re: Tuscaloosa Marine Shale

Formation is at the same depths as the Niobrara in Colorado. Colorado has the Rollins gas sand above though and extensive infrastructure already in place. Operators can even use the wellbores of depleted gas wells for re-entry and sidetrack.

I'll jump in with a question. My family has had a lease for natural gas for thirty years in Morganza (Lacour/Debetas Well) The payouts for our parcel used to be decent per month but in the last 10 years they have gone down to about 20% of previous value . Everyone I've ever spoken that works in the industry says it will payoff huge in the future... anyone got any idea when?

Yep. It has been producing for thirty years now. The royalties have gone down to a few hundred a month. Perhaps it's like you say and the prospect of oil is at play as well in my informed friends opinion. Other more informed on this board may know.

Tuscaloosa Trend

Go Haynesville Shale

Both have some info.

My family has 20 acres just south of Amite and have not had any inquiries on leasing property for the TMS. Can I read anything into this or is the parcel size just to small?

Ask neighboring property owners if they have gotten any leases. I'm not familiar with that area. Small parcel sizes do matter but if neighbors have leases then you may get a call.

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Huh??? If they produce an average of 250 bopd @ $80/bbl that's $7.3 MM a year. It's paid off in less than 2 years.. I'll take that

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Keep in mind that the $10MM number does not include production costs, marketing and trucking costs, all of which is minimal. What is not is that these operators are only getting 75% net revenue and the mineral owner get on average 25%. So drop that $7.3MM down to $5.4MM.

We have still not seen the long term production numbers. There has been a lot of improvement and learning with the longer laterals and more frac stages, but keep in mind there are operational limitations with these long laterals. THere is a physical limit to how long the wells can be (8000 ft + 13,000 ft TVD = 21,000 ft) most coil tubing used to drill out the frac plugs have 19,500 ft restrictions. Under the right circumstances this can be increased and they are obviously looking for ways to make this work. The oil is there and it can be very lucrative to make it work, but i still believe we are a few years away before you see the kind of drilling that is in North Dakota and TX. There still needs to be improvements to technology and frac designs to overcome the poorer quality of the rock.

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TigerBite

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You may be right, that's just what we had heard from some people in the industry.

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You may be right, that's just what we had heard from some people in the industry

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April and May LLS averaged $20 over WTI, so the pure numbers they were throwing out may have been true at the time. June was $14 and July is about $12.50. It's trending lower because of the glut of light sweet crude that is hitting the gulf coast from Bakken, West Texas, South Texas, the GOM, and in some cases, West Africa. Hurricane season is tricky, but the general trend will be lower because of the infrastructure relieving pressure on Cushing (like Athanatos said). These are amounts paid at St. James though and they don't account for transportation, margins, etc., so the the netback at the lease will probably run at least $5 lower than LLS, and possibly a lot more depending on who is in the middle and exactly where the crude is coming from as well as quality.

I just don't think it's something to bank on from here on out because in all likelihood that spread is only going to shrink as a long term trend.

Crude is starting to see an oversupply situation to that which natural gas has gone through and the oil rig count needs to shrink or things could get ugly.

Bump