The Future is Here - OpenAI Says to Sell Your Oklahoma Mineral Rights

All,

If you own mineral rights in Oklahoma, you may be considering whether or not to sell them. While it can be a tough decision, there are several reasons why selling your mineral rights can be a smart move.

First and foremost, selling your mineral rights can provide a significant financial windfall. The value of minerals, such as oil and natural gas, can fluctuate greatly, but if prices are high at the time of sale, you could stand to make a significant profit. In addition, selling your mineral rights allows you to receive a lump sum payment, rather than waiting for royalties from mineral production, which can take years to materialize.

Another reason to sell your mineral rights is the potential for reduced liability. If you own mineral rights, you are considered a working interest owner and are responsible for paying a portion of the costs associated with extracting and producing the minerals. By selling your mineral rights, you can eliminate this financial responsibility.

Additionally, selling your mineral rights can provide peace of mind. Owning mineral rights can be complicated and time-consuming, as you may need to keep track of production levels and royalty payments. By selling your mineral rights, you can free up your time and energy to focus on other priorities.

Overall, there are many compelling reasons to sell your mineral rights in Oklahoma. Whether you're looking to receive a significant financial payout, reduce your liability, or simply simplify your life, selling your mineral rights can be a smart decision.

More to follow,

Berlin

*pretty wild a robot wrote this!

Riviera Resources dice adios to the Arkoma

All,

On 11 December 2018, Riviera Resources, Inc. (“Riviera”) announced that it signed a definitive agreement to sell its interests in properties located in the Arkoma Basin in Oklahoma to an undisclosed buyer for a contract price of $68 million, subject to closing adjustments. For those who do not remember the sad saga of Linn Energy, Riviera = Linn Energy - the Linn Energy assets that were contributed to Roan Resources. Since there haven’t been many large trades in the Arkoma recently, Berlin thought it would be appropriate to analyze the metrics and valuations reported in the press release.

Snapshot of Berlin’s assumption of the operated wells under contract

Production

Riviera agreed to sell approximately 24 MMcf/day of net production. It was reported that this equated to proved developed reserves (PV-10) valued at $61 million. Berlin believes this might be slightly misstated as $61 million seems like a lot to pay for 24 MMcf/d, but if the bank who is loaning other people’s money to you says it okay to misconstrue the allocated value then it must be okay...maybe. It is Berlin’s estimate that these assets are generating ~$1.23 million / month (24,000 mcf / day * $2.86/mcf * .80 * .75 * 30 days).*

Land

If the production valuation is accurate, then Ms. Undisclosed Buyer will purchase 37,000 net acres for $7 million, a whopping sum of $189.19 / net acre. Assuming that it is all held by production (HBP), that might turn out to be quite the trade. Using data hastily queried from Oseberg’s Atla platform, the average one year pooling bonus delivering an .8125 NRI in Coal, Hughes, and Pittsburg counties in the past twelve months lies between $550 and $650 per net acre. While some of the Riviera acreage might be burdened below an .8125 NRI, it is most likely inclusive of more formations than the pooled acreage and it is HBP. Buying at ⅓ the price of your offset competition is usually a good thing and will enhance the opportunities to earn a multiple of your purchase price upon exit.

Operations

It is Berlin’s estimate that Riviera is selling 192 operated wells (174 horizontal (mostly woodfords), 18 vertical). The wells are predominantly located in Coal (94), Hughes (63), and Pittsburg counties (20). Since activity has cooled in the Arkoma and Riviera is not running a drilling rig in the prospect, Berlin reckons that Ms. Undisclosed Buyer will not immediately contract a rig to drill the already HBP’d acreage.

Potential Purchaser

At a $68 million purchase price, the universe for potential buyers is quite large. If there were more transactions in the Arkoma, it would make sense for one of the many private equity backed concerns to drag this asset along into a larger trade. However, since no large company has started to consolidate the PE shops and those PE shops seem to be settling down into their marathon paces, the PE shops should be excluded as a potential buyer. More than likely, the buyer is either a family company who already operates wells in the area such as Sanguine Gas Exploration, or one of the institutionally backed operating companies who seem to have a hurdle rate that barely clears the LIBOR; Scout Energy, Merit Energy, Foundation Energy fit this mold.

