Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-06-2013, 08:58 AM   #41
Full time employment: Posting here.
ronocnikral's Avatar
Join Date: Apr 2010
Posts: 853
Originally Posted by haha View Post
Although your viewpoint as an industry participant is helpful in some ways, it also gives you a very different bias and interest from someone who is primarily interested as an investor, or as a citizen trying to see into the future.

Your need is well paid, continued employment, as long as you intend to work. And security of your pension, if you have one. An of course what part of the industry you work in makes a big difference.

Drilling is at very high levels in the US today, which is very good news for anyone connected with drillers, or mud suppliers, or fracking chemical suppliers, pipe, etc. IOW, an employee or principal in this industry is in hog heaven, as the producers costs are their income.

But lease fees in the more periperal areas of some of these gas plays, for example the Haynesville, and some of the Marcellus have fallen dramatically recently.

For some industry participants the best world is one in which producers are on a treadmill trying to keep up production with rapidly depleting expensive wells, as long as there is acreage to be drilled and capital to drill it.

Full disclosure, I do work for an operator ("producer"). And I do agree that my view point is different from that of an investor. I choose not to tilt towards Oil/Gas/Energy beyond what my index funds give me. Since my income is derived from that industry as well.

But, I would like to address some of the things that were said above, which my experience shows me to the contrary. 1) In the woodford (oklahoma), I drilled some wells last year with the expectation of them being un-economic stand alone, but the idea was they would hold the lease. I found service prices were dropping, and I was able to drill them for about $2MM less than what my employer thought I would. One well has paid out already in about 1 year, the other will soon. With that success, it prompted a small private company to drill an adjacent section. So, these areas aren't so devastated as many would think. Yes, rig count is down, but there are companies out there betting an improvement of gas price and getting the wells down now while they are cheap. To me, this is the correct approach, as the wells will probably pay out in 2-5 year range with today's prices if you can control your costs. Everything else is upside, with little downside. Very few public companies will do this though, b/c investors don't want $50MM+ developments in nat gas.

2) as far as leasing costs in the marcellus. We had some expiring leases and sent the checks per the agreement to extend the lease. No one cashed the checks.

Again, I remain optimistic, perhaps naively, about oil and nat gas in this country and worldwide. And fear none about any of my posterity facing empty reservoirs.

ronocnikral is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-06-2013, 09:11 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
Join Date: Apr 2003
Location: Hooverville
Posts: 22,580
Originally Posted by ronocnikral View Post
Again, I remain optimistic, perhaps naively, about oil and nat gas in this country and worldwide. And fear none about any of my posterity facing empty reservoirs.
Thanks for some very helpful additional information. And of course I agree wtih you completely, our children will never face empty resevoirs. Not least because it is essentially impossible to empty a resevoir. But I feel pretty sure that todays surfeit of supply and low natural gas prices will give way to balance, and if LNG exporting gets going, American gas prices should eventually approach prices in in other parts of the developed world, which are not exactly cheap.

Regarding crude production, prices are fairly high now, and US production has gone up esp with so many rigs formerly drilling for unconventional gas now drilling in the Bakken and Eagle Ford etc. But world production stays on its long plateau, even with with these high prices.


"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


All times are GMT -6. The time now is 01:15 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.