VIDEO: $20,000 PER ACRE LEASE............LET THE PLAY DEVELOP

Pimm Fox interview with Nicholas Atencio, chief executive officer of Mainland Resources Inc.
Lease cost discussion starts at about the 1:30 mark in the video.

http://www.bloomberg.com/video/65507056/

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Permalink Reply by Todd Charles on December 26, 2010 at 9:48am

Great investigative work, Gasholic, ferreting out this CEO's figures - thanks for sharing it here.  Once again, you're "leading edge" information, bringing us out of the dark.

All the best to you in the New Year !

Sincerely, Kit

 

Permalink Reply by Mike Knapp on December 27, 2010 at 10:25am

I would be careful, the expectations that are being created in this thread are VERY unreasonable. 

 

 

Permalink Reply by wadea william saad on December 27, 2010 at 11:29am

To Mr. Mike , I  like to say unreasonable expectations are of the table , but I  hope when good luck shines on you and you are discussing a lease , dont regret it later as some folks often expressed regrets in this forum , thinking they should have added this or that and they were soft spoken with the company , many also held out for more and they got what they wanted, being in a group helps take the shyness of negotiations out and make pure business .

Permalink Reply by gasoholic on December 27, 2010 at 1:19pm
Any expectations in this thread was created by Mainland Resources CEO,  Nicholas Atencio.
Permalink Reply by Jeff on December 27, 2010 at 8:51pm

Hi Mike

Yes, we must be careful about our expectations but I don't think you know all that has been happening or maybe you work for a gas company and you want to keep things quiet.  I don't know. 

I do personally know property owners in Sullivan County PA who did sign for about $2 and $5 an acre about 5 years ago.  They are in 10 year leases with Chief who is now selling them for about $9180 an acre to Exco.  Also I have a neighbor near Dushore who has 100 acres and was offered $11,000 an acre this past summer.   They must want to drill a well there.  Anyway the last I knew he didn't take it.  He is afraid to ruin his water.    But you don't have to have a lot of land to have received a good lease.  A friend of mine who has 2 to 3 acres near Mildred was leased for $5750/20%  for 5 years this past summer.  

Lease amounts have fallen for some and not for others in the county since then.  But it all depends on what you are willing to settle for.

 

 

 

Permalink Reply by Mike Knapp on December 28, 2010 at 5:30am

Jeff,

 

5 years ago, the Marcellus was completely unproven, hence the bottom dollar numbers.  $5-10 per acre has been the going rate in PA for 100 years.  The reason that Chief was able to sell that acreage for so much is because Chief drilled wells to prove the acreage and Chief is giving up a bunch of money in profit by selling it rather than developing it themselves.   Chief is also selling the production that comes with those leases and much of the acreage is now HBP, which means the leases will be valid for decades to come.    

 

Yes, I do own a gas company, but the advice I give here is the same that I give friends and family.   Holding out because you think you're going to get $20,000 per acre because some CEO of a tiny E&P firm that operates in a completely different play 3,000 miles away says so,  there's a 99.9% chance that you will be waiting a few decades just to be seriously disappointed.   There may be a few that get those numbers, but the VAST majority will not.  

 

 

 

 

 

Permalink Reply by Mike Knapp on December 28, 2010 at 5:12am

Well, I hate to break it to you, but it seems as though Mr. Atencio doesn't know what the heck he's talking about.  

 

In the beginning of the interview, he comes right out and says that they are lease flippers.   Of course he's going to tout how much money he stands to make, that may as well have been an infomercial aimed at his potential investors.  

 

Now let's get down to the nuts and bolts. 

 

Mainland Resources has a stock price of FIFTY CENTS.   They have market cap of $45 million.  Mainland hasn't drilled a single well or produced a single MCF of gas from the Marcellus.   Mainland is a Haynesville company.  Its sole holdings were in Louisiana, which it sold and now they are working in Mississippi.    The numbers he's tossing around work in the Haynesville.   In the Haynesville, it started out at a few thousand per acre, then ran up to about $20K (just like he mentions).  

 

THE HAYNESVILLE IS NOT THE MARCELLUS.   It's a much, much smaller play.  It's much more competitive.  There is much better infrastructure.   The Marcellus dwarfs the Haynesville and Barnett put together.  It's the difference between buying land in Montana or Manhattan.

 

 

 

 

Permalink Reply by mark ayers on December 28, 2010 at 6:44am
Mike is your company public or private? Always looking for long  investments in the Marcellus.
Permalink Reply by Mike Knapp on December 28, 2010 at 8:48am

Mark,
My company is private.

 

If you would like to discuss further, please send me a private message on the site or track down my e-mail or website with a google search.  Posting my company info here is a violation of the rules. 

 

-Mike

 

 

Permalink Reply by gasoholic on December 30, 2010 at 7:02pm

Mr. Knapp,

 In searching your company, would it happen to be the one located in Armstrong County ?

Permalink Reply by gasoholic on December 28, 2010 at 9:47am
 Reply by Mike Knapp 4 hours ago

 

''I hear lots and lots of stories.   As always, I believe half of what I see and none of what I hear.   I find it awfully hard to believe that there are companies running around paying double to triple the going rate to random landowners for no apparent reason.  If there ARE people that received those numbers, I'm sure there is a very specific situation that got them that much higher rate or there is more to the story than meets the eye''. 

 

Yes Mike, there are stories, and news stories, and rumors ect.   For someone who owns a gas company and dealing in the Marcellus region, I believe it would be in you and your companies best interest to get up to speed. It just does not look good, trying to talk down facts and all, when a person in your position should know what's really happening around the play.

''More to random landowners for no apparent reason''. Mike, you've got to be kidding ! Of course there's a reason, and you said it yourself, a specific situation. Which is why everyone needs to know their own situation.

 

 

Permalink Reply by Mike Knapp on December 28, 2010 at 10:51am

Mr. Oholic,

 

I'm supposed to be privy to every nonsense rumor circulating around the play?  Please.  Rumors are rumors.  WHERE'S THE BEEF?   You post up a video of some guy that is the CEO of a tiny E&P company that doesn't even operate in the Marcellus, who is trying to flip for money, who states that in SOME shale plays, you COULD see AS MUCH as $20,000 per acre.  I have no use for such conjecture.  Neither should you, or anyone else for that matter, hence my posting as much.  

 

For someone who is so interested in Marcellus value, I believe it would be in YOUR best interest to get up to speed on the GLARING OMISSIONS from that video. 

 

Is that 20K for the landowner for a new lease? 

Is that 20K if it's been HBP? 

Is that 20K for every parcel, or for just for unit sized blocks?  

Is that a price for selling off 50K acres of mostly contiguous ground after taking a few years and tens of millions of dollars to install pipelines and infrastructure, prove the area and selling the production alongside the acreage? 

 

You can bet your rear it's the last of those.  And I STILL don't know if you'll ever see those numbers in the Marcellus, and if you do it won't be anytime soon.  You can sell a a glass of water to someone in the desert for a lot more than you can sell a snowball to an eskimo.  So yes, there were people drawing UNREALISTIC EXPECTATIONS from that video.  All I did was put it into perspective, which I will continue to do for those who appreciate it.  

 

Cheers!

 

Mike

 

 

 

 

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