Replies to This Discussion

Permalink Reply by FairMktValue on September 6, 2013 at 2:20pm

Nice post Phil,

Haven' been able to digest all the info there but a quick look certainly reinforces my opinion that there is a a whole lot of "more" value in the "stacked plays' than the O&G company's want to let out to the landowners.

Shareholders and investors get the "plumped" version and the truth lies somewhere between. 

No problem with that. That's just business. Just wish more landowners would really take the time to look at what "long term value" they really have and not just jump at the first offer.

Yeah, I am spittin into the wind. Most people just see the $$$'s dangled and grab at it . Human nature I guess.

Really liked pg 9 Rex , "Prospective Butler Units" although it did not come far enough East for me. Nice info though.

Cheers

 

Permalink Reply by Philip Thackray on September 7, 2013 at 1:05am

FairMktValue,

Page 9 of the Rex document is a bit old.  With the recent exchange of leases between XTO and Rex that drawing has become more Rex and to the East things are more XTO.

Geografically things are tighting up.

Rex - Forward, Jackson, Lancaster, Connoq, N. Adams

XTO - some Forward, Penn, Jefferson, Summit, Butler, E. Clearfield, E Winfield, N. Middlesex, N Clinton and (?) N Buffalo

And the surprise surge of Range along the southern most townships.

The stacked plays are, in my opinion, very real.  In most of Butler County the Burkett and Marcellus are wet plays and the Utica is dry.  Not sure if the Rhinestreet will pan out.  In the Rex presentations they keep saying that they will frack an old verical Rhinestreet well to see what is there but they haven't published anything as of their September presentation.

 

Regards,

 

Phil

 

Permalink Reply by FairMktValue on September 7, 2013 at 2:26am

Phil,

Yeah, Range is a bit of a surprise. 

I believe Huntly & Huntly is fronting for them and has become fairly agressive to the South of 228 W. They are offering 10yr , 4,250 non surface O&G boilerplate and I am hearing a lot of people jumping on the front money. Mostly small parcels that I have heard about but they may have gotten some bigger ones, not sure.

I am thinking that Range may have an eye on Rex. XTO or Range could gobble them up if they really wanted to. Just a thought.

Agree with your geography for the most part but Rex has a strong position in N. Middlesex and SW Penn.  Seems to be a gap between SW Penn and Forward that XTO has splitting Rex a bit.

Cheers

Permalink Reply by Philip Thackray on September 7, 2013 at 4:10am

FMV

 

Huntly and Huntly does the lease work and pays a large percentage of the upfront money.  Range does the drilling and H&H pays a small percentage of that cost.  H&H and Range divide the sales some way.  At least that is what I have read.

 

I can confirm the $4250.00 per acre number in Middlesex.

 

Here is my take on Range and the Southern townships of Butler County:

 

Range has drilled some very significant dry wells just to the east of the wet Marcellus region.  These southern Butler townships span the border of the wet/dry Marcellus.  Apparently, the dry gas contents along this border can be very large which makes sense as the previously (millions of years ago) wet components have converted to methane over time.  Condensate can be removed at the well head and any gas with residual NGLs (C2-4) can be blended with the drier gas and sold by the BTU as methane.  No cryogenic plant, no fractionation plant, no special pipeline, market for methane looking better and better and you can get to market easily.  Range is talking about “dry” wells with EURs of 10-20 Bcf (per 80 acre well).  That’s 10-20 million thousand cubic feet times $4.00/thousand gas that is $40 million to $80 million from a single well!  No fuss no muss.  (Three months ago I thought that dry gas would tank but that does not seem to be the case.)  All of this is just fun speculation of course.

 

I once hoped that XTO would buy Rex but the way things have gone I don’t see that.  Rex sold their mid-stream stuff to Mark West for 500 million dollars and Sumitomo owns 20% of them and Sumitomo is the Goldman Sacks, Barclays etc of Japan.  XTO of course is Exxon.  However, with talk of Shell quitting the northern townships (for business reasons unrelated to the quality of the wells I understand) – who knows.

 

Regards,

 

Phil

Permalink Reply by FairMktValue on September 7, 2013 at 12:36pm

Phil,

As you say just fun speculation of course.

I find your take on Range quite interesting. I have not been paying too much attention to them as I am completely surrounded by Rex.But that's another story.

Range may warrant me taking a closer look at what they are doing. They certainly are one of "the players" in SW Pa. I was sort of surprised that Range was sniffing around to the South and East, figuring they had their hot spot in Washington and Green.( I am in Middlesex by the way) 

Your "dry gas" numbers even if cut by a third are pretty impressive. There are pretty much no "dry holes" in this area even out of the "fairway" as they call it. If gas prices can edge close to 4 bucks there is a ton of money to be made. I have suspected for the last couple of years that there is perhaps exponentially much more gas here than even the O&G companies are letting on even to investors.

