Barnett Shale

Devon, Chesapeake execs talk leasing at conference

Top executives at Devon Energy and Chesapeake Energy, two of the biggest players in the Barnett Shale, bemoaned the high cost of getting leases in the Barnett Shale at a New Orleans investment meeting, reports Reuters news service. Chesapeake Chairman Aubrey McClendon, speaking to reporters at the Howard Weil  Energy Conference, called the escalating bonus payments "a discouraging trend," adding that "luckily, the costs of acquiring acreage are generally not a meaningful part of your overall cost equation."

"We are amazed at the royalty rates and bonuses that some people are paying to get into the area," Devon Chairman Larry Nichols told Reuters. Devon got into the play with its 2001 acquisition of Mitchell Energy, the Barnett Shale's pioneer, and expanded that in 2006 with its purchase of Chief Oil and Gas. It has stayed mostly in rural areas, unlike Chesapeake, which has jumped headlong into the most densely populated portions of the play.

-- Jim Fuquay

Chesapeake donates $1 million to United Way

Chesapeake Energy has pledged $1 million to the United Way of Metropolitan Tarrant County, kicking off the first-ever Barnett Shale Endowment Fund. UPDATE: Click here to read the full Star-Telegram story.

The United Way is not only looking for other energy companies to donate, but also homeowners drawing cash from the leasing of their mineral rights, said Nancy O'Malley, spokeswoman for the group.

Oklahoma City-based Chesapeake announced the donation, which will be paid in roughly $200,000 annual payments over five years, this evening at the opening of the new headquarters for United Way. The non-profit just moved into the Mercado development on Main Street just north of downtown Fort Worth.

United Way plans to spend 5% of the value of the fund annually and keep the rest to build interest income. United Way's first distribution of the fund is expected by April 2009, O'Malley said.

While this is not the first large donation from a deep-pocketed energy company getting rich off the Barnett Shale, it is considered to be the largest natural-gas-related donation for the United Way's Fort Worth office.

Examples of other donations thanks to the Barnett Shale:

• In June 2007, Chesapeake announced a total pledge of $3.75 million for scholarships to students in Fort Worth and Dallas.
• For the past three years, Fort Worth-based XTO Energy has been a big benefactor at the Fort Worth Stock Show & Rodeo, buying the Grand Champion steer each time. The company has also been big in buying up and redeveloping property in downtown Fort Worth. The company has a total seven buildings and a parking garage in downtown, imploded another one and is redeveloping a building in the Fort Worth Stockyards.
• Devon Energy gave $3 million to the Fort Worth Museum of Science and History building project in 2007 and was the lead donor in the Fort Worth Police and Firefighters Memorial Project with a $200,000 gift last year. The Oklahoma City-based company, the largest player in the Barnett Shale, gave another $100,000 to the North Texas High School Rodeo Association last year. Several Barnett Shale players were major founding donors to the Science Museum's capital campaign.
• Here's a story from S-T reporter Sarah Bahari on how corporate sponsorship of charitable organizations is tightening, but Chesapeake says it still gives a lot.

-- David Wethe

(Photo: United Way of Tarrant County moves to new headquarters in Mercado building, north Fort Worth, in January)

EOG Resources goes for oil in the Barnett Shale

EOG Resources, the No. 3 producer of natural gas in the Barnett Shale, caused a stir Thursday with its announcement it intends to produce oil from 250,000 acres it has leased in Montague, Clay and Archer counties. That's on the northern fringe of the Barnett Shale, where the formation has a higher content of crude oil than elsewhere. EOG's activities there won't affect the "core" area of the Barnett Shale, made up largely of Tarrant, Johnson and Denton counties, where the rock contains mostly natural gas.

For a full report, see the Star-Telegram's news story here.

Burleson "Holdouts" organize

To hear the folks in South Burleson tell it, lately, landmen have been crawling over the city like ants.

The South Burleson Homeowners Association reports it's changed its name to the "Community of Gas Lease Holdouts," as "this seems to define our reason for being and so many were afraid of the Homeowners part of the name, because they thought that we were going to restrict some things in their neighborhood."

The Community of Holdouts says 19 landmen representing Chesapeake Energy, Devon Energy, and several other entities have peppered South Burleson with lease offers carrying $1,500-$10,000 per-acre signing bonuses and 21-25 percent royalties.

The Community has had two meetings so far, including one Saturday. More than 300 people attended and "new properties are being added daily to the over-350 properties already registered," says Bill Mahanay, pmahb@sbcglobal.net, spokesman and organizer for the group. "With many volunteers to make phone calls and canvas the areas of South Burleson," the group hopes to add more properties to its list, Mahanay said.

The group's next meeting is 4 p.m. Feb. 23 at the Burleson Church of Christ, 820 S.W. Wilshire.

-- Scott Nishimura

Having a meeting on the Barnett Shale? Publicize it here, on our new Community Calendar!

Devon, Chesapeake, EOG make Fortune's best companies list

Devon Energy is No. 48, Chesapeake Energy is No. 61 and EOG Resources is No. 64 on Fortune magazine's latest list of the "100 Best Companies to Work For." Devon and Chesapeake are based in Oklahoma City, EOG in Houston, but all have substantial Barnett Shale activities and employment.

