Author: James L. Smith
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
Most oil and gas leases allow the operator to extend possession for an indefinite period by establishing production in paying quantities. We show how this option to “hold by production” (HBP) stimulates the drilling of many wells that would otherwise be uneconomic. Although such wells may superficially appear to be poor investments, in fact they contribute to shareholder value. We also show, however, that the HBP provision delays the drilling of other economic wells, an outcome that has become a frequent point of conflict between lessees and lessors in this industry. We provide a simple method to value the HBP lease provision as a compound option, and estimate that it has increased the value of typical shale gas leases in the U.S. by 25%-250% in recent years, depending on location. The HBP provision appears very likely to have increased drilling in certain areas, but even more likely to have decreased drilling elsewhere. Understanding the incentives created by the HBP option is fundamental to understanding the rate and pattern of drilling in U.S. shale gas plays. Our analysis does not support industry critics who allege that continued drilling of many sub-marginal gas wells has been a mistake.
The Option to Hold a Petroleum Lease by Production
Author: James L. Smith
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
Most oil and gas leases allow the operator to extend possession for an indefinite period by establishing production in paying quantities. We show how this option to “hold by production” (HBP) stimulates the drilling of many wells that would otherwise be uneconomic. Although such wells may superficially appear to be poor investments, in fact they contribute to shareholder value. We also show, however, that the HBP provision delays the drilling of other economic wells, an outcome that has become a frequent point of conflict between lessees and lessors in this industry. We provide a simple method to value the HBP lease provision as a compound option, and estimate that it has increased the value of typical shale gas leases in the U.S. by 25%-250% in recent years, depending on location. The HBP provision appears very likely to have increased drilling in certain areas, but even more likely to have decreased drilling elsewhere. Understanding the incentives created by the HBP option is fundamental to understanding the rate and pattern of drilling in U.S. shale gas plays. Our analysis does not support industry critics who allege that continued drilling of many sub-marginal gas wells has been a mistake.
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
Most oil and gas leases allow the operator to extend possession for an indefinite period by establishing production in paying quantities. We show how this option to “hold by production” (HBP) stimulates the drilling of many wells that would otherwise be uneconomic. Although such wells may superficially appear to be poor investments, in fact they contribute to shareholder value. We also show, however, that the HBP provision delays the drilling of other economic wells, an outcome that has become a frequent point of conflict between lessees and lessors in this industry. We provide a simple method to value the HBP lease provision as a compound option, and estimate that it has increased the value of typical shale gas leases in the U.S. by 25%-250% in recent years, depending on location. The HBP provision appears very likely to have increased drilling in certain areas, but even more likely to have decreased drilling elsewhere. Understanding the incentives created by the HBP option is fundamental to understanding the rate and pattern of drilling in U.S. shale gas plays. Our analysis does not support industry critics who allege that continued drilling of many sub-marginal gas wells has been a mistake.
Natural Resources Code
Author: Texas
Publisher:
ISBN:
Category : Natural resources
Languages : en
Pages : 588
Book Description
Publisher:
ISBN:
Category : Natural resources
Languages : en
Pages : 588
Book Description
The Law of Oil and Gas
Author: Lawrence Mills
Publisher:
ISBN:
Category : Forms (Law)
Languages : en
Pages : 816
Book Description
Publisher:
ISBN:
Category : Forms (Law)
Languages : en
Pages : 816
Book Description
To Extend Oil and Gas Leases
Author: United States. Congress. Senate. Committee on Energy and Natural Resources. Subcommittee on Energy Production and Supply
Publisher:
ISBN:
Category : Oil and gas leases
Languages : en
Pages : 90
Book Description
Publisher:
ISBN:
Category : Oil and gas leases
Languages : en
Pages : 90
Book Description
Proposed Outer Continental Shelf Oil & Gas Leasing Program, 1997 to 2002
Author: United States. Minerals Management Service
Publisher:
ISBN:
Category : Continental shelf
Languages : en
Pages : 200
Book Description
Publisher:
ISBN:
Category : Continental shelf
Languages : en
Pages : 200
Book Description
Innocent Purchaser of Oil and Gas Lease
Author: Robert Etter Hardwicke
Publisher:
ISBN:
Category : Estates
Languages : en
Pages : 120
Book Description
Publisher:
ISBN:
Category : Estates
Languages : en
Pages : 120
Book Description
The Law Relating to Oil and Gas, Including Oil and Gas Leases and Contracts, Production of Oil and Gas, Both Natural and Artificial, and Supplying Heat and Light Thereby, Whether by Private Corporations Or Municipalities
Author: William Wheeler Thornton
Publisher:
ISBN:
Category : Gas
Languages : en
Pages : 1514
Book Description
Publisher:
ISBN:
Category : Gas
Languages : en
Pages : 1514
Book Description
Digest of Oil and Gas Decisions
Author: Graham B. Smedley
Publisher:
ISBN:
Category : Natural gas
Languages : en
Pages : 308
Book Description
Publisher:
ISBN:
Category : Natural gas
Languages : en
Pages : 308
Book Description
The Law Relating to Oil and Gas
Author: William Wheeler Thornton
Publisher:
ISBN:
Category : Gas
Languages : en
Pages : 918
Book Description
Publisher:
ISBN:
Category : Gas
Languages : en
Pages : 918
Book Description
Analysis of Options for Amending the Mineral Leasing Act, Sections 2(a)(2)(A) and 7
Author: United States. Bureau of Land Management. Office of Minerals Policy Analysis and Program Coordination
Publisher:
ISBN:
Category : Coal leases
Languages : en
Pages : 188
Book Description
Publisher:
ISBN:
Category : Coal leases
Languages : en
Pages : 188
Book Description