Just curious if something might be in play due to the glut of production and little demand and lack of storage.
Can you clarify your question? Are you wondering what happens to the well if a shut-in happens? If that is your question, then ideally producers will reopen the well once the price of oil rises to somewhere above breakeven cost to produce.
Continental is shutting in wells in Grady County if that is your question. When they deem appropriate, they will bring that shut-in production back on line. I don’t know if other operators are doing so, but there are only a couple of players left.
Whiting Oil Company has declared bankruptcy. Wondering if anyone knows what happens to our royalties in this situation as I cannot make any sense of the legal bankruptcy paperwork?
in most cases, the royalties continue as usual. There are quite a few good comments on bankruptcy situation in the BLOGS area. Look for Richard Winblad and Wade Caldwell’s names.
I will do that. Thank you so much.
Papa- I got notice today that Casillas is shutting in many of its wells in the McClain, Garvin, Grady, Stephens areas.
Todd - did Casillas send you a notice? Are companies required to notify mineral owners when they shut in a well?
No they are not unless your lease specifically states that. I am a working interest owner as a mineral owner. Continental has also notified me of shutting in wells.
When they shut in existing wells, is this temporary or permanent?
It depends upon the well, the product stream, the operator, the economics, timing, etc.
Some wells will be uneconomic to be opened, some will be permanently damaged, some will come back slowly, some will be relatively fine. Operators want income, but they don’t want to waste flowing a well when prices are too low. It costs money to shut in a well properly and it costs even more to open them back up again. I suspect that some of the low performing, non-economic wells will never come back online again. Some newer, high performing horizontal wells will be worth turning back on. The overall economic health of the operator will also be key. Reserves in the ground are important in a bankrupcty or takeover. The strong will survive and the weak will not. The breakeven prices vary between basins, so that is tied to reservoir quality and takeaway (and storage) capacity. Q2 and Q3 could be pretty rough until the over supply is used up and demand returns.
No easy answer for your question.
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M_Barnes, Thank you!
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