By Randy Nichols, CPL
Originally published in AAPL Landman Magazine March/April 2022 Edition
The US oil and gas industry remains in limbo as oil demand is soft and the world economy struggles to recover from the effects of COVID-19. As a result, capital expenditures for drilling new wells are at an all-time low. On the other hand, the renewable energy industry is experiencing a large influx of capital, primarily for utility-scale solar and battery storage.
In the final part of our maintaining your oil and gas lease when curtailing production series, we review important lease considerations and seven best practices for meeting lease requirements. If you missed part one or part two of the series where we covered four lease clauses, you can read the blogs here:
In part one of our FAQ series, we reviewed the first steps oil and gas producers should consider when curtailing production and the lease clauses to be aware of. The second part of our series, we will cover the Production in Paying Quantities and the Cessation of Production clause.
Faced with an oversupply of oil, no place to store it, and a spot price below the cost of production, producers have scrambled to shield themselves from permanent damage during the downturn -- but not all solutions for saving your leases are created equal.
In part one of our FAQ series, we will review the first steps oil and gas producers should consider when curtailing production and the lease clauses to be aware of.
Reserve-based lending (RBL) is a type of asset-based lending used to finance the operations of independent oil and gas companies. Debt is issued as a factor of reserve value, which is known as the Borrowing Base. Loans are subject to redeterminations of the borrowing base, commonly twice a year.
Due diligence is the process of investigating assets to make an informed decision about the cost, benefits and risks of acquiring or investing in such assets. As an industry leader in title diligence, Cinco evaluates mineral properties across the US and works closely with our client’s attorneys and lending partners to help them navigate the risks inherent with their deal.
While no two oil and gas due diligence evaluations are alike, there are common stages and milestones that we see in every process. This article will breakdown the typical oil and gas title due diligence process and describe how Cinco supports our clients’ success at each step.
This edition of the Texas Landman field update covers activity in Railroad Districts 1-6. Even though drilling activity has remained flat since my last report, oil prices have edged up close to $60/bbl and held firm above $55/bbl. The increase in oil prices may be due in part to the Saudi’s keeping their promise to cut production until later next year to speed up the rebalancing of the oil markets. Of course, they may just be trying to boost the price of oil before their IPO of Saudi Aramco later next year.
