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re: 9000 unused oil leases. Inform me please.

Posted on 3/6/22 at 6:29 pm to
Posted by 79ABTEXTIGER
Abilene, TX
Member since Jul 2009
212 posts
Posted on 3/6/22 at 6:29 pm to
The first thing an oil company does is secure a lease on land which gives them the option to drill. Companies typically lease more land than they expect to be productive. As they drill wells and the wells are nonproductive it condemns the land and no additional wells will be drilled. After a period of time the leases expire and are no longer valid. Another company can lease the land or more likely it remains unleased. The price of oil determines whether or not an area is economical. So areas that were once condemned can become potentially productive with an increase in oil price. Oil companies must be confident in the oil price several years in the future before they will invest in long term projects. That confidence does not exist right now.
This post was edited on 3/6/22 at 6:31 pm
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