Replies to This Discussion

Permalink Reply by Sam Douglass on October 2, 2012 at 3:56pm

I think you will know when the real guy comes knocking on your door.  Even then go slow and check in with the NWPA group - I think they are on top of it. There is not all that much happening right now, but soon they will be wanting to line up properties to feed new billion dollar plants and export markets overseas.  That does not happen overnight.  Maybe the new budget year in January will stir things up; maybe not.  Meanwhile the value is there and will not go away.

Permalink Reply by Linda A on October 1, 2012 at 3:25am

where?  specifically...

Permalink Reply by Samuel J. Orr on October 1, 2012 at 6:44am

What does the acronym GIS mean? Where did you get this info? Are you employed by CX? Pardon my ignorance on this subject? I appreciate your posts but just need some clarification. On another subject is there any map available on web that perhaps shows Range Resources's leaseholdings in Crawford and/or Venango County? I know Range obviously has such a map, but wonder if they might have published something on web?   It would be nice for any landowner to know who in his general area was leased to whom. Would be nice to see map on this site that was updated as parcels were leased to particular O&G companies. Obviously the logistics of this idea are likely very difficult, thus my wish is unrealistic. The information, if available, would allow a landowner to assess which company might be most interested in leasing, and ultimately drilling his or her property. For example, if I had property which was surrounded by a bunch of properties that were all leased to Range Resources, I might reasonably assume that Range might be the only one interested in leasing and ultimately drilling my property. This knowledge might alert me that offers from other entities  might be from so-called "flippers".

Permalink Reply by Craig on October 15, 2012 at 8:35am

NWPLA just finished their meeting at MMR this last week and said they had no oil and gas companies interested in the acreage that they had put together.  Now trying a new tactic by breaaking it up into smaller chunks to market it separately, making it easier to market.  A year later, still nothing.

 

CX - their deal blew up in Mercer/Venango - don't know what that's based on, but looks like geology is going to play a lot bigger part in future decision making.  I know a lot of people are saying money is the driving factor - yes, it is, don't pay big money for something that you don't think will work for your program - so is that money, or geology?  Meaining Halcon.

 

Patton Energy - have some friends that signed on back a few months ago, big money, and they get an e-mail that basically tells them that the offer is revoked, they won't be leasing the acreage in their area, and in the ONE area they do want, they are going back with significantly lower offers.  Email .direct from the leasing guys in the field

 

NE Appalachia Land Services - Have some friends in the Eastern area of the county that signed and just got re-approached to extend the amnount of time that they want before paying the "lease:"  So now, they are offering more dollars, when they can't find a buyer at the number they are already at, and want more time?  That seems a little like having the cake and eating it, too.  Or why pay for the cow, when the milk is free.

 

All this tells me somethign is wrong in Denmark, folks.  There ia a lot of hype about the goodie here in Crawford, but there seems to be a big pull back - what is going on?

 

A few weeks ago, I asked advice about taking an offer I had on the table, knowing the company had paid some neighbors, and had decided to take it.  I was vacillating on whether I wanted to sign at the dollars they were offering, and now I want the offer, and I hope I am not too late.

 

And don't come back saying - "just wait, it'll get better".  Took that advise, and it got worse.  I knew it was wa gamble, but thought I had more time than this.  Even made an offer on an adjoining piece of property, thinking I had the opportunity to lease it since it was not leased.  Made an offer to the guy for more than it is worth to get the oil and gas rights, now I am in a contract, gotta hope. 

 

But that is the price of capitalism - I still prefer it to socialism. 

 

 

 