It will be worth the squeeze if Arkoma mania ever strikes again…and it will.

The Juice

If gas ever becomes the new oil (again) and companies (because Wall Street tells them to) start increasing their desire for gas reserves then this could prove to be a lucrative purchase for the buyer. She’s not paying a premium for the production and the acreage is coming over for the price of a couple sections of SCOOP acreage. It would be a home run if a big lease play sweeps through the basin à la 2007/2008 and she can exit for $2000 plus / acre .

If you have any additional comments or you would like to point out an error in Berlin’s math or reasoning, please drop a line below.

More to follow,

Berlin

*0.80 is the estimate of the NRI of the leases, and 0.75 is the estimate of the ratio of operating expenses to revenue. Berlin is not literate to the point where she can make footnotes in a blog post.

Same Same, but Different

All,

Bethany McLean argued in a recent New York Times piece that some exploration and production companies who drill and frac horizontal oil and gas wells are on shaky financial footing due to the fact that most don't make money. This is a good argument and it makes sense! She is correct to note that most of the drilling is driven by companies that are able to acquire cheap debt from yield starved Wall Street investors. Berlin agrees that an increased money supply has forced interest rates lower than they ought to be. This decreased cost of capital allows more projects to pencil as viable. 

What Berlin takes issue with is the fear mongering title of the article "The Next Financial Crisis Lurks Underground." Now, Berlin isn't an expert in synthetic collateralized debt obligations (but will taken an organic, gluten/dairy free, and pastured CDO of course, thanks), but here are some takeaways from the causes of the last financial crisis:

Mmmm...pastured, organic financial products above Oklahoma oil and gas mineral rights.

1. Banks lent money to subprime borrowers, but lied about the credit worthiness of the borrowers, and sold these mortgages downstream.
2. Companies sliced and diced these mortgages into complex derivatives. Few people understood the quality of the underlying assets.
3. These derivatives were given favorable ratings by the credit rating companies which qualified them to be purchased by firms thinking they were less risky than the actually were.
4. Insurance companies wrote polices on these derivatives and mis-priced the risk. Some of these insurance products were also make into derivatives.
5. Housing prices decreased and the pile of mis-priced risky assets collapsed.

I'm sure the usual commentators will point out that Berlin missed a couple key bullets, but those are the basics. What is similar in these situations (housing and oil) is that investors are looking for yield (but that is always the case) because debt is cheap. What is different in these situations is that the housing precipitated financial crises was fraudulent, opaque, and systemic. People lied about the quality of the assets, people turned these assets into financial products that few understood, and these products were sold to firms across multiple industries. 

Berlin doesn't believe that the banks underwriting these oil companies' debt offerings are committing fraud. The oil companies are admitting in their financial reporting that they are losing money. Yet folks are buying these bonds anyways as the risk premium is apparently worth it. So while it is bad for the equity owner when the company loses money, it isn't necessarily bad for the management team (who always seems to be paid well), and for the holders of the debt if they are confident that the company can continue to roll their notes forward. 

These bonds also do not appear to have been turned into derivatives and sold across multiple industries. For these reasons, Berlin believes that if in fact oil producers do go belly up (as they do from time to time), it will not cause an international financial crises like we saw in 2008.

Please leave your comments below.

More to follow,

Berlin

The Money Spring

All,

Mike Shellman at Oily Stuff, pens the best blog on the oil business. He often writes regarding the unsustainability of the shale drilling business model.  In his most recent post, he commented on a recent report that Haynes & Boone released on what sources companies are using to raise capital to fund their 2018 exploration and production efforts. The report indicates that 58% of the capital deployed in 2018 will be from the raising of debt. Berlin argues that this number is actually higher as the report notes that "Joint Ventures with Private Equity firms such as farmouts, drillcos, etc" will account for 12% of the capital deployed in 2018, but those arrangements are going to be partially funded with debt also. Regardless, there is a lot of borrowed money at play. 

