Newfield’s rate of return

Newfield’s rate of return is higher in both the Scoop and the Stack plays(with a 2% tax rate) in Oklahoma than either the Bakken (10% tax rate) or the Eagle Ford (8.5% tax rate) Oklahoma is subsidizing their drilling in other states.

 

 

Open Letter to the OIPA membership (Oklahoma Independent Petroleum Association)

Dear OIPA,

I think it’s time to explain why after nearly 40 years serving on the OIPA board and holding many positions including the office of President I chose to relinquish my position as a “lifetime” member of the board. I still consider OIPA a fine organization and an excellent networking group. But they have fallen short of advocating for the small producers across the state and have become a horizontal drilling association. Nothing wrong with horizontal technology; it is a game changer. But when it trespasses on the rights of vertical producers and the OIPA board refuses even the slightest measure to give them some protections that for me that is unacceptable.

Most of my time on the board we did our best to represent a broad spectrum of a very diverse industry.

There are differences between oil producers and gas producers.

There are differences between big and small companies and between privately held and public companies.

But for most of the time we got in a room and worked out something that allowed us to speak as one voice; even though sometimes the issue was so compellingly difficult that individual board members went a different path. They were always allowed to do so and without criticism.

In 1992 the board took a position on Natural gas pro-rationing to limit gas production from the biggest wells. The vote was split down the middle. The late Sam Cerny was our President and he disclosed to us all that his company would not let him support our position. Everyone understood. I could name Chairman after Chairman that spoke on behalf of the industry against their own interest.

That tradition of unity with freedom and with honor I held in high esteem.

That tradition along with many others is gone. Of course, change is the only constant in the world and we all have to embrace it one way or the other. However, some change requires a course correction or in pilot terms a 180 – going in the opposite direction.

At the end of the day, the change that required me to resign and work toward having a voice for small producers had very little to do with one issue. It was a cultural change.

The cultural change was many faceted.

There was greatly diminished effort to work out differences in a way that protected all producers. Individual board members, most of whom dedicated decades of service on a non-profit board for the benefit of all, were castigated publicly for disagreeing with leadership.

The tradition of what was required to be selected to be on the board was a back breaking change. Being selected to be on the OIPA board was historically an honor bestowed on individuals of good standing in the industry that had demonstrated a willingness to work, give of their wealth and their wisdom to the good of the entire industry. (Panas’s three Ws of requirements of a board member) That criteria changed to one of one W of the three- wealth. Big companies were given board positions not because an individual had worked for the industry or had acquired any wisdom thru years of hard knocks but because their company gave enough money. At the same time small, politically active and knowledgeable producers were told to “work your way” on to the board thru the many years of serving on committees.

At the end, this was the practice that left the small producers without a voice in OIPA. The big company members of the board are likely very good people. It’s just a different dynamic when a board shifts from a majority of those who run their own companies to those who work for someone else with little or no experience working in the public arena.

The biggest break in tradition for me was the shift in our culture as an organization that always tried to never ask for anything that was not in the best interest of our state. I know that sounds a bit altruistic for a business trade association. But it was the tradition of which I was most proud.

While many will disagree, I believe we broke with that tradition when the association supported and helped a few companies get a 2%permanent tax rate for new wells drilled.

I am embarrassed to watch teachers in my community have to take second and third jobs to make ends meet. The Gross Production Tax has gone from over 1 billion per year to 165 million affecting all our state’s vital services. Don’t get me wrong the position of trying to do what’s best for Oklahoma is not totally one of altruism. It’s also the best way to be a part of the Oklahoma community and has produced good outcomes for us as an industry. There is a reason Oklahoma is the friendliest state in the country to do oil and gas business. That is beginning to change. We are dropping in the public perception of our industry.

OIPA’s soon to be President Tim Wiggly said it best “vertical wells are our history, Horizontal drilling is our future”. That may be so, but that is no justification to disregard the 3000 Vertical producers in the process, which is what OIPA has done.

