One of the top takeover candidates in North American shale plays is GeoResources, which boasts leaseholds in the Bakken Shale and the Eagle Ford, has a market capitalization of only $760 million. The company owns 46,000 net acres in the Bakken, of which it operates 33,200 acres. GeoResources has drilled and completed eight wells in a 25,000-acre block near the border between North Dakota and Montana. In 2012 the firm plans to drill between 23 and 26 gross wells in which it will have a 25 to 30 percent working interest.Personal note: it's been my observation that GEOI is getting more active in the Bakken through its wholly-owned subsidiary, G3 Operating.
Friday, January 27, 2012
GeoResources -- One of the Stronger Shale Oil Companies -- Seeking Alpha
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I have been watching Geo Resources (G-3 OP) for a couple of years and they have become somewhat active in the Strandahl Field (Williams Co.ND) along with Marathon. They also participate with Oasis on some wells in the area. My guess is just across the border in MT is numerous undrilled acres (Roosevelt Co) and it would not surprise me if G-3 begins drilling that area or possibly participate with Oasis. The one problem is that these leases are nearing expiration dates and negotiating new leases will be very expensive, this said, I don't see them wasting much time this year with their drilling plans.
ReplyDeleteThat may explain the increased G3 activity; risk of losing leases.
ReplyDeleteI'm probably wrong, but I think in the aggregate the amount of lost leases will be minimal. It will be anecdotal, and we will read a lot about lost leases, but my gut feeling is these companies know what they are doing. They only have to demonstrate they've started drilling to hold the lease as I interpret the rules.
A company can outsource someone else to drill a well if they can't get their own rig to it; there is a glut of small rigs (<50 per cent utilization) and they could be used to spud the well, while waiting for the big rig to become available.
But this is beyond my expertise. Yes, there will be stories written about top leasing, new leases, expiring leases, etc., but I'm pretty sure the companies know which leases they are willing to lose and which ones they want to keep.
With the announcement that oil companies are going to decrease natural gas drilling, that frees up manpower, if not rigs, for the Bakken.
But you may be correct; I've seen the same thing: increased activity by G3.
I know of one section in the Strandahl Field where the mineral lease (majority) is still owned by the lease broker. This was a lease which was executed in 2008 and will expire this year. Makes you put some thought into what's going on or about to.
ReplyDeleteI expect to hear a lot of anecdotes about expiring leases. From the mineral owner's point of view, some mineral owners will do very, very well.
ReplyDeleteFrom the operators' point of view, in the aggregate, I doubt it will be much of a story; these folks know what they are doing. Once they start spudding, they have shown intent and that will probably be enough to hold the lease, again, based on what I've read at the discussion group.