Monday, December 13, 2010
"I don't like to buy acreage for fair price” says oil company executive
With each passing day I become ever more convinced that acreage in the overpressure oil window will eventually see lease bonuses far exceeding the $30,000 per acre and 27 1/2% royalty that was paid for Barnett and Haynesville acreage 2 years ago. Thanks to this blog, I now have a network of landowners and others with pertinent and important information that supports that notion and buoys my optimistic appraisal. Eastern province Eagle Ford acreage in the thick overpressure oil window is worth many times more than Barnett and Haynesville sweet spot acreage was worth when operators paid $30,000 per acre lease bonuses and 27 1/2% royalty. Eagle Ford is poised for historic highs in lease acreage deals to be made soon, very soon.
From the very inception of this Eagle Ford blog, I have steadfastly and methodically exposed the manner in which operators have flagrantly mistreated landowners. In doing so, I have merely pointed out a few of their unscrupulous tactics and deceitful behavior that has occurred in the Eagle Ford. The full extent of their deception is beyond the scope of my blog. My paramount objective has been to give landowners some hard pertinent facts, and useful information they can use to fairly negotiate a oil and gas lease. As it turn out, the term “fairly negotiate” is a oxymoron in regards to how operators conduct their leasing operations.
For the most part, I have used the operators own words to document, report and point out what they themselves have said, usually to their stockholders and investors. I have merely used their own numbers, facts and arguments that they themselves have used during their conference calls. I listened carefully to those conference calls to their investors streamed over the internet and I took notes. For the most part, my blog has only parroted what they themselves have said. I have been faithful to the truth and I have fairly reported the facts in regards to what operators have said and bragged about publicly. The facts speak for themselves, and my blog is merely an amalgamation of those facts. I have simply codified and highlighted some of those facts, and in doing so, I have exposed how operators and their landman agents have used stealth, cunning, deceit and lies in their brutal exploitation of Eagle Ford landowners who signed oil and gas leases with them early. Their callous treatment of so many honest, gullible and uninformed landowners has been nothing short of shameful and borders on dishonesty.
Because of my blog, all eyes have now been opened as to what a fair price should be for land in the Eagle Ford. By now you should know that all land is not equal, some land is more valuable than other. Landowners in the thick shale of the overpressure oil window have extremely valuable “proved” acreage. This blog has laid bare those facts, and I have provided full transparency for all Eagle Ford landowners to see how operators have used their army of landman to conquer Eagle Ford landowners. Aubrey McClendon, the CEO of Chesapeake Energy, refers to his leasing agents as his "army of landman.” There is nothing more telling in regards to how landowners have been exploited than McClendon's remark "I don't like to buy acreage for fair price, I like to go in and put a play together where we put our army of 5,000 landman to work, and we are buying it lease by lease for a very inefficient cost average to the rest of the industry to try and replicate and we make it a transaction where there is not a public market, it's us and the landowner and we're gonna most generally going to get the benefit of that side of the transaction, so think about again, every time we move we are buying acreage worth 5 to 10 times what we pay." That remark sums up how operators see you the landowner, as someone to exploit and conquer.
I have no idea how high lease bonuses and royalty in the Eagle Ford will eventually go. I do feel fairly certain that prices are poised to explode higher and that many savvy operators will eventually be paying on the order of $100,000 per acre lease bonus and 30% royalty for some Eagle Ford acreage, and though not happy about paying that, they will, because even after paying those huge amounts, the overpressure oil window will still be enormously profitable for them, leaving them a lot of room to make millions of dollars. Even at $100,000 per acre the deals will still be lucrative and profitable for them, the overpressure oil window is that lucrative. It's all perfectly true. This might sound like the musings of a mad man but look at the results of the wells being brought in and you readily see that the figures don't lie, the Eagle Ford is unlike anything you have ever seen or heard about before. If you still own acreage and are not leased, demand a fair price. The oil in the ground will only become ever more valuable. Time is on your side, don't rush to make a deal. You won the lottery! Don't give your winning lottery ticket away!