As traditional producers who run our own companies, live in communities all across Oklahoma, and as members not only of the oil and gas community but the community including our fellow men and women we can restore that voice. The Oklahoma Energy Producers Alliance was formed to give us that voice. I urge you to join us to make a difference for us and for our state by going to okenergyproducers.org and joining today.

 

Respectfully,

 

Mike “Bubba” Cantrell

Talk with horizontal frac victim Mitchel Turner

It’s just not right to ever take someone else’s property. The big horizontal Fracking companies just do it because they can; then they say “sue us” knowing that small business men and women cannot afford lawsuits.

Call your state legislator today and tell them to vote no on SB867. Don’t expand horizontal fracking!

 

Mike Harris, another horizontal fracking victim

Mike Harris has worked hard his entire life. He is well respected in the oil and gas community for his knowledge and work ethic. He has managed to accumulate some working interest and a few properties of his own over the years. Now he is watching those that he has depended upon for retirement destroyed by horizontal fracking! Call your state legislator and tell them to vote no on SB 867.

 

Horizontal frac victim Tony Weaver

Tony gives a fair and balanced accounting of what’s happening. None of these guys are willing sellers. It’s shameful that they can be forced to give up property, by the state.

 

Gross Production Tax Resolution

We ask every school board in Oklahoma to take this same action – then follow it up by having those that care about education call their state legislators with one simple message ” restore the gross production tax to 7% for everyone, which is lower than any other state and pay our teachers”

RESOLUTION 

Whereas, Oklahoma has led the nation in cuts to per pupil state aid expenditures since 2008; and

Whereas, Oklahoma teacher salaries rank in the bottom three lowest teacher salaries in the nation; and

Whereas, the State of Oklahoma has experienced repeated revenue failures during the last two years; and

Whereas, for the current 2016-2017 school year education appropriations provided by the Oklahoma State Legislature are $84 million less than what was promised in the common education budget due to revenue failures; and

Whereas, Tulsa Public Schools has received over $30 million in cuts in state aid since 2008; and

Whereas, midyear reductions and shortfalls resulted in an additional $4.5 million dollars less in education funding for the 2016-2017 school year; and

Whereas, further funding reductions are anticipated before the end of this school year; and

Whereas, sustainable and appropriate funding from the State of Oklahoma is crucial to the Tulsa Public Schools Board of Education’s mission to ignite the joy of learning and prepare every student for the greatest success in college, careers and life; and

Whereas, over $1 billion dollars in unnecessary tax breaks to oil and gas companies in the last three years alone have been a contributing factor to the decreased education budget and recurring revenue failures; and

Whereas, eliminating these tax breaks and returning the Gross Production Tax to the historic levels of 7% would yield approximately $500 million in 2018; and

Whereas, the 7% rate would ensure all oil and gas companies are taxed at the same rate and will not decrease oil and gas drilling in Oklahoma because the rate will still be equal or less than all other states in the nation where oil and gas drilling occurs; and

Whereas, immediately returning the Gross Production Tax rate to 7% is the most direct route to avoiding both the impending cuts and to putting the state budget on a sustainable path forward

Now, therefore, be it resolved that we, the members of the Tulsa Public Schools Board of Education, joining with voices from all sectors and throughout the State, hereby do call on members of the legislature of the State of Oklahoma to immediately pass legislation to return the Gross Production Tax to the historic rate of 7% to be effective for all wells on July 1, 2017 and thereby put on us the path for an adequately funded public education system with the resources to pay our teachers an honorable wage and support the most important of our work as a State: preparing every student for the greatest success in college, careers and life.

 

 

Dated this 1st day of May, 2017.

_____________________________________                           ______________________________________

President, Board of Education                                                         Superintendent of Schools

 

Print copy: Gross Production Tax Resolution

 

 

 

Gilliland/Weaver Wells watered out by Horizontal Wells

Some of our ongoing and growing list of vertical wells being destroyed by horizontal frackers.

This list is  Gilliland/Weaver Wells watered out by Horizontal Wells.

Steve was the one interviewed on the OETA video series. He was the one in his office.

