Replies to This Discussion

Permalink Reply by Thomas Wentzler on March 26, 2011 at 5:52am

As the foreign money runs out (like Statoil funds paying many of the exploration bills), drilling will slow until gas prices increase - especially since there is a one month payback on wells drilled in the Eagleford/Woodbine.  Many companies are re-orienting their to the South Texas area and North Dakota where there is both oil and gas.  A government directive/incentive to use natural gas would change that shift  back to PA quickly.

Permalink Reply by kathy on March 26, 2011 at 9:38pm

Not good news for us

 

Permalink Reply by Thomas Wentzler on March 26, 2011 at 9:49pm

Only if you need money tomorrow.  Eventually, it is going to happen.  Further, the silver lining is that 2 years from now the technology will be so much better that you will recover more gas from your well. 

While rather morbid as an analogy, we are like cancer patients; e.g. need to try something and to do nothing does not advance the frontier.   Here is the parallel: If they drill your lease, they will make money - period.  If they do not, they may lose the lease via the clause in the contract.  They know how many wells they can drill and frac vs what they have leased.  They are on a treadmill.  The CFO of Statoil told me that they have 17000 wells to drill in three years - not possible unless they are in a frenetic hurry. 

The chemistry on these wells is evolving - at conferences arguments abound as to the correct chemistry for fraccing.  Being right or wrong can be huge.  We just changed the chemistry in Utah as an example and the production went from 150 bbls/day to 350 bbls/day. 

 

Punch line same well drilled 2 years from now with the rapidly advancing technology may yield a 50% increase in gas production - good for the gas company... but on a relative dollar basis, spectaculary for you.

Permalink Reply by kathy on March 27, 2011 at 11:33pm

That was even better to know. Thanks. I am sure that is a wonderful way to look at it! Appreciate the insight.

Permalink Reply by NY Gas Rights on May 25, 2011 at 1:28am

Statoil bought 33% of the interest in the Marcellus only from Chesapeake. A couple of billion dollars targeted in the drilling/exploration account is not drying up and cannot be "shifted".  Mitsui bought 25% of Anadarko's Marcellus interest under similar terms. Anadarko and Chesapeake are in partnership. There is no lack of interest or funds for drilling. Pipelines are the issue; Oh, and the greedy landowners that think they somehow know more than the geologists and engineers.  It is amazing how a few mornings sitting in some diner educates people more than a 4 year college degree in energy exploration. 

Permalink Reply by Daniel K. Mathers on April 23, 2011 at 5:22pm

Good post, Tom. I think you hit the nail on the head. A number of leases in this area are lapsing without renewal for these reasons. Absent a radical shift, they will bw back to pick these up and probably with a better result (and a higher new lease royalty).

Permalink Reply by erik feist on June 13, 2011 at 7:36pm

Just received an offer from Seneca Resources for a 5 year lease for 4K/acre and 19% royalties. Rumor has it they are running from Rose Valley down toward Trout Run. Has anyone in that area signed recently or fielded any offers?

Permalink Reply by erik feist on July 22, 2011 at 6:52am

Seneca pulled their offer off the table saying they were unable to get the unit together.  No other word of any other activity yet.

Permalink Reply by Jody M on July 22, 2011 at 12:03pm

We had an offer a few weeks ago from Seneca.  $3700 and 18%.  My father is handling it so I dont know all the details.  Lewis township just north of Trout Run.