Sheikhs v Shale from The Economist

Is this sustainable? Mike argues that it is not and his fact based writing often explains why. Berlin argues that it is sustainable. There are many reasons why it is sustainable and listed below are a few of them:

1. We have an expanding money supply that keeps interest rates artificially low and drives yield hungry investors to riskier margins....and
2. Incentives are skewed in most public corporations and management teams often enrich themselves at the expense of the majority of the owners. This can be observed when companies take on new debt to improve short term metrics at the expense of the company's long term financial health and stability....and most importantly
3. The longer something has occurred, the more likely it is to continue to occur. While 15 years is not a long time in the span of world history, capital markets have been funding marginally profitable shale wells for 15 years. You might say "it does not make sense, why are these companies being funded?" Berlin would argue that it is your mental model that does not make sense and needs to be updated. It hurts her head too, after all, wouldn't the equity stake holders want to profit on their investment? But, since the market has funded the exploration efforts, it makes sense.

Please comment below or contact Berlin with any more questions about the suitability of debt financing and the continued sustainability of the shale drilling business model. Or if you would like to sell your Oklahoma mineral rights under any unconventional (and conventional) oil and gas well.

More to follow,

Berlin

Separate but Equal is not Equal

Are all mineral buyers the same?

With the announcement of Longpoint Minerals II securing $802 million to purchase Oklahoma (and Texas) mineral rights and royalties, the froth will return to the marketplace after a few months of reprieve. It is not uncommon for a tract of minerals to be bought and sold three times in a short period of time within the SCOOP or STACK before ending up with the end buyer. The supply of mineral acreage is finite. The billions to deploy in a relatively small geological fairway encourages many participants to enter the mineral trading ecosystem. This article will address some characteristics of each of the participants.

Opportunists
There are more opportunists in the game than anyone else. Due to the variability within any large sample, Opportunists come in all colors. The category, in general, can be defined as individuals or companies whose desired endstate is to locate and negotiate a smaller mineral purchase transaction while simultaneously negotiating the sale of the same tract to another buyer and preferably for more money. Business models vary slightly, some opportunists just broker transactions for a commission, some will assign their purchase and sale agreement for a fee to the end buyer who will fund and close the trade, and other opportunists will fund their own closing and obtain title before marketing and flipping the acreage.

Most opportunists are no better than the snake oil tonic salesmen of the frontier. Beware of their inflated offers to purchase your Oklahoma mineral rights

The companies who discredit the category as a whole are those who contract for the sale of minerals and then fail to close. Either because they don’t have their own funds or they were unable to obtain an agreement to flip the acreage. Many Opportunists mail letters to mineral owners at highly inflated prices with no intention to close. Once the mineral owners engage with the Opportunists, the prospective buyer will drastically lower the offer. These kinds of actions understandably frustrate the original sellers. This conduct also muddies the waters for potential future buyers as they have to contend with the residue of past negotiations and unrealistic price points set by the original Opportunist who didn’t have the funds to close anyways. If sellers insist the buyer have some skin in the game, these kinds of activities are less likely to occur. For seller’s, purchase price should be just one of the factors to consider when selling minerals. The opportunity cost can be very high to have one’s minerals tied up for a few months just to have the Opportunist back out at the last moment. Timelines for closing, contingencies, and most importantly, the buyer’s willingness and ability to close are also important to contemplate when selling a mineral property.

Private Mineral Companies
The next step in the mineral trading food chain are private mineral and royalty acquisition companies (disclaimer: this is how Berlin would classify her business). These are usually smaller operations that consist of sole proprietors or at most a few partners or family members that conduct the day to day affairs. Most do not raise outside money and thus are usually not active buyers in the core of the SCOOP and STACK. These companies are content to buy producing minerals for a reasonable multiple of current cash flow and non-producing property on the fringes or in front of a developing play. Deal flow is sourced by word-of-mouth and select Opportunists. Most pay the bills from a combination of producing royalties and lease bonuses.