Range may be getting "built out" down south (pure speculation) as far as infrastructure and holding leases and needs somewhere to expand. If your take on the dry gas is correct , makes perfect sense to head north, edge into Rex and XTO and who knows what Shell is going to do.

What this all means for the landowner - I don't know. IMHO the H&H lease being offered is garbage. Range is pretty slick,spots an opportunity on the fringe and goes for it.  

Sadly, most landowners do not have a clue what they are potentially sitting on long term. I could go on and on and, on about this but for now I am going to just shut up.

I do like this site, not a whole lot of constant activity but lots of good info input by some good people. 

Cheers

Permalink Reply by Philip Thackray on September 8, 2013 at 1:00am

FMV,

 

Just fun speculation for sure!

 

Those are not my dry gas numbers, they are from the recent Range presentation Range August 15, 2013 (also, see page 24 for their RCS Reduced Cluster Spacing results - game changer!).

 

Being surrounded by Rex may not matter.  No one predicted something like the massive exchange of properties between XTO and REX in April – May 2013.  From the Middlesexians I’ve talked with Range is coming on like gang busters there.

 

Regards,

 

Phil

Permalink Reply by FairMktValue on September 9, 2013 at 11:58am

Yeah Phil, I guess I phrased that incorrectly. I was aware where the numbers came from - Not "yours". LOL

Anyway.... those numbers as mentioned above have me believing there is a ton of gas down there - wet or dry. Lot of $$$$$'s.

The reduced spacing would seem to be the next trend. Rex also has been playing around w/spacing and I would assume most of the other have also.

Rex has also been touting something they call "Super Frac" which I did read about but sorta glazed over. From what did sink in I gather it is blowing  more "holes" to start with and increasing lateral length. 

My point is that the technology is moving right along. The O&G co's are getting constantly more efficient and thus more cost efficient. Infrastructure right now appears to be the "drag" lets call it on getting more gas to market. That said, pipelines and processing are moving along quite well IMHO.

Now we have the catch 22 - get too much gas to market w/o an increase in demand and prices are depressed. Yeah, pretty simplistic , but there it is.

So, I don't see "big" money for most landowners for maybe 5 or even 10 years. But, make no mistake about it there is a lot of $$$$,s out there.

Exactly when..... ?????

Pure fun speculation.

Rex having me "surrounded" does not concern me very much in spite of the landmans little smirk. If they really want and need my parcel they will sign something to my liking. If not so be it.

I firmly believe this is a long term play - eye may not get a lot out of it but my children and grandchildren have a very good chance of possibly some nice bucks. Hopefully they will be able to look back and say " Pap wernt no dumb a$$". LOL

Cheers

 

Permalink Reply by Philip Thackray on September 9, 2013 at 12:18pm

FMV

I highly recommend RBN Energy for technical, markets, predictions etc.  The site is a bit disorganized but LOTS of good article there.

XTO did 500 foot spacings on one of the Godfrey pads.  I was lucky enough to spend some time in the engineer’s trailer during the drilling.  Amazing!!

The Rex super-frac is just more sand and more stages.

Over production will hold prices down.  See rbn energy for a view to the future.

I am in a unit that will be producing in the next few months but I wish they could hold off until 2016 to 2019.  I think the prices will be good then.

I too think mostly about the children!!

Regards,

Phil

Permalink Reply by FairMktValue on September 9, 2013 at 12:48pm

Phil,

WOW - amazed to see someone looking out that far!!!!

The finance guys would likely disagree w/you -"time value" of money etc. Too many variables there for me ! Lotta lookin into the crystal ball- guessing which way interest rates. stock market, and gas prices are gonna go.

I would ask you how in the H E double hockey sticks you got in the engineers's trailer- but hey a guy can't give away all his moves !!! LOL

Have bookmarked RBN, may not understand it all but some may sink in .

Cheers

Permalink Reply by cheliped on September 9, 2013 at 1:06pm

hey guys,

I was wondering if you guys had any thoughts about why shell hasn't progressed as fast in butler county.

thanks

Permalink Reply by FairMktValue on September 9, 2013 at 1:30pm

Cped,

To me Shell is a bit of an enigma - big company - worldwide- seems to be just fishing in

Butler  Co.. May be just trying to confirm that there is enough there to justify putting the Cracker in Beaver Co. May not want to be a producer,just flip what they have. Who really knows ?

IMHO I do not see Shell being a "player" for a while if at all. We shall see how it all shakes out.

Cheers

 

Permalink Reply by cheliped on September 9, 2013 at 1:41pm

thanks for the info.  I

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