Chesapeake Declares Eastern Ohio RICH IN OIL!

Matthew Steffy of the Tribune Chronicle (July 29, 2011) reported an announcement made by Chesapeake:  "Utica Shale in eastern Ohio is liquid rich."  These results follow two years of "proprietary geoscientific, petrophysical and engineering research performed by Chesapeake. Eastern Ohio Utica Shale is said to be "characterized by a western oil phase, a central wet gas phase, and an eastern dry gas phase."   Chesapeake who currently holds 18 of the 24 drilling permits in Ohio plans to drill 20 wells by 2012 and 40 wells by 2014.  The discovery is said to increase the value of Chesapeake by $15 to $20 billion.

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Permalink Reply by Gary R Sarisky on July 29, 2011 at 12:45pm
Its 40 riggs by 2014
Permalink Reply by AT on July 30, 2011 at 1:39am
Permalink Reply by scott jackovitch on July 30, 2011 at 2:00am

Tens of thousands of jobs for Ohio thats awesome.  I am looking forward to the days ahead .  I was a little surprised when he said they do not drill the best wells first.

Permalink Reply by SA Frank on July 30, 2011 at 3:36am

It is a learning process like everything.  They will fine tune the best sections to drill horizontally through, improve completions, etc...

Look at Cabot's press releases, the wells just keep getting better.

Permalink Reply by Jim Litwinowicz on July 30, 2011 at 3:06am

Mad money man Cramer on the Utica

 

http://video.cnbc.com/gallery/?video=3000035922

 

He says it is a game changer!

Permalink Reply by C.BURGER on July 30, 2011 at 5:17am
There has definatley been a flurry of activity among land people in the last week to 10 days in our area (southeast belmot/northeast monroe)  Totally my opinion, I feel they are trying to get as much gobbled up on mostly thier terms as possible, bonus $'s are increasing rapidly and people are getting anxoius for money.  I haven't heard of a good contract with these offer's.   The Jerry McGuire syndorme is kicking in (SHOW ME THE MONEY) 
Permalink Reply by Jim Litwinowicz on July 30, 2011 at 11:23am

Can anyone tell me the location of most of the CHK wells? What towns are they near?

Couldn't find any on the DNR maps....but it helps to know where to look.

Thanks

Permalink Reply by Missy Boardman on July 30, 2011 at 1:02pm
Mostly in Carroll County.  2 in Augusta Twp and I think 3 in Washington Twp. BTW I would like the price to outright sell my mineral rights, not lease.  I appreciate the info Jim.  
Permalink Reply by Jim Litwinowicz on July 30, 2011 at 2:52pm

Missy thanks for the info

 

I  know of only that sold the rights and they got double what the leasing offer was.  And I think he got ripped off.  I do know I would be very hesitant to do so as they rarely pay anything near what the royalties would be on a producing well. Play with calculators and you will see that the royalties on a well in a single year can be more than the bonus payment, even double. In the life of the well, it can  a hundred times more. So the royalties will be way more than what they sell for. I'd hold out for at least three times the going rate of leasing, probably try to get five times.

 

Use a royalty calculator to figure out the first five years of royalty and ask for half of that figure.

 

Here's one take ; http://www.pagasleaseattorney.com/blog/106-should-i-sell-my-marcell...

 

Consider selling half the rights if possible.

 

 

 

 

Permalink Reply by Finnbear on August 4, 2011 at 2:18am
With no horizontal Utica wells in production for a reasonable length of time yet, using a royalty calculator makes all sorts of assumptions that only time will bear out. One can only guess now at what the depletion rates will be. We have been told that deep wells in Ohio will likely be in production for generations due to the multiple formations under our feet. When one formation is tapped out, they will be able to plug that lateral and go deeper to the next formation and produce it or plug the bottom and come up to a shallower formation to produce it. Oil & gas extraction technology is changing at a rapid rate and new ways are being developed to approach formations formerly thought to be not worth the effort financially required to extract the hydrocarbons contained in them. Bottom line, 15 years ago, Marcellus was known to contain hydrocarbons but was not financially viable to produce from a vertical well bore but look at it today. Below the Marcellus and Utica is the Trenton Black River which shows promise. There are also shallower formations that very recently show promise for the future due to developing and emerging extraction technologies.
Permalink Reply by Finnbear on August 4, 2011 at 2:06am
Why would you want to give up that much control of your land? If you lease, you can negotitate a good lease that protects you as a landowner and allows you to hold their feet to the fire if they violate the terms of the lease. If you sell the mineral interest entirely, you no longer have any say in what happens when those minerals are extracted. You also reduced the value of your land should you have to sell it in the future. Get a good lease, enjoy the signing bonus and the royalties.
Permalink Reply by scott jackovitch on July 30, 2011 at 1:55pm
The Buell well in harrison county is in Archer twp near the town of Jewett.

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