Aggregators
Aggregators generate most of current high dollar deal flow in the SCOOP and STACK. Like the Opportunists, they are rarely buying to hold for their own account, but unlike Opportunists, they close the trades with their own funds. Most have relationships with the private-equity or institutionally backed mineral company that provides them with exclusive rights to generate deals in certain geographical areas with an established price point in which to sell their minerals to the larger company. They are paid either on a commission basis or they may be allowed to keep the spread between what they paid for the mineral property and the price set by the end buyer. Aggregators are aggressive in generating deal flow and fill their funnels with leads from call centers, direct mailings, full-page newspaper ads in the county seat’s paper and of course personal relationships with others in the ecosystem.

Private Equity and Institutionally Backed Mineral Companies
The current end buyers of high-value mineral properties in Oklahoma are private equity and institutionally backed mineral companies. Longpoint, mentioned above, is dominant in the space, but other companies like Fortis Minerals, Luxe Minerals, and Haymaker Minerals and Royalties also compete by spending large amounts of other people’s money. These companies can pay a premium for interests in the core areas of the plays due to their lower cost of capital and the longer times horizons for their funds. From a layman’s view of prices, these companies must be modeling the substantial development of multiple geological targets in order to see a return on their investment. From a prospective seller’s point of view, it can be argued that currently, no company will pay more for your interest than one of these firms.

Publicly Traded Mineral Companies
There are a few publicly traded mineral companies. Most seem to be above the fray of the day to day transactions taking place in across the state. Instead, companies like Black Stone Minerals will buy large deals from other large companies, both public and private, that are either divesting their minerals entirely or of assets located in a specific basin. They seem to make a splash on the newswire once or twice a year with an acquisition of $100m+.

Operators
While most exploration and production companies focus their acquisition dollars and efforts on leasing, some firms are finding it advantageous to purchase minerals in sections where they are likely to drill wells. One of the quickest ways to boost the economic returns of the well is to have fewer expenses. There are few items on the well ledger that are as expensive as the royalty burden of a lease. Look to see more companies attempting to acquire mineral acreage in operated units especially if the company is planning to density the section in the near future.

Please comment below or contact Berlin with any more questions about the types of mineral buyers or if you would like to sell your Oklahoma mineral rights.

More to follow,

Berlin

(This post was first published on Oklahoma Minerals on 5 July 2018)

Tom Ward is back and that is good news for Oklahoma mineral owners

Oklahoma Oil and Gas Royalty Owners,

NewsOK business writer Jack "in the" Money, reported a new partnership, BCE-Mach, LLC ("Mach"), that was formed earlier this year between Mach Resources, LLC, and Bayou City Energy. Bayou City Energy will be providing capital to the acquisition and development efforts of Mach Resources, LLC, that is led by Tom Ward.

Mach Lease Bonus = Pleased Oklahoma Mineral Owner

This announcement should make Oklahoma oil and gas mineral owners smile (and dream about purchasing a new combine...). In the recent past, Ward has been associated with Chesapeake Energy, Sandridge Energy, and Tapstone Energy (so much energy that its giving Berlin chest pains). Chesapeake and Sandridge specifically, were known for paying 2x-4x the going lease bonus in the area in order to assemble their prospect. 

Mach stated "It is our intent for this platform to be aggressive in consolidating and redeveloping select under capitalized regions of the upstream sector" (in Oklahoma and Kansas). Mach has not recorded any oil and gas leases in Oklahoma to date, but one could read the under capitalized tea leaves steeping in the mid-continent and see Mach stepping back into the watery tar pit f/k/a the Miss Lime.

This would be weird, but not unusual. After all, if you are the only company taking a risk and you fail, you will get fired and will be accused of being a poor steward of your investor's capital and a poor explorationist (Johnny's word, not Berlin's) to boot. But if you are one of many to take a "risk" and you all fail, you may get fired (or may not), but you will be okay enough (because others were just as wrong) that you'll get an "atta boy" or "we understand, the macro-headwinds shifted" or "man, we were just as surprised as you were that the LOE never decreased" and will be able to raise money again. 

