As I was sitting in the local restaurant this morning , small city in Ohio,  I overheard a couple guys who work in the industry.  I won't mention who they work for but they were discussing the hurt that this industry is starting to go through. Alot of companies are doing away with jobs. Anyway from the sounds of it there's going to be an awful lot of vertical wells going in to hold properties.  Never thought of that happening again since Oxford oil did it a few years ago.  I can believe it will happen. Scary thought for alot of folks but maybe there's some good leases out now that will help prevent that. Let's hope 

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Unfortunately many of my neighbors are stuck in old Oxford leases that vulnerable to this tactic.

Not a lot of the lease around this area Ed. I know a bunch that are vulnerable. A lot of those people didn't use attorneys. Not that it would have helped, I know a lot of attorneys who don't know much more than I've learned on here
Sounds like those industry guys (probably landmen) didn't know what they were talking about.

For traditional vertical development, an operator typically needs a source rock (creates the gas), a reservoir rock (holds the gas), and a trap rock that traps the gas in the reservoir. All three things need to present themselves in a location for a vertical well to be viable.

On the other hand, shale formations are unique in that the source, reservoir, and trap rocks are all contained in the shale itself. This basically means that the shale is a more continuous resource. It doesn't depend on unique geological features to provide suitable locations for drilling. This is one of the reasons why the companies are able to simply stack the drilling units next to each other in a uniform patern--the geology allows it.

So the idea from the industry guys is a mediocre one at best. It would be impossible for the companies to hold all of their shale leases with conventional vertical wells. I can guarantee that the companies don't have the locations since the verticals depend on trap features, which are not as uniform and continuous as the shale.

HBP on AEP land? 


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