For years now there have been meaningful, important discussion on this forum. But there is a segment of the population--both on and off line--who have remained convinced that the good times will never end and that there's always a bigger payoff waiting for everyone down the road. Some of us have been trying to explain that this stuff is cyclical. That it is impermanent. That it is beholden to cheap money and perfect market conditions that rarely remain static. For years I've been called many different names, most of them not something would repeat in mixed company. At some point people are going to acknowledge that those of us who have spent our adult lives in the industry--and who posted facts on here at great risk to our professional lives--were in fact not trying to swindle you. We have been here to help you since day one. Because even though helping you may not have been the best way to maximize our own profits it helped us sleep at night. It made it possible to hold our children and not feel like we were the cause of someone else's suffering. And for that we were called liars and thieves. Ladies and gentlemen, you are now witnessing the other side of the shale mirage. When October hits and the revolver raid happens look for a few of these shale players to get wiped out entirely. Look for consolidation. Look for blood in the streets. And then, when the dust settles and the bodies are strewn about, please remember that you were warned that nothing lasts forever. Remember that some of us truly wanted to help you even though we came from the big, bad, evil industry.
As for me, I've moved on. I left the oil and gas industry because there's nothing left for me to do. I have a family to feed and I can't do it by making $0/month. Everything you think you know about how the oil and gas industry operates is a myth. Unless you've lived it then you're just relying on whispers that come and go with the wind. When commodity prices were high everyone made money. Even an idiot can make money at $100 oil. But now that the tide has rolled out you get to see who's swimming naked. And guess what? It's all of them. They're all still breathing because of junk bonds and gullible investors who were so desperate for yield that they were willing to lend money to anyone who offered them a halfway decent coupon. If you haven't been drilled yet here's my advice: go back to your life. Hug your kids. Kiss your wife or husband. Forget all about the notions of Jed Clampett wealth that were promised to you by hucksters in cowboy boots or anonymous commentaries on this blog. Focus on what matters in life. We are barely into a cycle that will be long, hard, and will crush the fortunes of a lot of oilmen who thought they were smarter than everyone else.
Matthew, good thoughts. Oil and gas is a finite resource. The shale story to be told here is not a sprint but a marathon that our kids and grandkids may see fully rolled out.
Dooms day alert! Are we really looking at a dooms day scenario? If those of you out there who were only seeing mega wealth potential, then I understand your disappointment over current market conditions. But, many of us are looking for the opportunity to sell our natural gas and earn money from it`s sale. Just as we can sell timber for profit from our property, we want to sell natural gas and make a profit, too. Will we become mega millionaires, hope so but probably not, but gas royalties will be welcomed to supplement our regular income. Having to wait longer will be difficult for us older landowners, but we know our children, as Keith points out, may be the ultimate beneficiary. That`s OK, too.
Do I still believe that demand will increase during the next several years...you bet I do! I believe the increase in demand will come from new pipelines with take away capacity to the east coast, to southeast US, to the Gulf of Mexico region, north to Canada, to the west, and northeast into New England. And then there are the LNG plants being built for export of natural gas. Are all these sources for natural gas lies? Personally, I don`t look at the current slump as a "bust" but rather a slowdown to allow demand and all the related infrastructure to catch-up to production capability, and then we enter into the next chapter for the shale gas story in the United States. My glass is half-full!!!
Depressing but interesting.
What I see for now is the contraction of the shale play, not the death.
Yes there will be casualties, but it will survive to bloom another day.
During working life in the industry here in the Appalachian Basin I have witnessed three boom/bust cycles.
And that is the nature of the oil and gas business, feast or famine. I believe this time is different only in the size not the nature. It's all part of the cyclical nature of the business.
As you point out, we are in a part of the cycle where the buzzards will feast on the remains of the departed.
As a part of that feasting is the rise of the mineral buyer. Again, as you point out, the land owner should put thoughts of great wealth out of their minds for now. The disappointment caused by the reality of dreams destroyed is the perfect time for these buyers to swoop in and pick up o&g rights from the disappointed.
I am not saying the mineral buyers are evil; it's all a part of the business cycle.
But, I would caution those whose dreams of instant have been wiped away. Be very careful when deciding to sell your o&g rights. Once they are gone, they are gone forever.
For some it will be the correct decision to sell; for others it will be a mistake that may be regretted forever. If you are in the process of deciding whether or not to sell I suggest that you take a breath, clear your head and take your time.
I am not against selling o&g rights. I believe it's not right for everyone.
Dexter, I bet you end up back in the Oil & Gas biz, make a bunch of money and help many people.
Don't despair, the next stage is coming soon, The new players will need people to figure out what went wrong and help cleaning it up.
We've had an "amateur hour' that lasted about a decade.
None of the land/oil & gas owners should feel bad about any mis-steps. I attended a lecture in the 1980's given by IBM's Thomas Watson, Jr.(his Dad founded IBM). Watson said anytime IBM does something in business for the first time, IBM usually receives a very expensive, painful education.
Like so much in life, gain comes from pain. I believe it's unavoidable. For me-all of the unpleasantness--it's like water off a duck's back.
Don't mess with Texas! Don't ever, ever mess with Texas!!
Thank you Dexter. Honest people with good intentions and a deep knowledge of the industry are a rarity these days. I bristled at first, very early on, when you expressed some doubt about the immediate development in NE Ohio. No one wants to hear negative facts at the beginning of a boom, but the truth should never be out of style. Thanks for your insight and advice. It seems to me to be, as always, solid. Thank you also Barry for describing a sound and intelligent approach the future. As for me, there's the old joke about the kid who starts digging into the manure pile because "there has to be a pony in here somewhere". I don't mind digging to find it, though I bet Dexter would tell me to just walk into the barn and look. Some people just have a better grasp of things. At any rate, a little more work, and however it is found, I bet my kids at least will get to enjoy the heck out of that pony.
Dexter, I'm sorry to read that you're leaving, both the industry and this forum. You have, pretty much every single time I read your posts, been a source of good and useful information.
As far as the hard times go, the last time we saw something similar to today it took the "oil business" just about 15 years to pull out to the doldrums. I'm not saying that we will not see aggressive exploration and drilling again until 2030, but I don't think it is reasonable to expect it in eight months, either.
I will still be around to discuss the macro issues, especially from an investment standpoint. But I'm now shut off from the inside track of what's really happening within the industry on a micro level. Thus any advice I give would be speculative, and I've tried to steer away from that. I came here to help people with the cloudier issues, but now I can't effectively do that. I can't speak to specific landowner groups, company activities, etc. Thus my value to all of you has declined. But I'm happy to hover around and answer questions when I can. This place has become a destination for me and I hope that I can still be useful to all of you.