Either way, it will advantageous for the Oklahoma mineral owner to follow Mach's war path to greatness. If you have any more questions on Mach or you would like to sell your Oklahoma mineral rights and royalties, please contact Berlin.

More to follow,

Berlin

Splitting the Baby and the Pooling Bonus

Oklahoma Oil and Gas Mineral Owners:

The Oklahoma Corporation Commission has been regulating on the fly as to rule changes on multi-unit horizontal wells. One of the recent changes is that applicants now must offer a formation election if the applicant desires to force pool more than one common source of supply. Berlin thinks that this effects the unleased Oklahoma mineral owner more than the commissioners had originally intended.

Your call Sol...splitting the pooling bonus for the Oklahoma oil and gas mineral owners.

Old World for the Mineral Owner:

The Commission effectively put a stop to applicants pooling from the surface to granite, instead allowing the the applicant to only pool her target formation and the formation directly uphole and directly downhole. For example, if the applicant proposed a Woodford well, she would have been allowed to pool the Mississippian, Woodford, and Hunton. For simplicity's sake, if my man Bruce was an unleased Oklahoma mineral owner and did not want to participate in the Woodford well with his 10 net mineral acres, he would elect out of the initial well and thus have given up his ability to participate in any Mississippian, Woodford, or Hunton wells while the forced pooling order was in effect. If the only option in lieu of participation was $1,200 per net mineral acre and a 3/16 royalty, Bruce would receive $12,000 from the applicant. 

New World for the Mineral Owner:

The situation has now changed with formation elections. The applicant now has to testify to the perspective value of a well in each formation she expects to pool in order to proportionally allocate the bonus amount. If she testifies that the Mississippian, Woodford, and Hunton are equally perspective, they would receive 1/3 of the allocated bonus each. Now if Bruce elects not to participate in the drilling of the initial Woodford well, he will only receive $4,000 from the applicant ($1,200/nma * (1/3) * 10). If the applicant does not propose a Mississippian or Hunton well during the primary term of the forced pooling order, Bruce will never have an opportunity to make an election and thus will never be compensated for his Mississippian and Hunton formations being pooled for a year.

Now many of you will shout "Berlin, you're a goon, Bruce's Mississippian and Hunton will be open after the primary term of the order." And that is true. Bruce will most likely be open in a year where he could lease or even propose his own well. But Berlin would argue that after a horizontal operator has drilled a Woodford well in the unit, the chances of another operator paying Bruce a premium for his Mississippian and Hunton rights would be unlikely unless better wells are eventually made in the the Mississippian or Hunton.

As there are pros and cons to formation elections for the Oklahoma mineral owner, there are also pros and cons for the applicant/operator. Pro: Her pooling bonus will be lower in the short term, in the case above 1/3 of what it would have been under the old regime. This will be even more advantageous for the operator who is pooling (as opposed to leasing) a greater amount of acreage. Con: Many companies are now valued on their net acres in multiple formations. So now if the operator pools more acreage and initially only drills Woodford wells, her Mississippian acreage count will not see a benefit from the pooling proceedings. This should be somewhat intuitive, she didn't pay for it, she doesn't own it (unless she can convince a bigger fish with someone else's money to pay her for the Mississippian acreage if it is during the primary term of the pooling order).

Conclusion:

Berlin predicts that these rules will change at some point in the future and that an Oklahoma mineral owner will again be permitted to elect out of all formations held by the pooling order in order to receive 100% of the pooling bonus from the outset (TVM, even if they don't call it that...).  

If you have any more questions on split bonus payments under Oklahoma Corporation Commission forced pooling orders or you would like to sell your Oklahoma mineral rights and royalties, please contact Berlin.

More to follow,

Berlin

Extending an Oil and Gas Lease

Oklahoma Oil and Gas Mineral Owners,

It can happen to the best of us, it was three years ago and nobody was drilling deep gas in Custer. You signed an oil and gas lease with an option to extend the primary term. Now, things are different, the "macro-headwinds" have shifted. There are folks with deep pockets paying 3x what you will be paid for your option. Even though $500/acre for a 160 acre lease on the home place would make most smile, you have a yellow equipment problem and were hoping that the original lessee will overlook the option and you will be able to sign a new lease at $1500/acre and buy that excavator you have always dreamed of. So what can you do? 

