From: "Gary Britt" 

George your assumptions are way off on this one.

First you are assuming a corporation would choose not to make additional
profits when they could.  That just goes against what people and the
corporations they run do.  Next its absolutely true that when oil was
$10.00 per barrel and less, that many of these kinds of wells cost more to
operate than the oil they produced.  Its also true that at $10.00 per
barrel and less that drilling for new oil in this country is usually too
expensive to be worthwhile.  Not profitable.  As a person who consulted
businesses in Texas for 18 years, I can tell you what was told to me, by
many a small independent oil man, who would have gladly made a profit if
they could.  In addition to confirming the above statements they also told
me that the geological physics of oil well pumping worked in such a way
that most times once you "turn off" a small well like the ones
you are discussing it is usually too expensive to impossible to get them
flowing again.  Finally, many leases require that the lessee actually make
production off of the lease that meets certain defined quantities per year.
 Therefore, again your theory that an oil company would just gladly make
lease payments without producing any oil for decades ignores what is the
likely language in the leases themselves as well as the drain on current
cash and profits such a wasteful strategy would be.

Now if oil stayed at $40 to $50 per barrel for a couple of years, that
would be enough to possibly convince lenders and big oil to invest in
increasing domestic production, maybe even new drilling, etc.  Drilling is
so expensive in this country the investments in up front cash are huge.  If
such expenditures will only be profitable as long as oil is selling for
$40.00 per barrel, one has to be really convinced it isn't falling below
$40.00 per barrel any time soon.  History over the past couple of decades
teaches us that the odds are $40.00 per barrel oil isn't here to stay. 
Maybe it will, but you aren't going to get bankers, investors, and big oil
to bet millions on the fact that oil prices won't be $25.00 per barrel next
year.

Corporations are run by people.  People who are profit driven, profits
drive share prices, are likely to be driven by profits this quarter versus
next quarter.  You advance theories that have these people losing profits
this quarter for some assumed potential profit years or decades away.  Just
isn't how it works.

Cheers,

Gary


"Geo."  wrote in message
news:40cbd2b6$1{at}w3.nls.net...
> "John Cuccia"  wrote in message
> news:1s6mc01ngthdkjn7oaoesv8o5lkpf629pe{at}4ax.com...
>
> > >Why do that, there are tons of Oil wells on dry ground in the US
already
> that
> > >aren't being pumped at all.
> >
> > Where?
>
> All around ohio for one. About 20 years ago they started putting wells on
farm
> land, the oil company would lease mineral rights for 100 years in exchange
for
> a percentage based on how much oil was pumped. It averaged out around
> $3000/month for a well so a lot of people let them do it, then a few years
> later they started shutting the wells down and stopped making payments.
The
> claim was that oil got too cheap to make it profitable. They played a lot
of
> games to get out of making payments too, some oil companies went chapter
11,
> some were split and sold, etc.
>
> My best guess was it was just a way to get ownership of the oil fields
here so
> nobody else could get them. But what I see all over around here are a
bunch of
> oil wells (small ones) that just sit there motionless day after day. At a
guess
> in my county  alone there are probably a couple hundred. State wide there
must
> be thousands. I haven't seen one pumping in years.
>
> Geo.
>
>

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