Permalink Reply by Samuel J. Orr on October 15, 2012 at 11:37am

Good summary. Here is mine. #1 low natural gas prices, #2 Money #3 Geology ! Let us assume that Halcon bailed on 90,000,000 acres of "leases" or "provisional "leases" in Venango Crawford and Mercer Counties. Let us assume that the average bonus on that acreage was $3000/acre. By bailing, Halcon has saved $270,000,000. Interestingly Halcon has 2 permits for horizontal wells in Greene Twp in extreme NW Mercer County:; It has been posted on this site recently that Halcon intends two drill 3 total wells in N. and S. Shenango Twps which are in the extreme SW corner of Crawford County; Halcon has  3 permits in Venango County and a 4th. one pending. Of those 3 permits two are in French Creek Twp, and third in Sandy Creek Twp. There has been some site preparation on these three properties. Wells cost estimated 5,000,000 to 6,000,000 per well. If Halcon drills 8 wells, the maximum expenditure is $48,000,000 dollars. If the wells are good, the landowners are in good shape. Halcon at that point has proven acreage and can go to banks or Wall Street for capital to lease a whole lot more acreage. It can then execute its game plan which was to acquire a hugh amount of leased acreage WITH PROVEN RESERVES and then kill itself off by selling the entire company or all of its leasehold assets to a much bigger player such as Shell or BP or Chesapeake or whomever.  If the wells are duds then we landowners have a problem. Halcon too will have lost money but it will have saved that 270,000,000. Incidentally, Halcon did not have $270,000,000 nor did it have any way to aquire that amount of money IN THE ABSENCE OF PROVEN RESERVES.  Even 3 good wells will likely improve their access to capital.  The above represents my best speculations about what is going on. In the mean time the O&G companies, and the landowners are hoping for an increase in demand for natural gas which will increase its price and make O&G companies more likely to drill. 

Permalink Reply by gary smith on October 15, 2012 at 2:03pm

seems halcon is headed north. remember the original wet gas/oil/dry gas maps ohio put on this site. it showed the wet gas/oil protruding into crawford at jamestown. as i posted before, two very reliables told me cabot still owns 50 % of ranges deep. one also told me that cabot was in on well at sugar lake. don't know why that hasn't come out. seems it will burst on all the landowners at once. probably because range has so much here in crawford.

Permalink Reply by Samuel J. Orr on October 15, 2012 at 2:38pm

Gary: I agree looks like northern 1/2 of Mercer County that borders Ohio is in the oil window. I believe that is true for Crawford County as well. From South to North: West Salem, Greene, South Shenango and North Shenango townships all line up. Unfortunately my land is in northeastern Venango County and from looking at the geology will not be nealy  r as good. Some hope for being in wet gas window. Good news is that 2 of Halcon's 4 permits for Venango are in French Creek Twp and are 2-3 miles south of my property. I am wishing that some good luck falls on Mercer, Venango, and Crawford Counties. It would be nice if all the acreage turned out to be good  even if  some turns out to be  good bit better than others.

Permalink Reply by Sam Douglass on October 15, 2012 at 3:07pm

Lease Payments Climb as Oil, Gas Prices Drop

Monday, October 15, 2012 

TULSA, Okla. – Oil and gas bonus lease rates paid to mineral owners are rising, despite overall drops in oil and gas prices, and in the Utica shale region of Ohio, per-acre payments range as high as $8,300, finds a new report by Farmers National Co., an oil and gas management firm based here.

By comparison, lease bonus rates in Oklahoma were as high as $15,000 in the third quarter, the report states; in North Dakota, $14,000 and in Texas $13,000.

 “Despite the fact that oil prices have dropped from $110/bbl earlier this year to $92/bbl and natural gas prices are down almost 20% from a year ago, oil and gas lease bonus dollars per acre continue to rise across the board,” said David Smith, vice president, oil and gas management division at Farmers National Co.

Lease bonus dollars reached record levels in 2011, and the upward trend continues, he noted.

“Farmers National Company has increased the level of negotiated lease bonus dollars for their clients by nearly 13% over its past record year in 2008,” said Smith. 

States seeing the highest levels of production, and reaping higher bonus rates, are those where new shale formations are being discovered and opened up utilizing newer drilling technologies. Activity is remaining strong, particularly in the shale areas of active states. “As new shale formations are discovered and opened up utilizing new technologies, production and profitability are picking up for many independent oil producers across the country” Smith said.

Because of this, oil and high-liquids content areas are still seeing very high lease bonus prices. The strong increases we are seeing can be attributed to active and competitive areas.

Drilling and leasing activity in Texas, Oklahoma and Kansas remain strong pushing the top end prices paid at or near record high rates per acre, said Smith. The top end lease bonus rates per acre reported in Oklahoma have jumped nearly 20% from from 2011 to currently. According to Smith, some of the increased leasing rates in both Oklahoma and Kansas are a result of the expanded Mississippian Lime shale play that has many operators scrambling for acreage and willing to pay top dollar to get the acreage tied up. North Dakota activity has jumped due to the Bakken shale formation that has had thousands of acres leased and drilled in just the past two years causing price increases. Colorado and Ohio have also seen significant jumps in average lease rates with numbers more than doubling, said Smith.

