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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (40937)	1/4/2011 9:20:54 PM
From: Paul Senior	Read Replies (1) of 78470

Oil land leases. Yes, the situation is complex. I find as an outsider, it's unfathomable. That's why I buy a basket of e&p stocks - large e&p and small, within a particular shale. Other aspects which are important, that a package of such stocks may facilitate dealing with, are: 1. Bakken shale and some others extend across state lines as well as country. So we're dealing with various state and provincial laws regarding land use and rights. 2. Some leases (esp. some Canadian gov't) require the acquiring company to drill a certain amount in a certain period of time or else the leases will be rescinded. Which means somehow, the acquirer has got to have funding and has got to secure fracing crews to drill. 3. There are several layers in geological formations (levels of shale). In some states, drilling rights can be bought and sold on the particular geological formation, i.e. the particular layer in the earth. Thus, if some company says they've got land holdings in the Bakken, I have to assume (given my limited knowledge) it's not necessarily so that the holdings relate to that geological level which has been proven to be the productive oil layer.

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