tag:blogger.com,1999:blog-1149283829854298377.post2517901818356363500..comments2024-03-28T15:12:38.709-05:00Comments on The Million Dollar Way (The Bakken Oil Blog): Fourteen Permits Renewed; Nine New Permits; Seven DUCs Completed; And, A Pronghorn In A Wheat Field -- July 12, 2019Bruce Oksolhttp://www.blogger.com/profile/10952652803684625738noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-1149283829854298377.post-28680707581770101882019-07-13T13:53:27.021-05:002019-07-13T13:53:27.021-05:00Pretty funny... glad to see you are putting all th...Pretty funny... glad to see you are putting all this into proper perspective. Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-79843763045401308502019-07-13T13:48:21.447-05:002019-07-13T13:48:21.447-05:00Not a bad option either. Put grannie on the truck...Not a bad option either. Put grannie on the truck and move to Beverly, Hills that is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-27899779161097666782019-07-13T07:15:28.011-05:002019-07-13T07:15:28.011-05:00... or just sell everything and move to Phoenix. ... or just sell everything and move to Phoenix. Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-77328858608043434362019-07-12T23:09:19.924-05:002019-07-12T23:09:19.924-05:00If you want to make it really clean, just auction ...If you want to make it really clean, just auction off your mineral rights (sell them). It's one number and less risks for the future funny business. The downsides are that sometimes separating mineral rights and surface rights can cause issues down the road because there's no longer a shared desire by the leaseholder to have development proceed. Also, you have to see if the taxes will kill you. <br /><br />But if you just want a super clean deal, selling the minerals is the way to go.<br /><br />Still have an attorney represent you and look at any land use issues. But at least you don't have to worry about games with the measurement of the volumes or the prices obtained for them or the midstream costs sneaking into what is supposed to be a topline deal.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-33166709151014342052019-07-12T21:08:10.769-05:002019-07-12T21:08:10.769-05:00Again, I don't have enough experience in this ...Again, I don't have enough experience in this arena to make any comments. But it's my experience that the reader reflects what 99% of mom-and-pop mineral right owners have told me. And that's why early on I suggested that anyone who has mineral rights in four or more wells needs to be represented by a professional before signing additional leases, etc. Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-10659688782121864462019-07-12T21:01:48.478-05:002019-07-12T21:01:48.478-05:00The reader added another comment which I accidenta...The reader added another comment which I accidentally deleted (once deleted, I can't get it back). Sorry about that. Here is what the reader wrote:<br /><br />It's basically just extending the idea of "top line percentage". Any time you have an offer to do profit sharing or the like, try to get the split off of the top line. It's not trying to get more money (the percentage can be adjusted to reflect coming out of a bigger number). It's just that it's a lot harder to manipulate the top line than the bottom line. The whole philosophy of lease contracts has been to take the percentage "off the top". Companies are trying to play games to take it off the bottom. Again, it's not even to try to change the amount allocated per se, but just to control companies from doing things that are wiggly that landowners can't anticipate.<br /><br />When you go to lease the mineral rights, you can still have different companies compete. And no company has to sign for something that doesn't give them a return. But just constructing the contract so that the leaseholder doesn't need a lawyer and an auditor AFTER the lease is signed makes everyone's life easier. Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-57547393259049486872019-07-12T20:59:27.346-05:002019-07-12T20:59:27.346-05:00With regard to permits are "just paper,"...With regard to permits are "just paper," I refer readers to this post in which I recently went through every permit issued in calendar year 2017:<br /><br />http://themilliondollarway.blogspot.com/2019/06/a-snapshot-in-time-north-dakota-oil-and.html.<br /><br />I picked calendar year 2017 for a specific reason: a recent year but not so recent that there were still a lot of DUCs.<br /><br />Of the 1,189 permits issued in CY17, only 56 permits were canceled (56/1,189 = 5%). In other words, 95% of issued permits are eventually drilled (there are still some permits that have not yet been drilled and those permits could be canceled, but in general, it is safe to say that an issued permit will eventually result in a drilled well. <br /><br /> TA: 2<br /> SI (DUCs): 87<br /> PNC: 56<br /> loc: 111<br /> dry: 12<br /> drl: 26<br /> conf: 166<br /> with IPs: 729<br /><br />Permitting activity remains my #1 metric. If permitting trends to zero, it would be very concerning. Even when active rigs trended toward 20 just a few years ago, I was not concerned; there was too much permitting still going on. <br /><br />Right now there are enough "outstanding permits" that if permitting were to trend to zero, there would still be a lot of wells to drill BUT if permitting trends to zero, it pretty much tells me all I need to know about the basin.Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-24934462409332566792019-07-12T20:39:30.814-05:002019-07-12T20:39:30.814-05:00Noted. I don't know enough about the subject ...Noted. I don't know enough about the subject to comment. When it comes to finances / money, I would be the wrong one to ask or to explain.Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-65840235396330752322019-07-12T20:35:40.552-05:002019-07-12T20:35:40.552-05:00I'm looking at longer term trends. If I see pe...I'm looking at longer term trends. If I see permitting trending to zero, I would start to be quite worried.Bruce Oksolhttps://www.blogger.com/profile/10952652803684625738noreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-83191624232860045142019-07-12T20:33:46.298-05:002019-07-12T20:33:46.298-05:00They should just write the leases to be for HH gas...They should just write the leases to be for HH gas and for WTI oil. Yes, there is processing and transport required to get it to that. But the companies can just lower the % to account for that (and take the risk). In addition, there is the value of the NGLs to help compensate the companies. There's just too much lack of transparency otherwise and too many ways the companies can play games with the midstream otherwise. <br /><br />I really do think this is the fairest way to do it and I would just negotiate for that if I had a large lease (large enough and the companies will cooperate.) Again, it's not even about getting more money out of the operators, because sure they would give a lower percentage if forced to do without the deductions. But it's about transparency and accountability. Companies are much more able to take midstream risk than leaseholders. And it would also stop some questionable partnerships with midstreamers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1149283829854298377.post-8714544045590913662019-07-12T20:25:06.160-05:002019-07-12T20:25:06.160-05:00I think permitting is a lot more variable and mean...I think permitting is a lot more variable and means a lot less (it's just paper). Sure, in the end every well needs a permit, but they also routinely permit more than they drill.<br /><br />Rigs on the other hand are burning money.<br /><br />The week to week CHANGE means little. But the LEVEL means a lot. IOW, if rigs dropped 5 from 60 to 55, this doesn't mean as much as the fact that you are at 55 (or 60) compared to being at 30 (crash) or at 180 (boom). It's like prices. Dropping $5 from $60 to $55 is still better than going up $5 from $25 to $30. I mean, 55 is almost twice 30! Level is what matters, much more than change.Anonymousnoreply@blogger.com