Some oklahoma oil and gas mineral owners trade their right to drill a well for a royalty and yellow equipment

Some Oklahoma oil and gas mineral owners will attempt to claim that they never received the option bonus. While most lessees who desire to exercise their option will call the lessor to confirm their address before mailing a check, the call is not required. To perfect the option, a lessee is required to send the bonus payment to the lessor's address via certified mail and file an affidavit of lease extension with the county clerk. A lessor is playing with fire if they do not accept the certified mail in order to claim that their bonus was never paid.

What should another company do that would like to buy a lease from a lessor who has a option to extend in their old oil and gas lease that they claim was not exercised? Berlin argues they should do the following to protect themselves:

1. Ask the lessor if they have been contacted by the lessee or its assigns or moved since they signed the lease.
2. Check the records to see if the lessee filed affidavits of extension in the section or the surrounding sections. It would be odd that the lessee would extend some leases, but not others.
3. Request the lessor warrant title to the lease.
4. Require the lessor file an affidavit of non-payment and file the affidavit in front of the new oil and gas lease.

People do weird things when money is involved (and isn't is usually?). As was said in the gun club, "U Signed the M*****f****** Contract." There is no reason to complain (or commit fraud) if the option that you agreed to is exercised. And the company who desires to buy a fresh lease should protect themselves from bad behavior. 

Berlin wrote this post because a loyal reader asked to learn more about the situation. If you have any more Oklahoma oil and gas leasing or mineral rights questions, or would like to sell your Oklahoma royalties or mineral rights, please comment below or drop Berlin a line.

More to follow,

Berlin

Spudding Before Forced Pooling

Oklahoma Oil and Gas Interest Owners:

Bruce was a bit pissed when he called up Berlin today. Apparently, his fence line weaning efforts cost him about 6 hours of sleep after he found the fence knocked down and the calves back with their mommas.  After he calmed down a bit, he asked why so many operators are spudding their wells before a forced pooling order has issued and what his options are as an unleased Oklahoma oil and gas mineral owner named as a respondent in the pooling proceedings.

There are a few reasons why an Oklahoma operator might spud a well before an Oklahoma Corporation Commission ("OCC") forced pooling order is issued.

1. As Berlin discussed yesterday, the OCC is short staffed and the review and issuance of orders is taking a substantial amount of time and in some cases up to 5 months after the pooling was recommended at the hearing. In order to feed the rig monster, operators must keep drilling their wells. After all, a pooling order is not needed to obtain a permit to drill.
2. If a forced pooled unit is not formed and there is no Joint Operating Agreement or any other voluntary pooling of leasehold interest between the working interest owners in the unit, there is no mechanism to govern the development of the unit. One of the consequences of this action is that there are no mechanisms to handle costs. And if a fellow working interest owner can't pay his costs, the operator will not provide well info. In short, operators will spud a well without a forced pooling order so they will not have to share well information in the short term with their competitors.
3. Forced poolings can be a time suck. Dealing with asinine requests on pre-pooling letter agreements, setting protest dates, and finally the protests themselves are often an exercise in busy work. If an operator has a high working interest in the spacing unit, she might just spud the well and file a pooling application in time to have the order issue before the division order title opinion needs to be rendered. 

The rig monster never sleeps, but enjoys purchasing Oklahoma oil and gas mineral rights before a horizontal well is drilled. It increases his NRI and keeps his LPs happy.

The operator incurs a risk when he drills before a pooling order has issued. Hopefully, he has used the time to evaluate the well and if he's made a good well, to lease the offsetting acreage. However, if he had issues drilling or made a marginal well, he is in danger of owning 100% of the working interest as the other working interest parties will have scouted the well and will elect out of the unit when the pooling order issues at a later date. So what are Bruce's options as an Oklahoma oil and gas mineral owner? Once the order issues, he should read the order as it will contain the usual options, however, he should be more strategic as he will have more information available to him.

