Rex Tillerson of Exxon and a brief statement about XTO

http://breakingenergy.com/2013/05/30/timing-was-off-for-xto-deal-sa...

Nothing specific or short term, but the fact that Exxon is in for the long haul.

Tillerson noted that the XTO deal was predicated on a 30-40 year outlook that sees natural gas growing in importance as part of the global energy mix. The company’sOutlook for Energy: A View to 2040 envisages global demand for gas will grow by 65% between 2010 and 2040, and overtake coal as the world’s second-most widely used source of energy.

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Permalink Reply by wyalusing jim on June 2, 2013 at 9:05am

not sure where the concept of dry gas areas being unprofitable comes from, but it is definitely not true. if it were not for the lack of transportation, much more dry gas would be produced in northeast pa.

wj

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 2, 2013 at 11:21am

Barnett is largely unprofitable at current prices.  The operators spend so much getting in that they need much better prices (which they had when they started) to get out of that thing alive.  Parts of the Haynesville are economical right now, but a lot of the field has produced underwhelming results and has made it a tough play to find profit.  Encana has some really nice wells down there but they're the exception right now.  

Permalink Reply by wyalusing jim on June 2, 2013 at 1:29pm

marcus, i'll give you that some lesser producing areas are not as profitable as they were at higher prices, but that still isn't the same as dry gas being unprofitable.

another aspect that has to be considered when analyzing profitability is the actual sales prices that are currently being gotten by producers. companies are not selling their gas at nymex or wellhead pricing levels.

dry gas is profitable or they would not be selling and drilling more wells as we speak.

wj

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 2, 2013 at 2:00pm

The areas I'm talking about aren't less profitable, they're not profitable at all.  There was a lot of land leased for the Barnett, far more than should have been in hindsight.  The Haynesville was originally over 1,000,000 acres.  The core, profitable area is now about 100,000 acres.  So essentially ~10% is profitable and the rest is extremely hit and miss.

"dry gas is profitable or they would not be selling and drilling more wells as we speak."

Tell that to the people at Exco who had a board member--T. Boone Pickens--screaming at them to stop drilling wells because they were losing so much money back in 2008-2009.  Problem was they couldn't stop drilling because their JV agreement forced them to keep operations going.  Sometimes companies have to keep drilling, even when it's not making them any money.  With NG prices where they are today there are plenty of viable plays, but that doesn't mean dry gas production across the board is profitable.  If Utica dry gas wells have high enough EURs then it'll be an economic prospect.  If not companies will just have to wait for the right market conditions.  Same as every other commodity based industry (except for gold).

What CEO said this last June: "We are losing our shirts," when discussing his company's NG production?  Hint: his name is in the title of this thread.

Permalink Reply by Tim Tarr on June 2, 2013 at 2:24pm

Wyalusing jim,

   Not as profitable is hitting the nail on the head. I'll add to that "at current prices".

Get >$5 Mcf and that changes big time. Don't need all that processing for dry gas. We need to get LNG exports or to take advantage of that "cheep" gas. With this "cheep" gas we could get glass, steel, aluminum and .... going in this area again.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 2, 2013 at 3:28pm

Bob makes a good point though.  The export price cannot explode because then it will lose the built in competitive advantage.  We have a tremendous resource in this country and we ought not kill ourselves trying to use it up as quickly as possible.  

Permalink Reply by CJ on June 3, 2013 at 11:57am

Any news on leasing?  I was ready to lease my property with different companies 4 times in the past 4 years, only to have them change their minds just prior to signing (within a matter of weeks).  It always takes awhile for my attorney to look over the lease, and add/adjust items.  I'm not comfortable signing these company leases as they stand.  That may be one of the problems.

Last company that changed their minds was EdgeMarc (and I understand all the variables that enter into any companies decisions).

Is there hope for signing a lease in the future?  A huge natural gas processing plant was just opened about 5 miles from me.

Thanks for any input.

 

 

Permalink Reply by Joseph-Ohio on June 3, 2013 at 12:45pm
I think there's always hope; but it also seems to me like if you
don't let them take advantage of you, you're going to be put
on the back burner (from what I read on these threads).
To me waiting for the right terms sounds better than ending
up with legal problems.
Permalink Reply by Oliver Perry on June 3, 2013 at 1:14pm

CJ,

I know you are in Butler County but I don't know what township. It seems that all the big players, XTO, REX, & Shell are only leasing specific areas where they need to fill in units. I think that's the way it's going to be now. Unfortunately the leasing boom is over in Butler County as of a year ago.

Permalink Reply by John OBrien, landowner advocate on June 2, 2013 at 1:13pm

It is unlikely that XTO has "pulled out" since they had been willing to buy 22+K acres worth of leases in MC.  Somebody is going to jump on this acreage just as soon as it is freed up.  My bet is XTO still wants it.  Much of this land is in Green twp. which makes much of it triple play territory.  My hope is that these folks don't screw up and take a lowball offer.  Since the truth is pretty much out that the value is high, I look for the highest bonus money yet in this transaction when it happens.

Permalink Reply by Jim Litwinowicz on June 2, 2013 at 2:34pm

Bob; there was an additional LNG terminal approved last Friday. It will be 50% foreign owned and located in Louisiana.

Permalink Reply by searcherone on June 2, 2013 at 2:19pm

Bob,

There is  truth to the rumor that they packed up--my solid believable  contact to the site in Center Twp. said they literally pulled up the stakes and told the landowner they would be back in two years.

Permit will be expired then so is XTO just seeing a prolonged legal battle or will they be back wanting the acreage that could be freed up?  Time will tell.

Interesting that XTO according to their website only has acreage in two Ohio counties--Monroe and Belmont.  There were some individual leases by XTO, but most of the acreage was acquired with the Beck Energy transaction. 

Perhaps there are some Exxon stockholders in Monroe and Belmont who are also in the middle of the voided leases.  Perhaps Exxon/XTO will need to explain to them why they didn't validate their acquisition from Beck Energy before finalizing it.  Looks like several somebodies were asleep at the wheel in the XTO division.  Perhaps Mr. Tillerson forgot to inform stockholders they had HBP acreage at risk.  At least Antero had the foresight to indicate that they have some acreage that is at risk from HBP.

Just my thoughts, Searcherone

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