Mississippian Carbonate Play - Oil & Gas Discussion archives

Miscellaneous Mississippian Carbonate Play
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Oil & gas discussion group for those interested in the Mississippian Carbonate oil play. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news

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Mississippian Carbonate Play

is of great interest: cheaper wells, great upside, & liquids = the story.

Courtesy of Ralpr, Thank you for creating the group.

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Awshucks, thanks for joining! I’ve been reading about the Mississippian Lime play in the Texas Panhandle and Oklahoma for awhile now, and then I noticed that some operators were drilling to the Mississippian Limestone in the Northern Permian Basin. I was amazed and honored to see it wasn’t on the Forum and thought I’d shine some light on it. Fortune favors the bulls!

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http://stocks.investopedia.com/stock-analysis/2011/Mississippian-Oil-Play-Gaining-Traction-PQ-RRC-SD-CHK-DVN0815.aspx#axzz1aaX15Eh9

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http://www.aapg.org/explorer/2011/05may/miss_lime0511.cfm

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http://www.bing.com/search?q=mississippian+carbonate+oil+play+texas&sig=1A69A5A608C24DE08C866AC0D92A00B3&FORM=O1FD1

Check this information out!

Ralpr

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http://www.tulsaworld.com/business/article.aspx?subjectid=49&articleid=20111209_49_E6_Thesta554895

Pipeline conversion to accomodate Mississippi Limestone production in Northern Oklahoma and Southern Kansas - FYI.

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http://fuelfix.com/blog/2011/12/19/oil-companies-exploring-south-central-kansas/

South Central Kansas appears to be in the Mississippian Carbonate Play a/k/a the Mississippi Lime Play.

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SandRidge Energy inks deal with Repsol

CEO Tom Ward of SandRidge Energy says the vast Mississippian Carbonate Play will be transformational for the Mid-Continent Region http://en.wikipedia.org/wiki/Mid-Continent_Region_(North_America) - like the vast Bakken Play (~200,000 square miles!)is to North Dakota, Montana, Manitoba, and Saskatchewan.

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Another Day, Another Deal for SandRidge

Paul Chi - December 27, 2011

Last Thursday, SandRidge Energy (NYSE: SD ) announced a joint venture with Repsol YPF, S.A., an energy company based in Spain. Under the terms of the deal, SandRidge will sell 250,000 net acres in the Extension Mississippian play and 113,636 net acres in its Original Mississippian play for a total of 363,636 net acres. The transaction is valued at $1 billion, or $2,750 per net acre. SandRidge will receive $250 million in cash at closing and $750 million in drilling carries.

This joint venture is the latest in the string of capital-raising moves by the company to fund its capital expenditures, which far outpace cash from operations. SandRidge's goal is to become self-funded by the end of 2014, and it appears the company will continue pursuing non-debt funding in the form of royalty trusts, joint ventures, asset sales, and potential sales of its already-public royalty trusts, SandRidge Mississippian Royalty Trust (NYSE: SDT ) and SandRidge Permian Trust (NYSE: PER ) .

Looking ahead, the company has already hinted at the possibility of another royalty trust likely to come in the first half of 2012.

Shallow, conventional oil
SandRidge produces oil solely from two places: the Central Basin Platform in the Permian Basin and in the Mississippian play in Oklahoma and Kansas. While other companies were pursuing the big shale boom in areas such as the Eagle Ford and the Bakken, SandRidge instead decided to move to shallow ground, where well costs are low and the per-well economics are particularly attractive. In fact, the company believes the return on both plays is 88%.

Because of the shallow targeted depth of both of these plays, the company has been able to use lower horsepower equipment, which has been in less demand as the rest of the industry has moved up the scale. That means less cost inflation. Over the past two years, SandRidge's service costs have stayed flat, which is quite a feat.

Looking forward
Due to the acquired drilling carry and lower working interest in the Mississippian as a result of the deal, the company expects 2012 capital expenditures to clock in at $1.6 billion, down from a previous $1.8 billion. Moreover, the company appears to be well on its way to fulfill its three-year strategy, which includes EBITDA in excess of $2 billion, annual double-digit production growth, and self-funded capex, as well as a debt-to-EBITDA of two by the end of 2014.