1. If the operator has made a good well, Bruce's interest will now be substantially more valuable. Bruce could participate in the well if he has completed his diligence on the property and scouted the location. However, Berlin's recommendation is that only professional mineral owners should participate in wells. Still, his mineral interest should command a premium with non-op companies who have other people's money to spend. Bruce should be able to negotiate an oil and gas lease with better terms than those found in the forced pooling order.
2. If the operated drilled a dud, it is unlikely that any non-op will seek Bruce out for his interest unless the non-op just wants to participate with a small amount of acreage in order to obtain well information. In this case, Bruce should just elect the option in lieu of participation under the pooling order that works best for he and his family's situation (ie does he need cash now to buy replacement heifers or maybe more royalty later if an operator decides to density the section). 

Berlin hopes she answered Bruce's question. If you have any more questions about forced pooling, or you would like an offer to sell your Oklahoma oil and gas mineral rights. Please drop Berlin a line or comment below.

More to follow,

Berlin

Smooth Move: Oklahoma Independent Petroleum Association

All,

If Berlin was a betting woman, she would venture to guess that an organization with the words "Independent Petroleum Association" in the title and that represents itself as the unified voice and advocacy group for the Oklahoma oil and natural gas industry might support an independent producer in court proceedings against a municipality. In most cases, the bet would pay out, but not when the Independent Petroleum Association in question is the Oklahoma Independent Petroleum Association (the "OIPA").

In a truly bizarre action, the OIPA, filed a motion with the Canadian County District Court to file brief of amicus curiae to oppose the actions of Citizen Energy II, LLC, a Tulsa based, independent oil and gas operator. There are various Latin terms contained in their motion, but the gist of their argument is that the municipality, Mustang, Oklahoma, was within their right to only conditionally approve the permit to drill. Not only is this weird because the OIPA is supposed to advocate for independent oil and gas producers, but it sponsored legislation to hamstring municipalities' restrictions on drilling operations in 2015 (52. §O.S. 137.1).

Were we supposed to hit send on this fancy letter to the judge?

In a quote from the OIPA's 2018 annual meeting invitation:

After years of oppressive regulation and months of low prices, we’re making the independent oil and natural gas industry great again. Come reflect on our success, plan for the future, expand your knowledge and take it easy at the legendary OIPA Annual Meeting.

Their words, not Berlin's. Who doesn't love greatness? Berlin would like to ask the OIPA how they define success (and legendary), but they would probably just say that it comes before work in the dictionary. Now, Berlin isn't arguing the validity of Mustang's case, she just finds it odd that the advocacy group is anti-advocating. Would it have been a better idea for the OIPA to keep its expensive opinions to itself? Its one thing to whisper to your attorney over a bloody at Cheever's and say "hey, why don't we hang Citizen out to dry?" It's quite another to be openly hostile and support Mustang.

The staff of the OIPA don't appear to be oil and gas folks, but their board appears to be comprised of industry professionals. Berlin is positive that one of the 80 board members own or are employed by companies who will attempt to drill a well inside a municipal boundary in the next year. Did they vote on this action? Weird.

The cat that came in from the cold and now must be nice to the other cats in the office.

It really isn't any surprise the OIPA fumbled this extremely easy to hold (easy_to_hold = nerf) football. Most Southern Oklahoma producers defected last year to form the Oklahoma Energy Producers Alliance after they were disgusted with the OIPA's policies towards extricating Oklahomans from the financial tar bit that is the State's budget. The larger independents left before that to lead the Oklahoma Oil and Gas Association. All groups advocate for crony capitalism and preferential treatment, but only the OIPA advocates for preferential treatment of groups that oppose the companies that compose its membership. 

As 1stSgt Benny once yelled at a young Corporal for agreeing with a Lieutenant, "whose side are ****ing you on" it might be time to ask the crew over at the OIPA the same question, but in an "inside cat" tone of voice.

More to follow,

Berlin