Chesapeake and the Deutsche Bank mortgage

I know it's still a fairly long time horizon, but does anyone have any insights or guesses as to what will happen when the five year period ends on the leases Chessie purchased from Everflow Eastern in 2012 and mortgaged to Deutsche Bank?

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Permalink Reply by Summer Johnston on September 17, 2015 at 3:10am

No. No relation.

I think we've moved too far away from my original question.

If Chessie can't sell the Everflow leases, will they simply expire in 2017 and will Deutsche Bank and Total be left holding an empty bag? I know the mortgages were backed by the minerals but I'm assuming (guessing, whatever) that they'll be worthless.

Permalink Reply by Joseph-Ohio on September 17, 2015 at 3:25am
I don't think so Summer.

If they don't end up selling them quite a few other things may happen that allows them (or the bank) to hang on to the acreage.

The lessor may find some dough to extend them.

The bank might extend them.

The bank may sell them to another interest who may extend them.

If a new lessor ends up with them I'm hoping it isn't some unfriendly (to the USA) country.

JMHO, but, like I wrote earlier above, they (the lessee and the bank) CONTROL a lot of acreage rich in Hydrocarbons and I've always thought it was all about CONTROL from the get-go. I don't think they want to give that up. Economics change dependent upon a myriad of variables. What isn't economic to recover this instant may become economic within the next heartbeat

Only my HO.

J-O
Permalink Reply by Paul Martinelli on September 17, 2015 at 4:18am

J-O.....come on man......give it up!

The "fat lady "  has sung on the are up North......at least for the next 15 years.

Take a vacation.......

Mike MurphyPermalink Reply by Mike Murphy on September 17, 2015 at 4:26am

PAUL go reply

Permalink Reply by Joseph-Ohio on September 17, 2015 at 4:40am
And you.

Not me.
Permalink Reply by Joseph-Ohio on September 17, 2015 at 4:40am
Paul,

Says you.

Not me.

Maybe sooner.

Haven't had a vacation for awhile - unless you call retirement a vacation.

So Paul, you think it's all over for the next fifteen (15) years for the Northern Utica.

On what basis do you estimate your time frame if you don't mind my asking / you responding ?

I think the Congress (Republicans) and the next election just might flip switch sooner myself.

JMHO
Mike MurphyPermalink Reply by Mike Murphy on September 17, 2015 at 5:32am

what does ur vacation and the next election have to do with the unproductive northern ohio Utica......maybe it not what ur smoking .....more like what are u drinking

Permalink Reply by Joseph-Ohio on September 17, 2015 at 5:36am
Don't drink.

Do you ? ?

BTW, was replying to Paul M. - did you read his earlier reply to me (which inspired me to write a reply back to him) ?

You know, written conversations work better when you read what the person you're writing to writes.

Just a friendly hint.
Permalink Reply by Paul Martinelli on September 17, 2015 at 6:30am

Not wanting to get into a drawn out back and forth conversation on this....
But....
1. the World's oil supply execeeds demands.
2. US shale fracking is expensive ( that is why shale drilling is slowing)
3.Only the most productive areas will be drilled first
(See BP's exit)
4.Other Shale/source rock areas around the world will begin to be explored.
5.new non fossil fuels are being developed.
Based on all that.....Drilling 50 BPD wells in Northern utica are way way down on the list of areas to be drilled.
IMOP.
I really wish they were drilling the North, and the wells were producing 1000s BPD....I really do....but the facts are just not there to support this view.

Permalink Reply by Joseph-Ohio on September 17, 2015 at 6:55am
We agree on most all of what you've written.

A big issue with me however and I think it should be for everyone, is the 'facts' you write about are only what the O & G producers tell us are 'facts'.

Saddest truth to me is that we only know what the O & G power brokers want us to know about how productive the northern tier of the Utica might be (or anywhere in the 'Play' for that matter). I for one take anything they say to us with many a grain of salt - basically I don't believe them when they're throttling back, shutting-in, or minimally producing from the wells they've already developed.

Why would they tell us the truth ?

So we can ask for more money for our leases ?

They've got their hands on the valves not us.

They report to the ODNR and the ODNR only cares about what they say they produce which may be (I'll write even 'probably is') a far cry from what they could produce.

Right now there's not even enough places to sell all or the fraction of what they want to produce.

Fifteen years ? ? Hope not.
Permalink Reply by Joseph-Ohio on September 18, 2015 at 1:04am
How about the reason shale drilling is slowing simply because they have enough right now ?

We need more market opportunity to have a reason to drill / develop new wells.

Keystone - need it.

More LNG customers - need them.

More conversion programs (from diesel and gasoline to natural gas) along with incentivization - need them.

More infrastructure to shipping ports - need them.

More refineries / cracker plants for our own light oils as well as the heavier - need them.

Oil wars and fighting to protect OPEC and SA production - definitely DON'T need it.

Pro landowner rights of ownership protections / protective legislation - NEEDED.

Leadership / Legislation pro all of the above - NEEDED.
Permalink Reply by Jesse V. on September 17, 2015 at 6:31am

I don't know when the expiration date is due on these but normally when leases (even ones with extension language) are due to expire the operator generally starts declaring units and holding what they can prior to having to pay out extensions or negotiate new leases. If you are seeing nothing then there is little interest. They will not pick up a costly option. That is the owner of the lease or any company with a mortgage interest. It's financial suicide. Those leases will expire. Everyone will lick their wounds. Perhaps new lease offers will come back around but if the area has not already proven to be a good area don't expect anyone to be giving anything other than table scraps. And why should they??

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