It's certainly hard to forecast three years out in this industry, but there are a few reasons to believe SandRidge has a shot at meeting its goals:

  • The company has specifically targeted shallow, conventional oil. As previously noted, this has led to low well costs, along with greater visibility on those costs.
  • With 7,900 potential drilling locations in the Central Basin Platform and more than 4,000 drilling locations in the Mississippian, its drilling program should enjoy highly reproducible success.
  • With highly reproducible success forthcoming, the company has hedged $4.2 billion in revenue from 2011-2015 at prices ranging from $74.40 in 2011 to $94.51 in 2015. That's further out in the future than most other companies will go, which shows management's faith in its assets.

Foolish bottom line
SandRidge is a very volatile stock with a 52-week range of $4.55-$13.34. Anyone buying shares should be willing to hold long enough for the company to execute its three-year strategy. Despite what looks like a huge funding gap each year, the company has proven time and again that it can raise capital through creative means such as joint ventures and royalty trusts.
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http://www.mineralweb.com">Mineral Rights Education/

We are continually gathering new ideas for educational content. Email suggestions to [email protected]

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Mississipian Limestone Play moving into TX

This is interesting. It (The Play) should be heading South much further if the map for our group is any indicator! The main thing is it is mentioned as being in Texas now. Limestone and Carbonate terms are used interchangeably - FYI.

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Hi newgenerationoillady, I’ll offer some hard won advice for what it is worth. I’d check with the County Clerk , and get copies of the plat map, property deed, and any and all recorded leases. Also look it up on the Texas Railroad Commision website for status of wells and locations, etc.

Hope there are no property issues, but alas it is a common theme on this website. Also, contact the surface owner once you have things better understood in your minerals and your rights.

Best if luck!

Regards,

Ralpr

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Thanks Ralpr!

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You're welcome newgerationoillady!

Ralpr

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Kansas on Cusp of an Oil Boom - Click on hyperlink below for the scoop.

Kansas on Cusp of an Oil Boom

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What geographic area does the Mississippian Carbonate Play - Oil & Gas play cover?

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It's huge. Scroll down to Dec. 27 and Tom Ward CEO of SandRidge quote below. Vertically it's very shallow by any standards - thus making it the most economical to produce and thus most profitable. I understand it's going Northward up Kansas. Per the most recent posting below. As you know it's in Northern Oklahoma. Google it and hopefully some maps will show where it is in relation to your interests.

Regards,

Ralpr

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Thank You for this information. I'm new to this forum and the Oil & Gas game. My family owns land and mineral rights in Logan County Oklahoma, located on the eastern side of the Nemaha Ridge, associated with the Mississippian Carbonate Play...Interesting Stuff

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I'll clarify my comments per Mr. Bay's excellent comment. The big advantage is supposed to be the use of lower demand, cheaper, less powerful drill rigs, which supposedly are more available. Because the big rigs used for deeper formations are in high demand and command higher prices as a result, infrastructure already in place for exploration and production of energy. When things were first being explored, the horizontal legs were not super-long (4,000-ft laterals?), but lately the trend is for longer laterals (depending on the outfit) - thus more expensive wells. The Mississippian is a conventional oil formation, and many of the other plays are unconventional and thus may not have infrastructure in place - driving up costs. Plus this play is in the backyard of many energy companies, keeping mobs and what-not (maintenance, repairs, personnel, other types of equipment more available/accessible? It appears from a formation-wide perspective that the Mississippian Carbonate Play is one of the most profitable - mainly due to lower costs for the energy producers, not production quite as much, but the production beats a sharp stick in the eye! Safer (less risk) and cheaper and faster is Economics 101. One article said these wells in this formation could be profitable even if the price of oil is $40/barrel. In other formations/plays I think the price point of profitability is higher.

Regards,

Ralpr

PS - this play is heating up in Texas in the Permian Basin finally - so my map will hopefully be more pertinent. But I'm counting on a big map to show this play as it expands. Tom Ward compares it to the Bakken in size and scope, and he says "Mid-Continent" which is a big swath of real estate. I know the Mississippian Carbonate extends to Iowa - and that there are speculators buying E&P leases in Iowa for less than $10/Acre. I'm guessing those areas further North would be in the gas window based on Comer's study on the Mid-Continent.