In addition to expanded drilling activity, other key economic factors contributing to rising lease bonus levels in 2012 are the continued uncertainty in the global and domestic economies, as well as political unrest in the Middle East. 

Farmers National Co., an employee-owned company, describes itself as one of the largest independent oil and gas management firms in the country. The company, founded in 1929, has eight lines of business: farm management, real estate sales and auctions, appraisals, insurance, consulting, oil and gas management, lake management, and national hunting leases.

Permalink Reply by Samuel J. Orr on October 15, 2012 at 3:30pm

 To Sam Douglas:  Fang posted the same information though he just posted the linkto the article.eled patience. He also couns My own recent surfing of the activity in various western Pa. counties indicates to me that leasing is drying up at least temporarily. Also note that some have posted that they received offers months ago that have recently been withdrawn or reduced. Because I am not so young anymore, and because life is not infinitely long, I will pose the same question to you that I posed to him: Sam, please look into your crystal ball and hazard a guess when I might be offered $8500/acre bearing in mind that my property is in western Venango County. If you don't want to stick your neck out very far, please hazard a guess as to when I might see even $5000/acre. Sam

P.S> Can anyone verify Gary Smith's info about Halcon purchasing Carrizo"s (sp?) leasehold interests in Trumbull County, Ohio and in Mercer Co. and Crawford County, Pa?? Supposed price $43,000,000??

Permalink Reply by Sam Douglass on October 15, 2012 at 4:11pm

Excellent point.  I am hardly young and I understand your point.  And I believe I mentioned that if you have reason to take money now, take it - but do not look back.  

My impression is that for whatever reason the companies have been holding back in the area and making the immediate expenditures from their budgets in other areas.  Now, the drilling in dry gas areas is only as necessary to hold leases [not for production objectives] because gas prices have been down while producers work to expand the market.  So, for the moment they have rushed off to the wet and oily areas.  But the market is expanding multi-fold over the next couple of years and there will be wells drilled and shut in to be ready for it.  I think I just read that prices on dry  gas for December delivery are now over $5 mcf.  But there is no reason to believe drilling is going to go crazy.  The producers know how to adjust drilling activities to maintain the price they are looking for.

My pain comes from the fact that landowners let the producers decide the price.  Bonuses are a relatively minor part of the drilling and development costs of 40 to 80 acre wells.  More is paid for prospects that are not nearly as good in say Texas where you are not likely to see royalty below 20%.  By their actions the producers are treating Appalachians like dumb hillbillys    I might not want to wait for $8500/acre bonuses, but I certainly think $5000/acre is reasonable.   By their actions the companies are saying that oily and wet gas are worth even more.

Know that the companies cannot be spending their money everywhere at once.  This leaves room for opportunists to do some leasing and sell leases later to the producers at big profits.  Nothing immoral about that.

And the companies insist on all the layers of productive strata - not just the Marcellus or Utica - they want it all --  FOREVER, reserves for future generations - 100 years ofdrilling they say.  When do you get paid.  Do not hold your breath for a big royalty right away.  They will laugh at you if you ask for a binding production schedule.  And as part of their negotiating ploy they offer one price to get people excited then walk away and come back to renegotiate.  These companies have lots of time to negotiate.  That's called wearing the other guy down.  These producers are not bad or good, they are just fulfilling the obligation to their stockholders to spend as little as they can  and make the best possible profit for their stockholders.  They are not worrying about dying.

Permalink Reply by Samuel J. Orr on October 15, 2012 at 4:27pm

Eloquent, too the point, and most helpful. I thank you for taking the time to comprehensively answer my questions and for providing a lot of additional helpful information. (I do believe that some of the leases in Western Pennsylvania had language that exempted the so-called "shallow gas" from the leases. I do not know the exact language that was used or the names of the strata that may have been exempted from such leases. Sam

Permalink Reply by Linda A on October 15, 2012 at 4:36pm

Once they have the lease, and drill, you get paid royalties regardless. 

Do you really think they will spend millions on drilling worthless shallow wells just to 'hold' the land for future drilling?  They don't have enough money available NOW to do what they want, why would they throw money away?

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