Pa. bids for shale-gas land lower than elsewhere

"On the same day last week that Pennsylvania received bids averaging more than $4,000 an acre to lease state forests for natural-gas drilling, the city council in Fort Worth, Texas, approved two gas leases on municipal land.

Fort Worth got $5,233 an acre - 30 percent more than the Pennsylvania Department of Conservation and Natural Resources did.

Though Pennsylvania officials were ecstatic about the bids last week for 32,000 acres of public land, Chesapeake Energy Corp., one of the successful bidders, agreed four years ago to lease 18,000 acres of the public land beneath Dallas-Fort Worth International Airport for $10,000 an acre, 150 percent more than Pennsylvania got"

 

From Philly.com

http://www.philly.com/philly/business/82034397.html

 

 

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Permalink Reply by Jean Michel LeTennier on April 14, 2010 at 7:41pm
file seems corrupted... can't download. it..
Permalink Reply by Rita McConnell on January 27, 2010 at 4:38am
Signing a lease in the Marcellus is a lot like making any kind of financial investment. Its all about the marketplace. There are various reasons why land/mineral values are higher or lower at any given time. The Marcellus play is young -- and geographically much larger than any of the other shale plays. Companies are startng to find sweet spots, but perhaps even spots that are a little less desireable. Not all land in the Marcellus is created equal, and its going to take a while to sort things out. But you can tell from recent entry of some big players like Exxon and EnCana, that the field is warming a bit, perhaps.

In the end, the personal gain one can make from the play comes down to signing a lease at the best possible time with the best possible royalty percentage. Stay informed, or get informed of whats happening in your area through these kinds of boards, talk to your neighbors, and if your serious, engage the counsel of a good oil and gas attorney who understands the economics of horizontal shale wells - different than traditional ones. Be ready discuss the issues for real when land men come knocking.
Permalink Reply by Edgar Simmers on January 27, 2010 at 5:10am
I have a lease in hand but it is not desirable to me so I am not returning it. I have contacted the company and they said it is non-negotiable. I have contacted other companies about leasing but receiving no response, even the one my neighbor has signed with. (which is the company that owns the well within eyesight)
What happens if I am in a producing unit and not signed? Does the drilling company have to have everyone in the unit signed before they can start producing?
Permalink Reply by Edgar Simmers on January 27, 2010 at 6:25am
Thank you Ruby. Is there any way of finding out who's land make up a unit or the boundary of the units. I would think there should be some type of map depicting the units now under lease.
Permalink Reply by Edgar Simmers on January 27, 2010 at 7:40am
My county (Lycoming) isn't listed with Landex. Thanks anyway.
Permalink Reply by terry hazlett on January 30, 2010 at 3:20am
James, thats what Chesapeke tried to tell my mom when the landman offered her $200 for her couple of acres, i laughed in his face and told him to come back when they where serious.They think we're a bunch of hillbillys that don't know anything! I think its time they wake up and start paying us what our land is worth!
Permalink Reply by ben yanda on February 15, 2010 at 7:52am
One aspect so far missed in this discussion is risk. Marcellus is still a greater risk than Haynesville and Barnett for many reasons. Midstream pipelines are few and far between, regulatory issues are serious, water supply and disposal issues are an impediment. Lease prices are highly variable. If you have a company planning to make its money in the short term (quartly earning statments as most publically traded companies do) they are focused on that number and so are many of their geologists and engineers. They need a quick return on investment and if PA's regulations or lack of infrastructure keep them from drillingeven a single well they may miss a target. Texas has a proven track record of letting you drill wells. It is likely that therefore Barnett shale leases are worth 1.5 times as much per acre becuase of the way the company does its accounting, return on investments, etc. even if there is more gas in the same leased area in PA.

The more impartant number is how much does the well cost to drill total, where is the market, what are the prices the companies are headged on (price per MCF) and how is the company measuring return on investment. What are the windows. There are still good companies shunning the marcellus because it is to expensive for the risk.
Permalink Reply by terry hazlett on February 15, 2010 at 8:20am
Ben , apparently you are in the og buss, the marcellus will be twice what the haynesville is! the pipelines are being laid as we speak, and the marcellus is more proven with every well they drill. there has been a 24Mcf well drilled in sw pa & i don't think to many haynesville wells can say that. Iunderstand og co's like to put out the propaganda telling us our land isn't all that good, and we should be happy they want to drill us at all, but those days are ,lease rates are raising to mirror what we know our land is worth, and i don't think chesapeak & range or any of the others players would be throwing they're money away for bad acreage!THE DAYS OF $10-$100/ACRE LEASES ARE OVER!
Permalink Reply by ben yanda on February 22, 2010 at 7:04am
Not in the oil and gas business. I work for an environmental consulting company. Work with a lot of oil and gas clients though and have worked in the Barnett, Haynesville, and Marcellus as well as many other CBM and conventional plays. I am also a landowner that has had leases taken out on my farm and my families farm in NYS

You are both correct and incorrect. The Marcellus is a great play. It is a huge, amazing play and it will be developed. But... I am trying to tell you the pipelines and the regulatroy issues are still a challenge. The industry will meet that challenge, but it takes time. What good is a 24 Mmcf well if it is shut-in and you have to make a quarterly report. Yes, it is money in the bank and some operators plan that way. But for tohers, it is still a liability. No one is throwing money away on a Marcellus lease, but if they can't get the acerage HBP or tied-in they may choose to invest there limited capital in some lower hanging fruit. In many respects in doesn't matter what your lease bomus is. It matters what your production and royalty payments will be. I'd love a $10/acre lease if I had 25% royalty. I am not putting out propoganda, different operators hedge at different prices, lease a different rates, and have different investment strategies. Landmen often want what they want and will try to get the best deal for themselves. Others care about the land owner, but it is always business. I just wanted to share some of the other considerations that were not being discussed because they make a difference. Price per acre and the potential productivity of a well are related but not necessarily corralated. There are many factors. That is the take home point.
Permalink Reply by Country Bumkin on February 16, 2010 at 1:47am
Here's what I don't understand. Where I live, there's the Columbia Penn Corridor 1711 pipeline. I only know of two tap-ons for that line to date. One for the Chase Property Well that Chief hasn't fracked yet and the Rex well in Drifting/Moshannon area--that's it! So explain to me why there isn't more wells being drilled around the existing infrastructure? It makes no sense to me. I believe there is plenty of existing infrastructure that can be utilized right now, however, I'm not seeing those properties developed either. If the "core" area is in NE pa and considered the best areas to develop, what good is it to have huge potential production numbers if you can't put it in a pipeline for market?
Permalink Reply by terry hazlett on February 16, 2010 at 2:13am
The og co's might be drilling to figure boundries to the play , or they may just be drilling wells they need to hold cheap leases they already have, by drilling to hold by production. be patient ,our time will come, along with higher lease payments!
Permalink Reply by Country Bumkin on February 16, 2010 at 3:48pm
I believe you are correct. Time will change everything. :)

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