Barnett Shale

Barnett rig count inches up second week

The number of rigs working in the Barnett Shale increased, just barely, for the second consecutive week, while the U.S. rig count continued to slide. In North Texas, 83 rigs were active, up one from a week earlier and up six from two weeks ago. Tarrant County increased its standing as the busiest county, with 33 rigs compared with Johnson County’s 17. Nationally, the rig count fell by 20 in the past week to 955, barely half of the year-ago total. Of those, 742 were exploring for natural gas and 202 for oil, with another 11 unclassified, Houston-based Baker Hughes said Friday. The U.S. count is down 53 percent since the end of August as weak energy demand has hampered oil-field activity. Texas, with 378 rigs, was down six.

-- Jim Fuquay

Schnurman: McClendon's deal a gusher

Star-Telegram columnist Mitch Schnurman wrote Sunday on Chesapeake Energy Chairman Aubrey McClendon's 2008 pay package. Here's his introduction:

Chesapeake’s Aubrey McClendon messed up big time. The consequences? A huge bonus.  Heads, he wins. Tails, shareholders lose. Either way, the chief executive of Chesapeake Energy makes a killing.

Aubrey McClendon, who built Chesapeake into the nation’s largest independent natural gas producer, had a terrible year in 2008. He lost 95 percent of his stake in Chesapeake, once valued at almost $2 billion, on a reckless gamble with a margin account and company stock.

Rather than reprimand the CEO for playing speculator and damaging the company’s reputation, the board gave McClendon a $77 million bonus in 2008 -- on top of $23 million in shares, salary and other perks. This after Chesapeake’s net profit fell by half and its stock price dropped 59 percent as natural gas prices collapsed. In the proxy released last week, directors defended the payout as a reward for superior performance, but it’s actually a path for rebuilding McClendon’s personal wealth. Call it a CEO bailout, with shareholders footing the bill.

Click here to read Mitch's full column.

Sell your royalties? Better think twice

First, property owners in the Barnett Shale had to decide when to lease their mineral rights and for how much. Now, with the recession pushing back drilling projects, some are being asked to sell their royalty payments. The offer: Wait for royalty checks to come in month by month -- or just to start in the first place -- or accept a one-time, lump-sum payment in exchange for the right to all those future payments. It’s not necessarily a simple decision at a time when natural gas prices have plunged, depressing royalties and putting their future value in doubt. "Now’s the time to buy," said Jerry Simmons, executive director of the National Association of Royalty Owners in Tulsa. Compared with the peaks paid last year, he said, investors face a much more favorable market to accumulate properties.

But is it time to sell? "I would be very cautious," said Bob West, a Fort Worth oil and gas attorney who has advised a number of neighborhood organizations. "This is a business we haven’t heard a lot of in Tarrant County, but I imagine we’ll be hearing more of," West said.

For the complete story in Sunday's Star-Telegram, click here.