Monthly Archives: July 2017

The Oil Reserve Numbers Are Fake News

Just crunched some numbers from a Miss. Well in Garfield Co., OK and 20,000′ Woodford well in (South)Blaine County. First is area where $2000 buys the mineral right. Production in steep decline for oil, and gas is flat at 250,000 a day. I value them separately. By funny math, most would convert the gas to oil on a BOE basis, apply $45/bbl for value and use an 8:1 ratio or so (BTU ratio)…Price ratio is 20:1, so they inflate the value of the reserves big time.

Those reserves touted at 450,000 BOE? Try 50,000 BBL + 3 BCF.

The Blaine County well is all gas, maybe 4 BCF? Yet leases are going for $6,000/acre and sales of mineral rights from $8,000 and up? Lierle reports up to $11,111 per acre for a Lease??? Insane to me. The cost of these wells is into the thousands and recoverable reserves are inadequate at current prices to cover the expenses and pay the royalty owners. Period. It is not a guess.