comment by petej on December 11, 2012 at 9:40pm

Jim, p umpjack, Lance, Enathan and Samuel,

Here is my thought which was (in a small group conversation) confirmed by a cx employee at the last meeting in Stoneboro (early Nov.).

Halcon, Shell and others (?) were bidding on the Vista deep rights. When Halcon made the Mercer County offer, they believed they would secure the rights. Now, once Shell aquired Vista's deep rights, a huge chunk of Mercer County ( north and east ) then became MUCH less attractive to Halcon. This is where the other deals Jim mentioned probably come into play.

I have a fairly good idea of Vista's leaseholds in Mercer County and this makes sense to me.

I'm not as sure as to Vista's leaseholds in Venango and Crawford, but, if you look at it from this viewpoint, does it start to make sense in those counties as well?

One additional piece of information to consider - the PUBLIC announcements of Halcon not paying certain areas of Mercer County and of Shell securuing he deep rights from Vista were only days apart ( early September? ). Does this also match the turn of events in Venango and Crawford (Adept & Halcon)?

Comment by Jim Litwinowicz on December 11, 2012 at 1:21pm

Lance, no one knows for sure why Halcon backed out of these leases plus the 20,000+ acres in Venango Co. My theory is: they signed these in June and then in Aug and Sept they announced the deals with Carrizo and the deal in Trumbell Co. They decided they liked the geology better(Higher wet gas concentration and some oil) in those areas and spent their budget on getting them so they had to dump the other leases.

But we still have several companies in Mercer, not one dominate player. We still have a lot of unleased parcels.  Add Cx's parcels with the NWLG in Crawford and that is 80,000-90,000 acres. Thats enough to attract new players. 

If the wells currently being drilled are good producers, you will see the current players compete for acreage and maybe two or three newbies also. If the wells are duds, prices will drop. And if the well results are location dependent, then there will be various offers.

Comment by p umpjack on December 11, 2012 at 1:14pm

lance spot on!

jim is still on his stool at the foxburg inn

we need to recall chevron paid over 6k an acre for atlas deep rights awhile ago however not all those old leases have unitizaton rights. In the late 90's early 2000  haliburton was thru those areas with thumper trucks and we all thought they were crazy yeh crazy like a fox......

Comment by Lance Nimmo on December 11, 2012 at 11:08am

Jim, if this was the case Halcon/Carrizo would not have backed out of your leases IMO in southern Mercer county. Why in the hell would anyone go where HilCorp had a 6 month headstart? It would be next to impossible to assemble a unit. The cherry picked areas by Halcon perfectly match my theory. Moreover, Shell's aquisition from Vista shoes Shell's value on pooled acreage that would just need a few "holes" filled. Chevron has the old Atlas HBP areas tied up, and should they decide they will grab the smaller parcels that aren't HBP.  It has happened all over our state. Once an O&G company dominates a certain area they hold the leverage, not land groups. Sorry Jim, agree to disagree!

Comment by Jim Litwinowicz on December 11, 2012 at 8:53am

Lance; have to disagree on several counts. One, quality of the area is important. If they see a huge payback they will offer more.  Thats why Belmont Co in Ohio got over $7,000/acre. And while much of Mercer is already leased the fact that there are at least four companies still active there means there is still competition since no "certain company" has dominated. And there is still a lot of land not yet leased.  We have over 25,000 acres in Mercer. Considering we have over 20,000 in neighboring Crawford and thousands more in Venango  means that there is the possibility of introducing yet another competitor into the game.

There are several wells now being drilled in and around Mercer Co. All these companies are closely watching each others progress. And companies yet to be heard from are also watching and observing, plotting and planning. If the wells come in big there may be a splurge of offers in the spring.

Comment by Lance Nimmo on December 11, 2012 at 8:09am

The quality of the area has NOTHING to do with the bonus money going down. The major players have Mercer county pretty well drawn up. HilCorp, Carizzo, Chevron, and now Shell all have locations where they are getting a stranglehold on leased acres. This happens everywhere. Once an area becomes saturated with a certain company, the money goes down because there is noone competing for the same ground. Not even a powerful "lawyer land group" can change that. 

Comment by Elnathan Cory on December 10, 2012 at 9:50pm

One last thought before I hit the sack. It is not the bonus that makes you rich it is the royalties. Take the bonus and hope they drill. If they do not you will only have to wait 5 years to get another bonus. I believe in this area.

Comment by Elnathan Cory on December 10, 2012 at 9:40pm

Lance, Shell knows that there are a lot of forlorn x-lessees in the area. They just want to catch them on the rebound and put together some drilling units. $3000 and 16.5% isn't all that bad if the lease is protective! My hope is that the first well drilled in the area is a "gusher".

Comment by Lance Nimmo on December 10, 2012 at 9:26pm

On edit, maybe if I would have contacted a lawyer I would have did better! LMFAO! Bloodsuckers

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