Replies to This Discussion

Permalink Reply by Jack Young on May 13, 2014 at 1:22am

It's usually a straight deduction - one group I know who buys property here just deducts away the rental the lease generated from their offer. So someone with a 10 year lease gets an offer reduced by $1000/acre.

Permalink Reply by Gringo on May 13, 2014 at 8:07am

Values are broken down 

Land

Buildings

OGM's

The lease is figured in to the value of the OGM's

A good lease adds value to the OGM's.

A bad lease will lower the value of  OGM's and can decrease the value of the land because of the encumbrances.

No Lease can be priced in at current rates minus tax rate %.

Permalink Reply by Jack Young on May 13, 2014 at 4:08pm

To be honest, that's not quite how professional buyers see it, although you make some good points. Any lease takes away value until/unless there's production because you've already taken a share of the expected cash flow out of the picture. 

The process that a professional uses is much trickier overall than any of this, of course. A property's OGM value can be heavily impacted by the lease status of the neighbors, the operator's financial situation and many other things.  It's very hard for anyone who doesn't have the whole picture to come up with an optimal price, but sellers generally don't have that information either, so you typically see as many winners as losers, Which is what makes the game so interesting!

Permalink Reply by Gringo on May 13, 2014 at 11:52pm

Sorry I did not have time to write a novel on the subject, quick and easy answer for a complicated process that still comes down to feeling good after the the research which as you said includes all surrounding parcel leases and making the math work. Sellers are still living in fantasy land if you go by listing prices, actual sales are showing a different tale. More winners than losers keeps you in the game.

Permalink Reply by Ann Ticopa on May 15, 2014 at 5:10pm

Upcoming 3-parcel property auction with mineral rights:

http://www.marcellusauctionspa.com/

I don't find much description of the house on Lot #1, which is puzzling.  Sure looks from the photos like it's worth more than  the 14.22 acres in a unit with a shut-in vertical SWEPI well in Middlebury Twp.  

Permalink Reply by Deb Reynolds on February 7, 2014 at 3:30am

Jack, there's a job fair scheduled by Shell for March, I believe, what's that all about? Not what it sounds on the surface? 

Permalink Reply by Jack Young on February 7, 2014 at 1:51pm

They go to all the job fairs on a regular basis, as they have over 100K employees and there are always openings. But remember, Tioga County is an incredibly small part of Shell's business - they didn't cut 60% of their PA headquarters staff so they could hire the same folks back at a job fair 2 months later!

Permalink Reply by Deb Reynolds on February 11, 2014 at 6:02am

Thanks--what I heard was that Shell sponsored the job fair--they were behind it--but like you say....unless they were looking to get rid of particular people, but I don't think they'd do it like that. Still, hope springs eternal. 

Permalink Reply by wyalusing jim on February 20, 2014 at 5:54am

with average withdrawals for the rest of the winter/spring, we could end up below a tcf in storage before injections. that could be close to 3 tcf to be put back by next winter.

looks like a good year for pricing and drilling coming up. all we need now is a spring like last year to cinch it.

swepi has recent new permits in Richmond twp., how about the rest of the county?

Permalink Reply by Lynn Wigglesworth on February 25, 2014 at 1:46am

I'll get excited when I see my first royalty check. I haven't heard a word from Shell since I signed the lease almost two and a half years ago.

Permalink Reply by JOE REDDING on February 22, 2014 at 1:38pm

SWEPI is moving in on the Watkins 820 pad to drill what looks like 4 new wells, they have permited 3 horzontals and one virtical, Thay started on Tuesday last week, I think. things are realy looking up in Chatham township.

Permalink Reply by Theresa Kolk on June 5, 2014 at 1:19pm

   I received a phone call yesterday from a gentleman looking to lease my acres....when I told him I was already leased back in '06 he sed they would probably buy our lease  as they wanted to  include us in a drilling unit...he was unable to tell me what the unit name would be...but he did say I would be notified when they  purchased the lease...I don't know how long all this will take but I will post updates whenever I get any more info... I am a few miles outside Liberty going west towards Morris...anyone else getting any phone calls or hearing anything?

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