Replies to This Discussion

Permalink Reply by Joseph-Ohio on June 3, 2012 at 2:18pm

Yes, Jim, I truly believe 'they really don't care' how much they pay (each other) in order to maintain control over the market.  That's because they take it out of the consumer's hide by jacking up their prices at the pump and everywhere else their products are involved.

That's our capitalistic process at work.

Otherwise, why does the price still rise when demand drops ?

It's a rigged game dude.

The house (government and big business) always wins.

The consumer always loses.

What I'm saying is as landowners lets try to not get beaten up too badly in this process - lets us capitalize for once.

Notice I said too badly - that's because I know we'll be beaten up anyway but hopefully not too severely.

And actually, I don't see a need to continue the conversation beyond this point - I've said what I wanted to say - valid / understood / believed or not.

Permalink Reply by Joseph-Ohio on June 3, 2012 at 10:00am

@ Pat Patterson,

Or a landowner who is not leased but has enough acreage to make a difference in assisting in establishing a 'drilling unit' should lease for maximum bucks and let the lessee construct the contiguous drilling unit.

It all boils down to the same thing as far as landowners are concerned....lease for maximum bucks.

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Permalink Reply by Bluflame on June 3, 2012 at 12:36pm

Jim,

  I posted this earlier today, but apparently neglected to depress the "add Reply" button.

  CHK sold a big piece of their Utica leases to Total late last year for $15K/acre. The Utica "play" at that point was (and actually still is) unproven except for CHK's announcement of initial well results of three wells in Carroll & Harrison County. Likewise, there were no pipelines or supporting infrastructure in place.

  Therefore, I believe "hype" plays a large part in determining lease prices. I'm sure CHK had a boatload of convincing data to show Total that us "commoners" will never see.

BluFlame

 

  

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Permalink Reply by Jim Litwinowicz on June 3, 2012 at 1:36pm

BluFlame;  $15K is a long way from $35K, Much of the $15K valuation would be just from the cost of aggregating all that land. And having three producing wells in place, at $6-8 million apiece adds a lot of value.  And I am sure that they either had pipelines to these pads or were well on the way to getting them in place. And these wells produced valuable data and core samples that we will never see, additional siesmic work that was done, old well logs that were studied. The "hype" had to be backed up by a lot data before a company like Total would spring for billions.

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Permalink Reply by Bluflame on June 3, 2012 at 1:52pm

Jim,

 Yes, a long way from $35K/acre, but ~ three times what any Utica landowner has received for his acreage. Pipelines and processing capacity are still a "work in progress" throughout the Utica play.

  I guess the point here is that when the reserves are proven, pipelines available and processing on-stream, it's not inconceivable that prices could ascend to $35K/acre.

  Another factor, of course, is trends in O&G commodity pricing which currently seem headed south.

  

BluFlame

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Permalink Reply by Bob Jenness on June 3, 2012 at 1:08pm

Regarding data, and who can see it.  I just looked at investor data from RRC, referenced elsewhere on GoMarcellus.  There's a wealth of useful info to this discussion there, even though it doesn't change the quote regarding the unproven status of the Utica.  If anybody's expert to do the math to get to a rational estimate of Utica values from the info there, I'd sure like to see it here, and if not, some of us amateurs will probably try it.  I could understand an assumption like "Wet Utica = Super-Rich Marcellus" or such, for an early estimate.  

For contrast, look at investor info from some of RRCs competitors in the area.  There's one out there who's apparently been aggressive in acquiring land, or really up-sold some developed stuff, as their stock has outperformed by more than 10x since the Bush Crash in '08.

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Permalink Reply by Bluflame on June 3, 2012 at 1:38pm

Bob,

  Page 22 of RRC's 5/28/2012 investor presentation shows the Utica divided into dry gas, wet gas and oil zones and overlaid with the locations of wells drilled by various companies. I thought it was interesting that the zones coincide with earlier rather than later ODNR-established boundaries. Other publicly-owned O&G companies have recently published similar maps. These assertions by the "experts" seem to de-bunk ODNR's assertion of a westerly shift of the boundaries.

  Thanks for the info!

BluFlame

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Permalink Reply by 0i7okn54zwbdo on June 3, 2012 at 3:06pm

Look at the numbers from the RRC call.  In the wet Marcellus they don't make money from a well until they hit ~$4.50mcf.  At the strip price (assuming 10 year average of $92/bbl and $4.27mcf) they lose 29% of the LOE cost.  That's bad economics.

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Permalink Reply by Bob Jenness on June 5, 2012 at 3:26am

Here's a responsible and enthusiastic view of the future values, maybe even would support the exaggerated numbers quoted here, if we live long enough...

Natural Gas on Historic Rise to Prominence in Global Energy

Markets

ExxonMobil CEO Addresses World Gas Conference in Malaysia

KUALA LUMPUR, Malaysia, Jun 04, 2012 (BUSINESS WIRE) --

--Increased supply of natural gas resources will help advance global economic

growth with fewer emissions

--Asia-Pacific region poised to benefit greatly from access to abundant,

cleaner-burning natural gas

--Sound policy pathway needed to ensure natural gas resources are unlocked in a

safe, economically competitive, and environmentally responsible way

The historic shift of global energy markets toward increased use of natural gas

will create new opportunities for economic growth and environmental progress,

Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil

Corporation (NYSE:XOM), said today.

As global energy demand increases, so too will demand for abundant,

cleaner-burning natural gas resources, Tillerson said in a speech at the 25th

World Gas Conference in Malaysia. By 2025, ExxonMobil predicts natural gas will

overtake coal to become the second most widely used source of energy worldwide.

"Natural gas is quickly becoming a key enabler of

economic growth and environmental progress around the

world," said Tillerson. "We

are living at a historic moment in the evolution of energy markets. How we

respond will shape the quality of life for generations to

come."

The need for natural gas resources is greatest in regions like the Asia-Pacific,

where energy demand is projected to grow by more than 50 percent over the next

three decades. Natural gas can help meet needs for electricity, chemicals, and

plastics that increase quality of life while reducing environmental impacts.

Access to natural gas has been made possible in large part by industry advances

in large-scale liquefied natural gas (LNG) production and transportation, and in

development of unconventional gas sources such as shale gas, coal bed methane,

and tight sands through hydraulic fracturing and horizontal drilling techniques.

"To date, North America has been the proving ground

for unconventional gas development -- and the results have been encouraging,

confirming the enormous potential of this resource,"

Tillerson said. "The challenge now is to confirm the

size of the global unconventional resource and to fully apply these breakthrough

technologies to nations outside North America."

By learning from the North American experience, industry and government can work

together to develop a legal and policy framework that encourages the safe,

sustainable and environmentally responsible development of global natural gas

resources.

"Our future success will depend not only on geologic

conditions and technological innovations, but also on government policies,

effective business partnerships, and disciplined

investments," Tillerson said.

"Fortunately, as government and industry leaders

consider the growing importance of natural gas and the need for its development,

they can study and learn from the successes and shortcomings of the North

American experience."

Tillerson said the policies needed to responsibly develop natural gas should

hold the industry accountable to operational integrity and excellence without

stifling innovation and investment.

"We know that when governments establish long-term,

market-oriented policies, our industry will respond with the long-term planning,

partnerships and projects that reshape the future for the

better," he said. "With

sound policies in place around the world, we can help nations and peoples

achieve their economic, environmental, and energy security goals -- and as we do

so, we can create opportunity and progress for all."

For more information about ExxonMobil's involvement

in the 25th World Gas Conference, visit our website. To read Rex

Tillerson's full speech, visit

www.exxonmobil.com/speeches.

About ExxonMobil

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