An Economic Analysis of what the Marcellus is worth per acre

Several recent M&A data points that involve significant blocks of undeveloped acreage in the Marcellus, Mississippian, Permian and other prolific resource plays bring in the spotlight the dispute regarding the valuation of so called "resource potential" - a somewhat vague metric that is often used in investor presentations as a selling point. Acreage transactions provide an important market test to the concept. In this note, I use M&A examples to illustrate economics and valuation dynamics related to undeveloped acreage.

http://seekingalpha.com/article/1411841-marcellus-mississippian-per...

This isn't the way the landowner wants to see their land valued. For the Marcellus play the writer primarily looks at what Chesapeake and Statoil have done in .

Several may be interested in the graphic showing how Statoil sees things

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Permalink Reply by Jesse V. on May 8, 2013 at 3:13am

Very interesting article. I love getting an inside perspective of what a deal like this means. The price paid by SWN did not surprise me at all given the factors stated in the article (lease expiration and cost to renew). It does however concern me that many landowners may never see production in even the next 10-20 years and will virtually be shut out of all of this simply because of infrastructure. Many who currently have very good leases may have to negotiate new leases down the road with much less negotiating leverage and consequently be left with the choice to not lease or sign a lease that could be less than favorable. It amazes me how much this has all changed in just a few short years.  

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