WET UTICA Worth $35k PER ACRE ??

Since the New Production #'s Are Out From The Wet Utica Wells..The Trend Is Showing That The Utica Acerage Is Headed Upwards Of 25k-35k Per Acre! It is being compared to the Eagle Ford In Texas. What Are your Thoughts And Opinions??  Some Texas Leases Were $30k Per Acre!

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Permalink Reply by Dark Sonnet on May 21, 2012 at 6:06pm

Source for New Production #'s?

Permalink Reply by Frank Walker on May 22, 2012 at 12:31am

Agreed.  Let's see the source.

Permalink Reply by Lance Nimmo on May 22, 2012 at 1:37am

This is ridiculous. Period.

Permalink Reply by Quincy Spitzer on May 22, 2012 at 4:04am

This is what I found online that shows the trend skyrocketing. the trend chart for the Utica is on 2nd to last page. The company who did the chart is Enervest. you can go online @ Chesapeak to get the latest production #s on the Utica .

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Permalink Reply by Bluflame on May 22, 2012 at 4:30am

Quincy,

  Thanks for posting the Enervest presentation. The chart depicts three possible developing scenarios for Utica lease prices as extrapolated by Enervest. The one you describe is the most optimistic and assumes that lease prices will follow an increasing trend over time better than that of the Eagle Ford play. The least optimistic assumes that lease price trends will follow Marcellus lease prices closely.

  In my opinion, we won't know which trend line is more accurate until more well results are known. Early production numbers look good. Secondly, oil & nat gas prices and world politics will enter into the picture. Don't forget when the Eagle Ford play was commencing, nat gas prices were considerably higher than today and Europe didn't look quite as shaky as today.

  Let's hope that Enervest's most optimistic scenario comes to pass!!

BluFlame

Permalink Reply by Quincy Spitzer on May 22, 2012 at 4:57am

I would think with the Utica being "wet" and most of the marcellus trend examples being "dry" gas the trend would surpass the marcellus by far. It appears to me that all the experts have been omparing the Utica to the Eagle Ford & also stating that it is better. I also would think with that with all the plans our coutry has instore for the use of natural gas and NTG, and also the demand for exporting that we will see the price of NG start to rise with a good election.

Permalink Reply by Bluflame on May 22, 2012 at 5:46am

Hi Quincy,

   Both of us see the glass as "half full"! Way back last summer when CHK announced the first results, Mr.McClendon said at their 2nd Qu. analyst's call "The Utica is similar to, but economically superior to the Eagle Ford". In my opinion, none of the O&G companies (such as Enervest) have released anything contrary to CHK's initial report. In fact, all seem to confirm his assertion, especially those with wells drilled. Gulfport had similar things to say at their 1st Qu 2012 analysts' report.

   The wild card is oil & NG prices and international politics. I believe the medium to longterm outlook is rosy, especially with exports, utility fuel conversions and transportation fuel conversions all moving forward.

BluFlame

  

Permalink Reply by Gayden Parker on May 22, 2012 at 8:10am

Quincy,

Please send the link to the latest production numbers on the CHK website.

Gayden Parker

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 22, 2012 at 9:06am

That chart doesn't represent $/acre to landowners.  That is a transactional line, meaning it covers the prices paid for acreage that is leased or HBP.  So if a company wants to buy a bunch of CHK leases and acquires an overall 80% NRI for $25,000/acre they are paying $312.50 per acre per point.  So a lease with a landowner with a LOR of 18% puts the value at $5,625/acre.  That seems in line with a lot of the numbers we've seen for leases over the last 6-8 months.  

CHK's average lease cost in the Eagle Ford is $2,200/acre.  The Point Pleasant has already eclipsed that.

Permalink Reply by Quincy Spitzer on May 22, 2012 at 12:34pm

What would you think Unleased Utica Land Is Worth to Sell Or Buy Per Acre? Taking In consideration the lease bonus money, and long term royalties from wet gas and oil?

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on May 22, 2012 at 4:20pm

That's a good question.  I can't give a good answer on the entirety of that as surface prices vary pretty widely.  I'm in Mahoning county which has traditionally had much higher land prices than say Columbiana or Jefferson.  If you figure unleased land, untillable, in Carroll county would fetch ~$5,000/acre for a lease bonus, maybe $2,000/acre for surface use and another $9,000/acre for royalties you have a price of $16,000/acre.  But that assumes quite a bit about the royalty payment and the underlying production.  If someone is buying land for the potential royalty they're doing so on speculation and should be given a discount at the sale.  If I'm buying an asset for investment I'm not planning on paying it's potential market value.  So my answer is I have no real answer.  Sorry.  

Permalink Reply by Quincy Spitzer on May 22, 2012 at 4:30pm
The information that I have gathered on the royalties is much higher than your number. If you go off the production numbers that the chesapeak wells have been doing including the bbls of oil, it looks like to me that @ 15% off the well head a mineral owner should receive somewhere in the 1200-2000 per month per acre range. That would realy bump the price per acre value up for an investor

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