Hello, I'm new to the forum and seeking advice and insight to a recent offer from Artex in Marietta Ohio for our families property in Perry County. Artex is seeking our approval to do 3D seismic with option to lease. The Utica and Point Pleasant is excluded. Artex wants the Knox Formation. My question is are there any formations in the Knox that can be horizontally drilled. From my research Artex only drills vertical wells, but I'm just thinking of the future. Thanks in advance.

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The hydrocarbons are contained within the traps.  Outside of the traps the hydrocarbons have already migrated out, since there was nothing to seal them in. 

it is like drilling into a piece of swiss cheese.....where you will only find oil in the holes

James, can you elaborate a bit more on this statement?

"I guess a landowner(0.297acre) needed to complete a RR unit was offered $2500 for a 1 year non-drilling lease recently."

That's $8400/acre.
Gary, the circumstances were quite unique. An erosional remnant was identified with 3 D seismic. The Lessor accumulated almost enough land to form a drilling unit. Lessor needed a tiny bit more so the offer($2500 for .297ac) was offered. The landowner denied and the Lessor simply applied for a variance with odnr and it was granted. .297 acres didn't give the landowner much bargaining power. Like Dexter said above:


"They also want to get the data and then avoid going through negotiations because, as is obvious, if they shoot seismic then try to lease you it means they found something and the landowner has immediate leverage. They're looking to avoid that entirely. They're also trying to keep any competition far, far away, by getting people locked down before word of good seismic data can spread. It's a really good strategy for them. Not so much for the landowner. I'd tell them they can shoot all the seismic they want but the lease has to be a separate negotiation. That way you get a lease only if your land shows what they are hoping it shows, which is exactly where you'd be if you signed the seismic/lease option, only in this scenario you have a little bargaining power."

Remember some of these wells can easily produce better than a Utica well.
Michael Kasler, I found this on the size question:

"Rose Run erosional remnants typically are 40 to 60 acres in size with larger or smaller erosional remnants outside that ..."

Drilling horizontal into the Knox is not only impractical it would be a huge waste of time and money. Not only are the remnants too small the Knox, where productive, is highly porous and permeable so you don't need a horizontal well. They don't even frac the Knox. It's either good, or not and you generally know as a soon as you drill into it. They are a good company made up of local people. They DO NOT have a business relationship with Chesapeake, those who posted otherwise are incorrect. The advice to grant the permit is good advice. If they find something they'll be back for a lease but don't expect big shale money for a lease bonus. These wells generally make (when really good) 0.3-0.5 Bcf of gas with a little oil. So over the life of the well maybe 900k-1.3 Million gross and they cost around 750K to drill and complete. Good money for you if they hit but if you expect more that 10-20 dollars per acre they'll just move on and drill somewhere else even if you have a great looking target on your property because if you expect too much for a signing bonus say 1k/acre and you have 80 acres you have to add that into the cost of the well and the profit margins and the time it takes to pay the well back (from all the drilling costs) aren't worth the effort. Your Utica is protected but its too shallow to ever work in Perry County anyhow so i would take what I can get. Hope this helps.

"They DO NOT have a business relationship with Chesapeake, those who posted otherwise are incorrect."

PAJoe, is a Farmout Agreement considered a business relationship?
Is a 3 way drilling JV with EVEP and CHK considered a business relationship?

" These wells generally make (when really good) 0.3-0.5 Bcf of gas with a little oil."

Really? "Little Oil"
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those kind of numbers are the exception not the rule. I stand corrected farmouts do count but no one is active anywhere near Perry County and a 3 way drilling JV in an area where nobody can make economic (Utica) wells is the same as owning a time share on the moon. You may have something on paper that you own it or a part of it, but you have no way to ever get there.

We ain't talking Utica PA Joe. Artex is leasing in prime a Roserun area where numbers like that are not necessarily the norm but definately are not the exception. Do the math on these 40ac units then compare to the Utica. Jerry and Dave ain't no Dummies.

I think we're on the same page, perhaps a miscommunication...

James and PA Joe, in the past 6 months I have never seen so much seismic action in this area. Precision Geophysical trucks are the norm not the exception. Also, they just shot a whole township in Knox county. Hopefully they found something. That's where I live.

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