Read HADOA March 2008 text version

Volume 2, Issue 1 M a rc h 3 1 , 2 0 0 8


Letter from President New CDOA's Recognized Upcoming Events Manager's Appreciation Lunch ELI Workshop What is My Royalty Worth Ensley Properties, Inc.

2008 Board of Directors Officers

President -- Jesenda Allen EnerVest Management Partners, Ltd., 713-495-6585 [email protected] First Vice-Pres -- Linda Nodler Mariner Energy, Inc. 713-954-3817 [email protected] Second Vice-Pres -- Sandy Warren EnerVest LTD. 713-495-5373, [email protected] Third Vice­ Pres-- Herbert Daniel HighMount Exploration & Production Inc. 281-873-1696, [email protected] Corresponding Sec- Rosemary Cruthirds El Paso Production Co. 713-420-2634 [email protected] Recording Sec-- Felicia Hall Swift Energy Operating LLC 281-423-0380 [email protected] Treasurer -- Susana Maldonado LandTemp 713-954-3814 [email protected] Immediate Past Pres--Connie Justice Swift Energy Company , 281-874-2829 [email protected]

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NAPE 2008

An auction, an icebreaker, a reception right in the middle of it all ­ where else but NAPE 2008! All 16,000 deal makers, deal seekers and "the rest of us" checking out the "latest & greatest" in the oil and gas industry! Connie Justice (past President) and I manned the NADOA booth on Thursday, February 7th and I was surprised at the number of people that came specifically for the Merger & Acquisition Book ­ a great contribution to our industry by our national organization! Noteworthy is that NAPE underwrote all of the luncheon expenses so that 100% of the ticket fees and donations go directly to assist disabled veterans who have served in Iraq and Afghanistan; Shell was the premier sponsor of the luncheon. If you have not attended NAPE, please consider going next year. You will see magnificent exhibitions and be in a place where there are prospects and endless opportunities that "ignite a fire" in all of us! I will leave you with a comment from one gentleman that stopped by the NADOA booth: "You are the most sought after person in the oil and gas industry in the United States"! It's a great profession to be in ­ don't you agree? Jesenda L. Allen HADOA President 2008


Hospitality -- Deborah Fletcher Energy Resources Technology GOM, Inc 281-848-0774, [email protected] Employment -- Nora Marquez-Williams EnerVest, Ltd 713-495-6535 [email protected] Ways & Means -- Kathy Keith Kinder Morgan Company, LP 713-840-1980 [email protected] NADOA/ALTA Liaison -- Kim Henderson ExxonMobil Corp [email protected] Business & Rules -- Betty Davidson CIMA ENERGY, LTD 713-739-6622 [email protected] Advertising & PR -- Brenda Johnson 281-326-3049 [email protected]

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Letter From the President

As I reflect on the previous year, I realize how very blessed I have been in my life. Although I lost my very best friend ­ my mother - to cancer, I have emerged miraculously, through a myriad of emotions, a changed and better person. My father is alive and in great health, I work for a wonderful company and my career that has taken flight! I could go on! My oil and gas occupation began as a college graduate in the Land Department of Scurlock Oil Company in 1981. Until then, the only thing I had ever done was to wait tables through high school and college, so I had everything to learn. I was very fortunate to have exceptional supervisors and mentors that "showed me the ropes" throughout those early years. I am beholden to them for the significant and vital lessons I learned. In that same spirit, my goal is to bring as many young people along as I can in this profession, to enrich their lives as well as mine, and to help rejuvenate a waning profession. My employees know that they must share their knowledge, have a strong work ethic and be able to have some fun along the way! After all, "success is where hard work and opportunity meet!" Don't ever let an opportunity pass you by because you have not done your work. If you aren't prepared, I promise there will be someone right behind you to take your place! I am both pleased and honored to be your President and I am proud to be of service to you. With your help, I am confident that we can make a positive difference in this esteemed organization. Jesenda L. Allen, CDOA

Division Order Analysts Certified!

HADOA and NADOA have long encouraged our membership to take the next step in our careers and become Certified Division Order Analysts. Education and training is key to building confidence in our profession, ourselves and each other. We are proud to announce the following people have become certified: Carolyn Sherman, Patricia Redding, Cathy Jones, Maryum Mims, Marie Andrews, Elizabeth Carrillo, Sherri DeWalt, Susan Taylor, Luanne Johnson, Terra Peterson, Deachi Payne, Betty Davidson, Bonita Hill, Honey Meyer Overby, Sandy Warren, Brenda Bennett, Rose Nguyen, Chris Knop, Virginia Jones, Shari Shields, David Quosig, Diane Sandlin, Linda Chance, Carlos Perez, Joni Byrd, Kathy Keith, Brenda Ricks, Suzann Turner, Eileen Gelbmann, Deborah Fletcher, Phyllis Fuller, Carol Kelly, JoAnne McKnight, Brad Wainwright, Elizabeth Walker. Congratulations everyone, we are so proud of you!!!!!! If your name is not listed above please contact the editor at [email protected] so that you can be recognized.

