Most Still Long-Term Gas Bulls As Property Values Remain High

Softer North American natural gas prices apparently aren't affecting property sales, with most companies at the American Association of Petroleum Geologists (AAPG) conference in Houston remaining bullish on long-term prospects in the oil and gas industry. "Softer [commodity] prices have not had any effect on property prices," said Casey Clawson, a senior staff geologist for Williams Energy Services. He noted the $2.8 billion price Williams had paid for Barrett Resources recently. "It'll take eight months before it really catches up. Williams has been in the buying market. Long-term, we are still bullish." At Conoco, geologist David Miller is seeing some effect, but not much, adding that companies are still wildcatting onshore in the US. "The price softening has caused people to become slightly more conservative. From the rig count, people have pulled in their reins a little bit," said Miller, who was promoting South Texas gas prospects in Webb County as one of the exhibitors at the AAPG Prospect and Property Expo. "I hope people have a longer-term view rather than a quarter knee-jerk reaction." "They don't," responded Bruce Byrd, principal of Dune International, a geophysics and property valuation consultancy. "People are running all different scenarios on their projects. Some are running models based on $2.50[/Mcf] gas, some are running models on $8 gas." Byrd and Miller predicted that gas prices would return to higher levels later in the winter, after a cold snap or two, noting that a lot of gas storage, while possibly full, is still 48 hours from the burner tip. Commodity prices will rise because of the delay, Byrd said. Attendance at the expo earlier this week -- sponsored by AAPG, the Society of Independent Professional Earth Scientists and the Houston Geological Society -- was high, with several hundred people milling around booths promoting everything from a piece of the Rockies or the Permian Basin, to partnerships in deep gas plays in the Gulf of Mexico shelf or in deepwater prospects overseas. "The lower [gas] price confuses buyers," said Scotty Light of San Antonio-based Lightning Oil, who was selling interests in South Texas plays. "But they're still looking and we're selling. We haven't had to lower prices. The projects speak for themselves." Actually completing deals is a little tricky, said David Wood of Fidelity Oil, a subsidiary of Montana Dakota Utility, who was scouting for gas assets to add to the company's inventory in the Rockies, the Mid-Continent and the Gulf Coast. "It's still very difficult. The sellers want prices back from the winter and the buyers want to use prices today," Wood said. Gas prices have impacted oil projects in California -- not gas deals, said Monte Doris, president of Sacramento-based Canyon Oil & Gas. Doris is selling an oil play in Kern County, on the outskirts of Bakersfield, California. "Everybody and his brother wants a gas play in California now. It seems ridiculous to say that the gas market is so good, it's hard to sell an oil play. It sounds unimaginable. The environment [for drilling] changed almost overnight," Doris said. --Keely Coghlan