Replies to This Discussion

Permalink Reply by Sam Douglass on September 5, 2012 at 3:42pm

Good question.  I have not heard anything to suggest that Crawford County and surrounding counties should not be acquisition targets - particularly when published material indicates it is an area of oil on the west side and wet gas to the east.  At the moment these are supposed to be premium targets.  While it seems likely that all of this will prove true, next to nothing has been done to prove out the prospect.

My current theory is that the fact Chesapeake has backed off creates a new time in lease acquisition for now.  Read up on Chesapeake and how it has set the pace for the industry and out bid and beat many of its competitors to grow from next to nothing to an an extraordinarily rich successful company.  I do not think the competitors particularly liked Chesapeake for that and in the last year it has been overwhelmed with attacks on its unconventional, but successful way of doing business.   The people who attacked the company did not, in my opinion, give credit to its leader for creating tremendous value - probably still do not understand it. I bought a few shares at $17.5/share and watched unconcerned as it went down to $15 and am more comfortable as I see it go toward the value I think it should exhibit.

In the meantime Chesapeake has basically stopped its aggressive acquisition program and concentrated on operations, primarily in the oil and wet gas areas, to demonstrate its value.

Without Chesapeake out there setting the pace on acquisition of leases, the others can fall back for a while and lower their offers.  In time, that should change.  Prices of oil, wet gas, and dry gas will continue to recover as the market rapidly expands.  And the big guys, directly or indirectly will become more aggressive in picking up reserves from prime areas of oil and wet gas -- and even dry gas areas.

That is my theory.  Anyone else have ideas?  Spend a little time on the Internet.

Permalink Reply by gary smith on September 9, 2012 at 1:26pm

i had a reliable source tell me that cabot oil retained the utica rights when it sold to range in crawford county. that was last year. this summer i ran into the person and asked if the well in cochranton had cabot in on it. i was then told that cabot retained 50 percent of the utica,not all of it, and that cabot was involved in cochranton.if true, and the wells being drilled come in, maybe cabot will unleash some rigs and lease money.

Permalink Reply by Bob Jenness on September 9, 2012 at 3:50pm

The longer they wait, the more of us they'll starve out into taking "low" leases.  On the other hand, at least one of those "small players" has been known to write more landowner-friendly leases than at least one of the biggies.  The buyout strategy has always been part of this business, from what I've read - e.g. Mesa-Hugoton, Chevron-Atlas, and Exxon-XTO.  Those biggies don't really want all that dirty old risk, just big new proven reserves and big profits from producing into a high market.  This turns the little guys into just another flipper, if they can't drill and sell the production, doesn't it?  

Then there's CHK, whose CEO freely admits his leasing is mainly to capture reserves at a good price.

As landowners, we need someone whose belief system is solidly in the drill, baby, drill camp!