The magazine noted that the median bonus at Devon in 2006 was $9,000 and ranked it fourth on the list for low turnover and eighth for work-life balance. Fortune highlighted Chesapeake's employee daycare center, which it says Chairman Aubrey McLendon approved, but not before doubling its size and cutting its fee in half. At EOG, employees all get stock options, a nice perk when the company's shares appreciate 43 percent like they did last year.

For the complete report, click here.

-- Jim Fuquay

(Photo: Monitoring a Devon drill head in northern Tarrant County)

Three injured in gas well incident in Alvarado

The Star-Telegram's Bill Miller has the story. Check back at star-telegram.com for updates.

-- Scott

Devon might boost Barnett Shale activities

Devon Energy, the largest producer in the Barnett Shale, said a decision last month by Alberta, Canada, to boost the province's royalty on production could lead it to move capital to U.S. onshore properties, namely the Barnett Shale. Stephen Hadden, Devon ’s chief of exploration and production, said Devon expects to drill more than 500 wells in the field in 2007, compared to 385 in 2006, and expects its daily production in the field to hit 1 billion cubic feet of natural gas equivalents by early 2009, rather than the end of 2009 as previously forecast. During the third quarter Devon’s production in the Barnett Shale rose 32 percent compared to a year ago, to 856 million cubic feet a day. It drilled 127 wells in the quarter, and Hadden said the company dramatically reduced its backlog of wells that were waiting to be connected to pipelines. Devon Chairman Larry Nichols, responding to a question about the longevity of Barnett Shale wells, told analysts that while the wells experience rapid declines in production in the early years, the company now expects some to last as long as 40 years.

-- Jim

Barnett Shale resources

CURIOUS ABOUT THE BARNETT SHALE? HERE ARE SOME USEFUL LINKS:

CORPORATE

Carrizo Oil and Gas

www.askchesapeake.com (Chesapeake Energy site)

Colt Exploration

Dale Resources

Fleet Oil and Gas

Harding Co.

Holland Acquisitions

Paloma Oil and Gas

Potestas Corp.

Western Production Co.

XTO Energy

DRILLING ORDINANCES

Arlington (includes city gas drilling resource page)

Bedford (city's gas drilling page, including ordinance and property owner Q&A)

Bedford  (city's comparison of provisions in several area drilling ordinances)

Colleyville (city web site)

Fort Worth (includes city gas drilling resource page)

Grapevine (Type "gas drilling" in the search bar to find the ordinance)

ECONOMIC IMPACT/ENVIRONMENTAL IMPACT

Barnett Shale Economic Impact Study, Ray Perryman, 2007

The Economic and Fiscal Impacts of Devon Energy in Denton, Tarrant and Wise Counties, Bernard Weinstein and Terry Clower, University of North Texas, 2004

Public Perception of the Natural Gas Industry: Insights from Two Barnett Shale Counties, Sam Houston State University, 2007 (Johnson County results, Wise County results)

Credit FAQ: Why the Barnett Shale Gas Basin Could Benefit Texas Municipalities, Standard & Poor's, 2008

LEASE FORMS

Leases negotiated by the Berkeley Place, Ryan Place, Mistletoe Heights, and Tanglewood neighborhoods in Fort Worth

NEIGHBORHOODS

Arlington Neighborhood Network, City of Arlington site. Includes updated contact info.

Arlington neighborhoods, neighborhoodlink.com. Spotty, but includes some info, such as neighborhood association email addresses, that isn't on the city site.

Bedford neighborhood associations, City of Bedford site, includes updated contact info.

Benbrook neighborhood associations, City of Benbrook site. Includes updated contact info.

Colleyville neighborhood associations, City of Colleyville site, includes updated contact info.

Fort Worth neighborhood database, City of Fort Worth site. Includes updated contact info.

Grapevine homeowner associations. City of Grapevine site. Includes contact info.

Neighborhoodlink.com

ORGANIZATIONS

Barnett Shale Energy Education Council

Fort Worth League of Neighborhoods Gas Drilling Resource Page, including "Tips for Neighborhoods Negotiating Gas Leases."

FWCanDo (Fort Worth Citizens Against Gas Drilling Ordinance)

Texas Land and Mineral Association (represents mineral rights owner)

Trinitytrees.org

PUBLICATIONS

pegasusnews.com

Powell Barnett Shale Newsletter (paid subscription)

Real Estate Center at Texas A&M University (oil and gas publications)

texasinsider.org

GOVERNMENT

Railroad Commission of Texas, includes Barnett Shale resource page, information on regulations.

Tarrant County public records site (Includes lease/lease memo lookup so you can check out how many leases energy companies are filing in Tarrant County, and where.)

ROYALTY CALCULATOR

Fort Worth League of Neighborhoods gas resource drilling page

CONTINUING EDUCATION

TCU Energy Institute's Petroleum Land Practices Program

KNOW OF A GREAT LINK THAT'S NOT LISTED HERE? Let us know about it! snishimura@star-telegram.com