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O Woe is Me...What will happen to the TMS?

Posted by bernell on October 14, 2014

What do these oil operating companies do if the price of oil falls to $75-$80?

I’ve gazed deeply into my cracked and blemished crystal ball to try to see the future of the TMS and obtain an answer to this question.

I believe my vision is as clear as any 200/20 eyesight can be while straining to see through muddy water.

Here is what I perceive...
I see that the TMS has been partially proven…a partial “core” has been outlined.

These areas are almost certain to be prolific and these oil companies now know it.

They also know that they are still learning ways to improve drilling and completion in the play.

Meanwhile, the time on the leases is ticking away.

Now, there is no doubt they would love to learn more and to delineate the play further, but my crystal ball tells me that 2015 will be the year of sewing up the known while continuing to learn and while waiting on oil prices to rebound.  It won't be a time of further delineation.

I’m seeing oil shale drilling slowing down across the U. S., but perhaps not slowing down in the TMS as much., if at all. 

But, I just don’t see a rush to drill as we had hoped.

I see the companies already here going to “core” areas and drilling 1 well per 1,000 acres (or more if they can get away with it).
Goodrich has already started this process. 

If you will notice they are drilling outward from known areas of abundance. 

Halcon is making a move in that direction. 

Encana’s holdings are mostly in that area already.  They are doing very little delineation at this point.

I predict Sanchez and Comstock will follow suit on all future wells.

The price of oil is too low. 

The TMS is still too questionable in many areas. 

They are going to focus whatever dollars they commit to the TMS in 2015 to known areas for drilling and, in the process, continue to get better and better at what they are doing.

THEN, when the price of oil rebounds sometime in 2015 or 2016, things will get busy.

Any proven areas left will be quickly drilled while at the same time delineation will start up again. 

Mineral owners in the unproven areas will be hit up for longer term leases. 

The TMS will survive, but it won’t “Boom!” so much as it will blossom.

So, in summary, I’m confident I have seen the future!...or not…take it for what it is worth…just one man’s rambling theory.

In the meantime, don’t worry. 

If Mississippi State University can have the #1 ranked team in college football and Ole Miss the #3, then anything is possible!

What do you think about it?