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Permalink Reply by Joseph-Ohio on September 26, 2014 at 10:44am

I think beyond location, location, location.

Looks / reads like to me as follows :

1) First it's harvest the easiest to recover resources from the leaseholds with the least amount of expense / overhead.

2) Minimize overhead / manage assets / condition the market.

To my way of looking at it it's just the way those who are now in control of the development are running things - in short to their best advantage.

Landowners never enter into their profit equation beyond an expense to be minimized in any and every manner possible before and after any leasehold / purchase of development rights.

It is as it's always been and always will be - landowner be aware - it seems to me a landowner / mineral owner hostile market.

All as always only IMHO.

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Permalink Reply by Patrick Donnelly on September 26, 2014 at 1:35pm

For landowners, the later that their contracted E & P company drills, the better as Appalachian Natural Gas price differentials will be wide by our estimations through early 2016.  What is needed, and is in the process of build out, is more infrastructure and midstream assets to move the material to the most robust demand centers (read the Gulf Coast).  Over $300B of midstream and downstream infrastructure is needed to be built over the next 10 years according to the EIA to move the massive new supplies of hydrocarbons.  The LA/MS LNG facilities (delivery dates 2016/2017) will be extremely beneficial to the exploration companies as robust demand centers which should bolster multiple basin pricings given that the highest prices can be achieved once its portable and exportable.  Please note in Europe and in parts of Asia, natural gas on a BTU basis sells for 3-4X of domestic. But through early 2016 market dynamics are such that  production growth is outstripping increased transport capacity.  Thus too much gas has been -and may continue to gather in the northeast with local producers unfortunately suffering discounts of $1.00 to almost $2.00 more than Henry Hub pricing.

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