What are we missing here? What does the industry know that we don't?

Prices on gas are down. I keep hearing how the industry has been in a downturn. Drilling is being cutback, but still, pipelines are being put in and large processing plants are being built. What are we missing? If everything is so bad now, then why did these experts invest billions of dollars into all of this.

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Permalink Reply by TennToddy on December 3, 2015 at 5:47am

Pipe lines are not complete nor the export terminals. I imagine the processing plants are behind schedule also. See TennToddy under Russia Bombs Oil Fields :)

Permalink Reply by bungalow_steve on December 3, 2015 at 11:09am

Companies have to sell product to make payroll. Most still have hedges and are getting, effectively, much higher prices then market. The hope is the prices will turn, they really have no other options open to them. Most of the hedges will disappear next year so that is when big problems will really surface with their debt obligations.

 

Also, historically speaking, larger companies like Exxon and BP buy out the smaller companies under these low price conditions, so the drillers have to keep up appearances.

Permalink Reply by Barry D on December 3, 2015 at 3:30pm

Zack,

Some were/are promoters/speculators looking to make a quick buck up front.

Others know that development of a prospect such as the Marcellus and/or the Utica is a long term proposition. The only way for them to know the true potential is to invest development money.

I think in the long run this area will prove profitable for those willing to invest the time and funds into true development.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on December 3, 2015 at 4:22pm

Zack,

     The Natural Gas Liquids in the Appalachian Basin are worth a fortune and will change where plastic is produced in the near future.

What EVERYONE is missing is: "NATURAL GAS LIQUIDS ARE FREE!". 


Check your Royalty Statements to see if you are being paid a for NGLs. In Ohio you aren't being paid. In WV & PA your producer won't admit they are taking NGLs. 

You ask for it, you got it.

Permalink Reply by Zack Jameson on December 4, 2015 at 4:04am

I'm being paid for NGL's, they are listed separately from natural gas on my statement.

Permalink Reply by Joseph-Ohio on December 4, 2015 at 5:06am
You mind sharing who you're leased with Zack ?

Any mention another line item for Natural Gas Condensate ? Or is that considered Oil ?

Where's your well - State, County and Township (you may have already shared that info. but I for one am not privy to it).

Thank you sir.
Permalink Reply by Joseph-Ohio on December 4, 2015 at 10:27am

Thanks Zack.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on December 4, 2015 at 8:31am

I'm betting you are paying more for processing NGLs than you were paid for the volume shown.This is what Chesapeake is doing.

Add up all your negative amounts and positive amounts, if you have more negative dollars for NGLs they are being subtracted from your Oil and Gas royalty.

This is the Ohio Access Midstream Kensington & Scio Processing Plant theft that parallels PAs Access Midstream Pipeline theft. Someone asked me why Chesapeake doesn't overcharge us for Pipeline use. The answer is simple, if they took any additional charges we would be paying them for taking our well products. 

$15 an acre per month is close to nothing.

Permalink Reply by rmc on December 3, 2015 at 11:10pm
From my understanding pipelines and infrastructure are built on very long business plans 15 to 20 years. I hope I said that correctly.
So you're large investment firms and hedge funds are betting that the infrastructure that they are investing in today will increase ten fold in value as are economy improves.
In my humble opion.
Permalink Reply by rmc on December 3, 2015 at 11:19pm
Zack also be prepared if the Utica proves out in our area as the business is hoping or expecting it to all new pipe lines and infrastructure will have to be built ,considerable larger then what's being built now.
Marcellus gathering lines are 16 inch Utica lines will be twenty inch lines from what I have been told.
Imagine all the processing plants that have been built in Majorsville and off of route 250 being all built again and twenty percent larger
Permalink Reply by frank speaker on December 5, 2015 at 9:24am

Pipeline companies such as Williams charge on a cost plus basis.  They get a guaranteed return on their investment.

Permalink Reply by LERRET on December 7, 2015 at 5:25am

Companies plan ahead. Projects approved last year will be completed this year. Otherwise, they can be sued by those that they contracted to do the work. That money was earmarked last year.  Next year won't look so rosy. Only projects that have to be done will get done.

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