 

HZ Well Impact List (Excel spreadsheet)

 

OETA story about horizontal frac jobs destroying hundreds of vertical wells

This is a Must See – An OETA story about horizontal frac jobs destroying hundreds of vertical wells.

This should begin to change the narrative from one of all out development at all cost, to one of judicious development with the rights of others and the environment protected.

 

Open Letter to OIPA Board

 

Gentlemen:

 

I would like to give you an update on the damage that is being done to small producers in the active horizontal plays in Oklahoma. I am a partner in Cimarron Production Co., Inc., and Brown & Borelli, Inc. The vast majority of our operated production is in Kingfisher County, Oklahoma. We have had, as of this date, 21 wells damaged or destroyed by the impact of horizontal frac jobs. Our wells producing from the Oswego formation are being damaged or destroyed by nearby horizontal frac jobs in the Big Lime/ Oswego formations, whether drilled in the same section, or nearby. The Mississippi formation horizontal frac jobs are hitting our vertical Mississippi production. Our core production area produces from the Hunton Dolomite. Those wells are being damaged or destroyed by nearby fracs in the Mississippi formation. We are not the only producers that are experiencing these damages. Most of the small producers in the Kingfisher area with whom I’ve spoken have been hit even harder than we have. I’ve been told by Legislators and people at the Oklahoma Corporation Commission that the OIPA is still taking the position that this damage is rare or non-existent. That statement is simply not true. Our engineer is of the opinion that, upon completion of infill drilling, we will no longer have any vertical wells producing from the Big Lime/Oswego, Mississippi, or Hunton Dolomite formations. Where we have contacted the horizontal operator concerning our damage, they have declined to even acknowledge it. Where I have spoken to vertical operators who have initiated litigation, the horizontal producers have indicated a willingness to spend whatever is necessary, taking as long as possible, to avoid any liability for the damages done by their fracs.

 

In addition to the damage done to our vertical production, our acreage is being taken in large blocks by the large horizontal operators, working through the Oklahoma Corporation Commission. Historically, the OCC allowed forced pooling only as to an amount of acreage which was expected to be drained by one well. Horizontal developers are now using the OCC to take mile wide swaths of acreage, capable, in the recent report of Devon Energy, of supporting the drilling of as many as 20 or 30 wells. The large drillers have reported acreage trades of $15,000, $30,000, to more than $40,000 per net mineral acre. Meanwhile, they routinely force royatly owners and small producers to sell their acreage at prices which are less than 5 and 10% of those amounts. We have a great number of interests which are burdened to slightly under 80% net revenue interest. The force pooling actions in which we are named routinely declare that those interests  are “over-burdened”, and are of no value.

 

Tim Wigley, OIPA’s incoming President, was recently quoted in the press that horizontal drilling is Oklahoma’s future, implying that the thousands of vertical producers are merely a quaint vestage of the past, and are irrelevant to today’s oil and gas industry. This is an astounding dismissal of the fact that the wealth of thousands of vertical producers, and tens of thousands of Oklahoma royalty owners are being transferred to the pockets of large out of state investors in the large horizontal operating companies. This transfer of wealth amounts not to tens, or hundreds, of millons of dollars, it amounts to billons of dollars of hard earned wealth owned by hard working Oklahomans into the pockets of these large horizontal operators and their investors.

 

OIPA was formed in the 1950’s in order that the small independent producers of Oklahoma could have a collective voice and influence which could be used to protect them from the abuses of the major oil and gas companies and their organization, which was formerly known as Mid-Continent Oil & Gas Association. OIPA should be standing and raising its voice to the rafters in defense of the disaster that is starting to overtake the independent producers and royalty owners in the State of Oklahoma. Instead, it appears that it is interested only in preserving and extending the advantages held by the large companies which have overtaken its governance. The regulatory system in the State of Oklahoma needs to be reformed to make it one that is equitable to all, and that should include a return to a gross production tax at a level that is the same for all producers, and sufficient by historical standards to help support the core services of the state that has provided so generously to so many in our industry over past decades. I urge all of OIPA’s remaining small independent producers to go to www.okenergyproducers.org , and join the Oklahoma Energy Producers Alliance, which is the only Oklahoma industry association which is dedicated to protecting the interests of Oklahoma’s small independent producers.

