- Associated Press - Monday, February 29, 2016

WICHITA, Kan. (AP) - Contracts with landowners are forcing a small number of companies to drill for oil and natural gas regardless of unfavorable market conditions.

The Wichita Eagle (https://bit.ly/1oJ0zie ) reports that producers are required by contract to drill in a newly acquired lease within a few years in order to maintain the land lease.

Kansas Independent Oil & Gas Association President Ed Cross says forcing producers to be picky about their leases keeps them thinking about the long-term success of their companies.

“They have to maintain the leases, even though they didn’t necessarily want to drill,” Cross said.

Other producers, such as Rod Andersen of Kansas Petroleum Resources, are taking advantage of lows costs in hopes for future profit.

Anderson’s company is drilling and testing wells at discounted prices and leaving the good ones uncompleted so that they will be relatively easy and inexpensive to complete when the price turns up.

“We are in a worldwide glut. It will continue to rise in the months ahead, and we will have taken advantage of it,” Anderson said. “It won’t be immediate term, but in the longer term.”

Bear Petroleum owner Dick Schremmer agrees and notes that smart people “know this won’t stay down.”

Bear will drill one new well every three months in a location Schremmer feels confident will produce. He’ll then leave his wells incomplete until oil prices to get up to $30 or $35 per barrel. Kansas crude now sells for about $20 a barrel.

Schremmer said it won’t take long for the industry to revive after better times roll back around.


Information from: The Wichita (Kan.) Eagle, https://www.kansas.com

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