Replies to This Discussion

Permalink Reply by caualie on March 25, 2012 at 3:23am

 The Milton Twp. well right on the Mahoning / Trumbull line appears to be the closest thing to an actual well in Trumbull. They worked 16 months on it wheras they're knocking them out in a month or 2 once the rig sets up in Columbiana Co. & south. They have a pump jack there as well. Something I haven't seen on the other horizontal wells. Is it a dud ? Nobody knows, but something was certainly different than what they're running into in the counties south of there. Certainly the industry knows, & it could be a factor in future leasing in surrounding areas.

Permalink Reply by Kevin Rishaw on March 25, 2012 at 6:42am

I would think between the Milton well and the well in Parkman, they should have a ballpark idea of how the geology changes as you move north.

Permalink Reply by Nash Smith on March 26, 2012 at 4:49am

According to an article...

Now lets wrap this back around to the question, Why would Chesapeake pull out of Parkman? If Chesapeake finds that the Parkman well is proven then that would bring competition into northeast Ohio. Chesapeake is no longer, "currently" interested in that region because the JV must not include that specific area. It takes up to $8,000,000 to build a deep, horizontal well. This industry is driven by market price and shareholder wealth. Chesapeake is not going to be the nice guy on the block and complete a well, have the results find it is proven, and then go complete the JV in another area and not profit from their efforts in Parkman while their competition is rolling in the revenues. But, if they pull out of Parkman, keep speculation low and keep that area dubbed as unproven, then competition will not be scrambling to be the first to set up shop in Trumbull, Geauga, Ashtabula, etc.

In other words, as long as this area is called 'unproven', they can pay less per acre.....

Permalink Reply by Nash Smith on March 26, 2012 at 4:55am

Lets say a drilling company is targeting east-central Ohio and they are offering $5,000 per acre and are looking to build a 1,280 acre unit. That means, the initial funding to landowners needs to be 6.4 million dollars (5,000 x 1,280 = 6.4 million). These drilling companies are publicly traded companies, i.e. Anadarko Petroleum Corporation, stock ticker: APC or Chesapeake Energy Corporation, stock ticker: CHK. There is no way they would risk $5,000 per acre if they were not absolutely sure that they would receive a premium ROI from that specific unit. (Keep in mind it can cost anywhere between 4 and 8 million dollars to build and produce a deep, horizontal well)

Now lets take that same project to northeast Ohio, aka an unproven area. Not only is this area unproven, the geological formation of the Utica shale is not ideal in terms of thickness of the shale and the depth of the desired shale. Those same drilling companies would never pay $5,000 per acre to pool together the needed 1,280 acres like they would in the above scenario. 1) The region is not proven, 2) the region is not proven, and 3) the region is not proven.

Permalink Reply by Kevin Rishaw on March 26, 2012 at 8:14am

I Feel like its the first day of dear season. In a few hours I will know if all the waiting and preparing have been worth it.

Permalink Reply by Kevin Rishaw on March 26, 2012 at 9:37am

* Deer season. Auto complete on my phone... Technology sucks ;)

Permalink Reply by JDM on March 27, 2012 at 11:58pm

Does anyone have any advice for signing a gas lease? I have an offer of $4000 per acre at 20% net royalties....i have tried negotiating for 20% gross and Chesapeake thru Mason Dixon is saying this is it...take it or leave....any advice on what to do? My property is in South Mahoning county.

Permalink Reply by Utica Shale on March 28, 2012 at 3:01am

JDM,

Option #1 - join a Landowners Group

Option #2 - consult with an O&G attorney 

 

 Call a law firm that negotiates O&G leases ...

 Chris Baronzzi

 Harrington, Hoppe & Mitchell

 330.744.1111

 

 They wrote the ALOV lease.

 

 The fact that you are on this board asking for (legal) help leads me to believe you need a lawyer.

 

 

Permalink Reply by JDM on March 28, 2012 at 3:20am

Thanks for the advice. I will give the lawyer a call. What is a good landowners group to join? I haven't read anything on the boards lately about Buckeye Mineral....did they ever sign that big group that they were negotaiting for? This was the group that was put together after the $5800 per acre group....last Nov time frame.

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