 

After twenty plus years of service on the Board of Directors of Oklahoma Independent Petroleum Association, I submitted my resignation from the OIPA board on March 29th, and joined the many longtime OIPA Board Members and former Chairmen, who realized there was no point in continuing to fight for an association we had already lost. We welcome the support of those of you that remain.

 

Sincerely,

 

Joe Warren,

Partner:

Cimarron Production Co., Inc.

&

Brown & Borelli Inc.

Letter from Oklahoman – difficulty getting justice when wells are destroyed by a horizontal frac job.

Here is a letter from an Oklahoman that demonstrates the difficulty getting justice when their wells are destroyed by a horizontal frac job.( the picture is a purging well during a horizontal frac job)
Almost everyone is either afraid for their names to be used or are in litigation .
The level of intimidation here reminds me of Karen Silkwood.

==========

Dear Mr. Cantrell:

I am certainly glad that someone is taking this on at long last. As I am sure has told you we are not opposed to horizontal drilling, except for the earthquake problem, which the Oklahoma Corporation Commission allowed to happen. We are opposed to third parties taking the property of existing vertical producers without compensation.

Regarding our situation we had 16 vertical wells which have consistently produced for the last 30 years. Our schedule is attached. All were gas wells on plunger lift so LOEs were very low and we had few if any mechanical problems. Water production was minimal, so we had no need for a salt water disposal well. A few years ago we received an out of the blue offer to buy us out. We weren’t interested in selling and declined. At that point I received several calls from their land VP. He informed me that if we did not sell to them, they would simply acquire toeholds and go to the OCC and get the prospect anyway.

When we declined to sell, they proceeded with their campaign . They were requesting 640 acre spacing. I conferred with our OCC attorney expressing my concern about the almost certain destruction of our existing production. To my dismay, he confirmed that the OCC would let them drill regardless and that we had no recourse at the OCC. When I inquired about the 50% consent requirement, he replied that it didn’t matter because they would apply for an exception to that rule and it would be granted. When I inquired about location exceptions and exceptions to 165: 10-3-28 I was also told it didn’t matter because they would get an exception to those rules also. When I asked if there was any recourse at the OCC when They ruined our existing verticals, I was told that there was not and that Our recourse would be private nuisance action as stated in the Greyhound Leasing 10th Circuit case. When we arrived at the OCC for the hearing the ALJ went “off the record” to state that he didn’t know why people kept protesting these cases because his docket was all crowded and basically, surely everybody knew that protests would not work out and the OCC would allow horizontal drilling even where verticals existed in the same formation. At that point, I realized that no matter how much we spent at the OCC, we had no alternative but to try to make a deal.

We farmed out our acreage. Our FOA provided that They would indemnify us from any liability or damage to our existing wells. They repeatedly insisted, and this appears in a few of the OCC orders, that there would be no damage to our existing wells. You will see from the second attachment that They drilled 14 wells and sent over 4 million pounds of frac sand and over 3 million barrels of slickwater our way. All pumped at 4-7 thousand psi,. Every one of our 16 wells is either watered out or full of frac sand. Because of the low volumes we could produce from some of the wells due to shut ins at their direction and after swabbing, DCP pulled our meters and cancelled our contract. There was a $350 per well penalty for volumes under 20 mcf per day. DCP’s suggestion was that we lay a gathering line, install our own meters at each well, and deliver to DCP at one central delivery point. We now have 15 plugging liabilities. While We were paid for its acreage and have an override on the horizontals, They haverefused to pay for the verticals .

I have tried to condense this, but I wanted you to get the full picture. The present proponents of some of these bills obviously don’t know what they are talking about when they claim existing verticals are protected by the OCC or the District Courts of Oklahoma. The OCC could care less. If you need any further information, just let us know. This family has joined OEPA.
If you want to help us get fairness and justice for the small producers in Oklahoma go to okenergyproducers.org and join this fight.