Famous Buell well (Buell 8H) about to be shut down!!! Chesapeake doesn't own horizontal drilling rights!
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Permalink Reply by Frank Nesmith on -
All this time we were all hearing Utica....wonderful....rich....Buell well is even known on Wall Street. Wonder how they will spin this when the "you know what" hits the fan and investors find out? I don't mean to bash drilling, but this is just plain wrong to treat landowners in this manner. I read on another post that their land agents moved out of Youngstown. Wonder if this lease language had anything to do with it. Seeing Chesapeake's prior actions, I can only imagine they will sue the land agents and try to defer responsibility.
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Permalink Reply by Buell Well on
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Don't get me wrong, drilling is GREAT, but as Judge Nunner wrote in his judgement order from January in the Sportsmen Club case, no third parties can be upset if the court issues orders which uphold the rights of landowners. Chesapeake can drill Buell or anywhere else as long as they pay to acquire the necessary drilling rights. Any line about "this is holding up development" only means Chesapeake is stalling until they find another way to rob Kenneth Buell blind. And If they treat landowners like this when the well's an embarrassment of riches (the best they've ever drilled supposedly, at least off the top in a new play) than how will they treat landowners whose interests are tied to an average or median well? Drill...just don't STEAL!
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Permalink Reply by 3rdk2fq1zz77d on
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Don't steal...that's rich. What exactly do you think CHK has stolen??? Embarrassment of riches, really??? I highly doubt that CHK is embarrassed by the amount of money the well will generate. Whether or not the well even returns the costs of its drilling is far from assured. You clearly know absolutely nothing about the oil and gas business.
Poor Kenneth Buell... perhaps he should have read the deed for the surface rights which he purchased. He waived off on his rights to receive even a single penny of surface damage proceeds for the drilling of a well or a coal mine. One hundred thousand dollars... I think CHK was very generous personally.
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Does Aubrey McClendon know anything about the oil and gas business jock-strap? There are these things called "earnings calls" (see Quarter 1 2012 on Seeking Alpha or any other site with a transcript). Aubrey called the Buell well "our best shale well ever".
I'll say that again: Chesapeake's CEO and (former) chairman of the board called it "our best shale well ever".
You really need to do more homework before talking about something this big Jacque.
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First of all, as I first stated when this case originally made some waves on this website, this case will be appealed, and it will be overturned on appeal.
Secondly, the original post here states that CHK's well is actually owned by Ken Buell...how on God's green earth you came up with that conclusion I will never know. CHK owns the well and nothing in the court decision states otherwise. Even assuming this assinine decision with all of its perverted logic were to be upheld on appeal (which it won't), CHK will never lose ownership of the well. CHK can simply plug off the horizontal lateral that extends beyond the confines of this property and produce this well till hell freezes over. The only thing this Judge decreed is that CHK doesn't have the rights to use the surface for the purposes of removing gas from the adjoining tracts. I've read the actual deed and frankly I think that the Coal company created a reservation that effectively gives them (and in this case their assigns, which is CHK) all of the rights necessary to use the surface belonging to the Hunting Club.
Several of you have stated that CHK somehow dropped the ball on their due diligence or their title work... that's a crock. You can hand this particular deed to one hundred different oil and gas title attorneys from one end of this country to the other and I do not believe that a single one of them would construe this document as limiting CHK's rights to drilling and producing this horizontal well. Is CHK arrogant...damn straight they are, its in their DNA which Aubrey McClendon has infused his company with. Are they incredibly difficult to deal with...oh hell yes. Are they wrong or did they do anything particularly heinous in this case... hell no. They were merely exercising the rights to which they rightfully believed they possessed. Wall Street isn't going to give this a sideways glance and Total is in the oil and gas business and I can assure you they too believed CHK was correct.
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Never read a more succinct explanation than King of people- of- the- Shale.
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Hmmm... wish I was smart enough to interpret that comment???
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whether it gets overturned is immaterial. For starters, the decision will likely be upheld because it has 100 years of Ohio case law supporting it. More importantly, any reversing by an appeals court will occur no sooner than 12 months from now. That means Buell 8H will be shut in for approx 10 months. decline curve, damage to the well, more evidence CHK is ripping off counterparties - Ohio landowners, JV partners, etc. Does Chesapeake have the $20 million to make this go away quietly? Appeals in Ohio courts are the least of its worries.
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CHK doesn't own the horizontal drilling rights, which is the entire ball game when it comes to shale drilling Jacques. Where have you been? Or will CHK's stockholders, Total, and prospective JV partners will be perfectly happy drilling vertical wells?
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This aint Kansas anymore Jacques, nor Texas, nor Oklahoma. As a general rule, if you dont know coal country mineral law then don't build a 1.3 million acre position in said jurisdiction with the idea of flipping it to stay afloat while nat gas prices recover. McClendon claims his Utica position is worth more than CHK's market cap. Unfortunately, they will have to buy some (much?) of that position a second time and now after signalling its true value to the locals. Wall Street won't look sideways? Ok, sure...
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Wall Street... the best proof of Wall Streets ambivalence to this court decision rests with CHK's stock price. Since this decision was rendered on January 17th, 2012, CHK has weathered natural gas price declines which essentially mirror the path of their stock price as depicted in the second image below. CHK has also weathered the disclosure of Aubrey running a commodity hedge fund from this CHK office, price fixing allegations, and countless other bad press releases characterizing the company as a rogue operator... and yet... they live on. No, Mr Buell, I don't work for CHK, in fact I am a competitor of theirs. No, Mr Buell, I don't work for Total. Nor do I intend to represent CHK in a legal capacity (although I suspect I could have done a better job than the counsel that represented them at the trial court level). Tell you what.... set up an escrow account with, lets say $1,000 each (you and me) with the escrow agent having instructions to deliver the escrowed funds to the individual that accurately predicts the outcome of this case on appeal. Sound good to you?
CHK stock price (last 6 months)
Natural Gas prices (last 6 months)
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Wall St. likely never even heard of the January decision. With Buell joining, they will. That's why they call it NEWS, Jack.
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