And there was much rejoicing in the land.... Gas Prices

[Ruffdaddy]

Im less worried about oil...more worried about the entire economy at this point.

[GrayStangGT]

Now its below $31 this is looking ugly

[03mustangdude]

broke thru $32 today.

[Sean88gt]

In Texas, for privately owned land, the primary term (time allowed to establish production or start drilling), is negotiable but averages 3-5 years. Some landmen will throw in an extension option (for more $$).


Once you've done that and moved from the primary term to the secondary term you generally can not take more than a 90 day break from production. Some landmen will use "operations" in place of "production" in this part to be sneaky.
Production = production in "payable quantities"
Operations = production, but not necessarily in payable quantities - so they could pull a bit out of the ground, but not enough to have to pay you royalties (or something like that, I'm not a landman), but also reset that 90 day clock.

There is also maintenance allowed where they can shut the well down for a period of time. I believe it has to be reasonable though.

[Strychnine]

How long can you sit before you gotta give it up? I know you gotta run the well every 60-90 days in texas...but hows that work with drilling?

In Texas, for privately owned land, the primary term (time allowed to establish production or start drilling), is negotiable but averages 3-5 years. Some landmen will throw in an extension option (for more $$).


Once you've done that and moved from the primary term to the secondary term you generally can not take more than a 90 day break from production. Some landmen will use "operations" in place of "production" in this part to be sneaky.
Production = production in "payable quantities"
Operations = production, but not necessarily in payable quantities - so they could pull a bit out of the ground, but not enough to have to pay you royalties (or something like that, I'm not a landman), but also reset that 90 day clock.

[Ruffdaddy]

But why would you want to get into the equipment / operating side right now?

I say spend your money on leases, and contract every one of your services... or just spend your money on leases and sit. In this market (without long term contracts setup before buying your equipment) you'd have a VERY hard time keeping your utilization high enough to make that worthwhile if you don't already have a presence out there. You buy equipment now and you're stuck maintaining it until it all turns around - and you don't know when that will be. It's easier and cheaper to run equipment and maintain it as you go than it is to stack it and refurb in the future.

How long can you sit before you gotta give it up? I know you gotta run the well every 60-90 days in texas...but hows that work with drilling?

[Strychnine]

If that's the case, we might need to pool some cash together and buy up some equipment and supplies on the cheap. I think between many of us on here, we can get a low-overhead operation going that could run through this dip.

But why would you want to get into the equipment / operating side right now?

I say spend your money on leases, and contract every one of your services... or just spend your money on leases and sit. In this market (without long term contracts setup before buying your equipment) you'd have a VERY hard time keeping your utilization high enough to make that worthwhile if you don't already have a presence out there. You buy equipment now and you're stuck maintaining it until it all turns around - and you don't know when that will be. It's easier and cheaper to run equipment and maintain it as you go than it is to stack it and refurb in the future.

[Broncojohnny]

If that's the case, we might need to pool some cash together and buy up some equipment and supplies on the cheap. I think between many of us on here, we can get a low-overhead operation going that could run through this dip.

I know where we can get all the debt we want for cheap! Wait a minute.....

[red89notch]

If you guys pump oil can we finally get that DFWMUSTANGS gasoline tanker group buy going?

[Ruffdaddy]

If that's the case, we might need to pool some cash together and buy up some equipment and supplies on the cheap. I think between many of us on here, we can get a low-overhead operation going that could run through this dip.

Funny you mention that. I was actually thinking that after the bankruptcies and liquidations, equipment will be cheap enough to drop the cost to drill and produce even more. At least until units are all used up.

[Broncojohnny]

I'll just go ahead and stop until things turn around in a few years.

Rig count this week -34
-20 oil
-14 gas


Over and out.

What you have to see is this capitulation where people just throw in the towel, that is the only thing that will take capacity out of the system because money is so cheap that they can pretend that things are going to turn around forever.

I read a story the other day that 60 E&Ps had already declared bankruptcy.

[Gasser64]

Come on 96 cents per gallon!

[no4njnk]

I'll just go ahead and stop until things turn around in a few years.

Our sales manager said he stopped looking, no point with seeing bad numbers all the time that you cannot do anything about.

[Sean88gt]

I'll just go ahead and stop until things turn around in a few years.

Rig count this week -34
-20 oil
-14 gas


Over and out.

How many more can they mothball?

Feels like oil is going into the 20's.

[jw33]