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TEXAS-NARO CONVENTION June 25-27, 2008. Irving, Texas NADOA EDUCATIONAL SEMINAR August 8, 2008 Charleston, West Virginia NAPE 2008 SUMMER EXPO August 27-28, 2008 Houston, Texas NALTA ANNUAL CONFERENCE September 24-27, 2008 Orlando, Florida NADOA 35TH ANNUAL INSTITUE October 8-10, 2008 San Diego, California


HADOA's April 3, 2008 Luncheon at The Crowne Plaza, 1700 Smith, Houston, TX 77002 will feature:

· · · · ·

Keynote Speaker ­ Terrill Williams ­ Founder and Owner of Petroleum Education Workshops, a leading educational and training center for the oil and gas industry. 11:30am--1:00pm-- Lunch and Meeting 1:00pm--1:15pm--Break

1:15pm--3:15pm--Seminar -"Critical Title Issues and Conveyances that Impact how Interests are Calculated" 3:15pm-3:45pm-- Q&A

BBL Definition

That the abbreviation for a barrel of oil, "bbl," actually stands for "blue barrel". The word "barrel" only has one "b," so why is the abbreviation for a barrel of petroleum "bbl?" In the early 1860's, when oil production began, there was no standard container for oil, so oil and petroleum products were stored and transported in barrels of all different shapes and sizes (beer barrels, fish barrels, molasses barrels, turpentine barrels, etc.). By the early 1870's, the 42-gallon barrel had been adopted as the standard for oil trade. This was 2 gallons per barrel more than the 40-gallon standard used by many other industries at the time. The extra 2 gallons was to allow for evaporation and leaking during transport (most barrels were made of wood). Standard Oil began manufacturing 42 gallon barrels that were blue to be used for transporting petroleum. The use of a blue barrel, abbreviated "bbl," guaranteed a buyer that this was a 42 gallon barrel. Submitted by Betty Davidson, of CIMA Energy Ltd. and HADOA Board Member

"This is your newsletter. Please submit articles of interest of your industry friends to [email protected]"

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On January 10, 2008 Nancy Baird, M.Ed. spoke to the Houston membership at their first regular luncheon meeting of the year. Nancy's subject was "Keeping GOOD People: It's Everyone's Responsibility" and as always, Nancy kept everyone's attention for the entire luncheon. Nancy described today's workplace of diverse ages and points of view and had everyone laughing about differences and the ways all can work together to bridge the gaps. By the time the luncheon adjourned most agreed that in these days of many vacancies and few employee resources it is everyone's responsibility to find ways to reach out to each other in a positive way. Almost all who attended

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What is My Royalty Worth?

The question, "What is my royalty worth?" is a question we all hear on a frequent basis. A good analogy would be "How much is a used car worth?" The correct answer should be: "That depends; tell me a lot more about the car."

First, where is it located? Location, location, location. No two states have the same

laws and taxes regarding minerals; no two states have the same geology; no two states have the same infrastructure for exploration, production, transportation and marketing; no two states have the same attitude toward our industry. These can have a significant effect on values.

Second, what is its age and its life history? A royalty interest that has been producing a very brief time in a largely untested area will be viewed quite differently from one located in a mature area with documented production characteristics. The life history of a property is simply a review of production numbers. When I am told that a property produces 30 BOPD that is only a starting point in the data gathering process. For example, the figure above can either be positive news or negative news. Suppose it has been producing 30 years, making no water and a little casinghead gas. It's been at its current level for at least 10 years, down from an initial flush production of 90 BOPD. That is what I call the all important stability factor. The situation could be just the opposite: making 30 BOPD, initial production of 90 BOPD, BUT only producing three months, no initial water production, but now making 90 BWPD with initial casinghead gas of 100 mcf per day, now nil. Here 30 BOPD is bad news. Third, what is the "flavor of the month"? An example would be that 10 years ago there was almost no market for

minerals and royalties in Johnson County, TX. In fact, there was no production in Johnson County, TX. Today it's the most active drilling area in the state with royalty buyers chasing the Barnet Shale Trend.

Fourth, what is the current state of the industry, the economy and product prices? I remember vividly what life was like in the period 1989-1993. The market was flooded with properties for sale at fire-sale prices and $12-$13 oil was the rule. Fifth, who is the Operator?

Frequently, this can be an unexpected plus or minus in the stability and predictability of income stream. Where is this property in the "food chain" of the industry? Is the Operator a significant player in the industry or do we have "Ma and Paw Kettle" whose office is the cab of a 1984 Ford pickup sporting bald tires, dented sheet metal and a collection of empty "beverage" cans in its bed.

I mention these points because I am told that "the rule of thumb is...." Recently I was told by a seller that everybody knows that all oil interests are worth X and all gas interests are worth Y. My point in writing this article is that if a royalty purchaser follows a simple formula in valuations that person will eventually be out of business. ABOUT THE AUTHOR: J. Mark Gresham is a Petroleum Landman & CDOA with 30+ years of experience in all phases of land work relating to the domestic, onshore business. He holds a BBA degree for the University of Texas at Austin with a double major in Petroleum Land Management and Finance. He has been an active royalty buyer since 1977 and focuses his efforts in Texas, Oklahoma and New Mexico.

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HADOA was saddened to hear of the death of our friend, Larry Austin Hamm, 52, on Tuesday, March 4, 2008. Larry worked many years in the oil and gas industry as an analyst and member of this organization. Every single person who hears his name smiles first and then says, "Larry is the greatest guy, he is so sweet and so much fun to work with." He was a brave and inspiring soul and will be greatly missed. Please keep his people in your thoughts and prayers in their time of need.

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HADOA March 2008

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