Surging Natural Gas Prices

How are the surging natural gas prices affecting drilling this year, and what about going into 2022?  Are the gas companies taking advantage of these higher prices?  What`s next?

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Permalink Reply by farmgas on November 29, 2021 at 1:55pm

How important is future potential from HBP land?  Shouldn`t that cause the value to be stable or reduced by non-development? 

Permalink Reply by Ralph cramdon on November 30, 2021 at 6:28am

The rush for land is over ,,... Those dream days of $5,000 per acre bonuses are over for the most part ... Land that is HBP that is tier 1 will be developed as quickly as possible as drillers want to be as profitable as possible ........I think that those now leasing would be smarter with deductions and other related items ....... 

 Oil is down 20% in a few weeks , Inflation and now Covid is sparking a rush to the exits ... n Gas as well has been beaten up , with ever increasing production .... Have been out of the Market while the rollercoaster continues .... When to get back in is the Ten Million $$$ question ...... 

Permalink Reply by Deb Reynolds on November 30, 2021 at 10:37am

How do you know what tier you're in? 

Permalink Reply by farmgas on November 30, 2021 at 9:16am

What about Tier 2 HBP land which I think is most common?  These areas might lack takeaway pipelines or compressor stations.  How high do gas prices need to go to incentivize drilling on this land or is it not just a monetary concern?  Will drillingneed  be done to sustain overall production due to declining well volumes?  

Permalink Reply by farmgas on November 30, 2021 at 10:46am

Check the quarterly reports for your gas company.  They often times have maps showing their core vs tier 1 & 2 locations.

Permalink Reply by Deb Reynolds on November 30, 2021 at 10:50am

thanks. I don't get any reports. I must be confused. 

Permalink Reply by farmgas on November 30, 2021 at 10:54am

Go on-line when their reports are provided usually the following month after the end of a quarter.  Private companies may not provide reports.

Permalink Reply by Ralph cramdon on November 30, 2021 at 12:35pm

Deb , if your in Tioga , I would consider it borderline tier 2 , the saving grace are the existing pipes in the region that make drilling more feasible.... 

 What is tier 1 ??? Different definitions abound ... here is something to think about /// Payback of less than 2 years , anything less than a year is great .... Tier 1 also  could be the most profitable real estate , either by high production numbers or low cost of drilling with nearby takeaway pipes ....  EUR 's of 20 B's or better would attract interest .... 

 Marcellus seems to decline in the 20 % range .. which is great compared to Permian 60% range .... Tier 2's will become attractive when tier 1's are near exhaustion.... probably 10 to 15 yers from now .. One thing to keep in mind is that these drillers are getting a bit smarter everyday , driving down costs and raising production , thus creating more tier 1's as time goes by ...... I do not  see N gas  demand dropping for many years  , thus these Companies will continue to drill , merge , and establish themselves ...... 

Permalink Reply by Deb Reynolds on November 30, 2021 at 1:11pm

thanks! yes, I'm in Tioga County, just outside Wellsboro in Charleston Twp. I love "listening" to you guys talk, I've learned a lot. We figure our acreage will be drilled in our kids' time, LOL. 

Permalink Reply by farmgas on November 30, 2021 at 1:42pm

I think that your comment about acreage being drilled in your kid`s lifetime is becoming more of a reality for those us that were excited in earlier years of this natural gas business.  We were excited and had dreams of enjoying the benefits of having gas royalty checks that would make retirement years more enjoyable with money to spend on our children and their children.  Oh,  those were the years and dreams that made all the effort & time spent to follow the drilling rigs enjoyable & suspenseful.  Will we ever again enjoy that anticipation and dreaming...who knows!  It is gratifying to think our children will have those same dreams someday. 

Permalink Reply by Ralph cramdon on December 1, 2021 at 1:01am

Farmgas , as tier 1 gets used up , you or your kin will likely get a letter one day from an interested party .... I own 4 parcels with rights unfortunately in the Southern Tier of NY ...... The closest one to you is likely in Lindley , SW of Corning ...... That land has a major pipeline just a mile or so down the road .... Even NY land will likely get a phone call way after I am gone ... Spent some time in places like Wellsville , Scio , Hornby and places to the East .... That region is in dire straits economically  and could use a boost for its long suffering citizens , unfortunately NY is Controlled by the Folks in NYC ...... 

 Back to Investing ,,, land prices in Tioga are way superior to land in NY .... Not sure why other than PA seems to have a much lower property tax burden ... I get new Tioga listings weekly and prices are firmer than NY ...... 

Farmgas do you actually Farm ? How are the economics of Farming changed over the years ??? 

Permalink Reply by farmgas on December 1, 2021 at 1:22am

No, not a farmer but our property was an old farm 60 years or longer ago.  Hence, new gas would come from our property...an old farm property.   Sounds a little corny I suppose.   Our property is located in the Jefferson, Indiana & Armstrong County area of the Central PA region.  We are in a most likely Tier 2 area filled with old Dominion & others leases meaning acreage is all in held by production status.  I have found that even though we all come from different areas of the shale gas regions, we share common goals, concerns & issues.  Some certainty reflect some regional differences within the shale region but most are similar to us all in one way or another.   Thanks for sharing your thoughts & news.

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