They will walk away

The world is temporarily awash in energy.....Those companies that signed 3 or 5 year contracts will be forced to abandon ship.  There isn't even enough dough to drill a test hole to claim held by production, the marcellus foot print is just too large....You younger folks will see the second coming in 5 to 10 years as the oil companies recapitalize and lease with you all over again....You old folks can retire to florida on your initial sign on bonus, or not.

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Jim ShoosPermalink Reply by Jim Shoos on March 9, 2012 at 2:28pm

If by "the world" you mean the U.S. then yes.  If by "energy, you mean natural gas", then yes.  The fact that foreign entities such as Reliance, Matsui, CNOC, Statoil and a host of others continue to pour investment dollars into natural gas development (possibly to ensure the export of LNG, possibly to acquire the knowledge of how to horizontally drill and fracture shale) reflects foreign efforts to ensure the continued availability of energy supplies.  Drilling will continue, albeit not at the same pace and not in the same places.  Dry gas areas will tail off in favor of wet gas development.  Bonus amounts could possibly decline as a result of fewer competitors seeking leases, and more than one significant player will announce a Chapter 11 reorganization. 

Permalink Reply by Chartist on March 9, 2012 at 2:30pm

foreign entities pour in fiat dollars, you know, the ones we can all print on a home computer....What country or company wouldn't put fake money into a real asset?

Permalink Reply by craig on March 9, 2012 at 2:29pm

True to some extent in the Marcellus only region. Now if you live in the NGLs and oil regions of the Utica you would be completely wrong. Not to mention the 2 or more other formations (that might produce who knows what)  that they seem to be interested in.

Permalink Reply by Dan on March 10, 2012 at 6:28am

The energy industry acheived insitution status long ago.  While we plan for the weekend, they plan for the decades.  Technology has shown the energy under foot in varying degrees for several decades.  Today the only limits are cost and current technology to extract but the demand is real.  Will some companies make financial mistakes or move efforts based on current prices or regulation?  Most likely, but they will always be back, might be months, years or decades but they will be back.  This is by no means the first energy extraction in the region but many seem surprised?

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