Replies to This Discussion

Permalink Reply by Dan on May 26, 2011 at 1:09am

I agree with James and Josh, patience will be rewarded at this time.  We are only weeks away from production numbers going public on these first wells, and we are about to see many more permits approved for drillling, both of which signal that this gas play is going to be successful.  And news like that will put even more negotiating pressure towards higher lease prices and better contracts.

Permalink Reply by Finnbear on May 26, 2011 at 1:57am

To play Devil's advocate, if the production numbers are not fantastic, lease offer prices/royalties will go down accordingly. If they are bad, lease offers may dry up entirely.

Permalink Reply by James Harber on May 26, 2011 at 2:11am

Regardless of what the production numbers are or are not, that really won't change anything in the long run. I can tell you just the numbers from the Buell well along can easily float anything else in production in the area. You can turn your attention away from the rich resources that are here and now and by the way have always been here. Either way, others are coming even now to this area and the potential is far beyond and current or future projections you have heard of or can even conceive.

Time will tell, some will cash in and some will not, it is way early to behold what lies below in the Marcellus, Utica or even the Trenton.

Permalink Reply by Finnbear on May 26, 2011 at 2:25am

I'm just thinking of the business model of some O&G companies. They typically go out and lease some ground in an area that looks promising. Next they go on a massive push to sign landowners with lease "offers" in that area while at the same time drilling test wells to verify its potential. The lease "offers" tie up the landowners for months before the date when the O&G has to pay up on the signing bonus. If the test wells look good, everyone gets paid and all is well. If the test wells don't pan out, the O&G will walk away from all those who signed lease "offers" and either leave the area or come back with lower offers based on the actual production. Many people who sign these "offers" don't realize that the O&G typically has language in the 'offer" that allows them to decline/not pay for any reason they want to. The time period between signing and payment buys them time to test the area while taking as much of it off the market as possible at the least cost. A great business model if you're the O&G, but aggravating for the ill informed landowner. One thing everyone here should know - a signed lease "offer" is NOT money in the bank. All is not golden until the check clears. BTDT.

Permalink Reply by Dan on May 26, 2011 at 3:40am

What you say is true, Finnbear.  But we are past that testing stage now.  For one, thing, plenty of people are getting their signing bonuses now.  The O & G Companies don't appear to be walking away at all.  Buell well production numbers aren't officially out yet, but it's obviously not a test well any longer since they've put in a 3 mile long 8" diameter  line to connect it to the nearest transmission line.  And the unofficial word is that production is very good there.  Also, ODNR mineral division has said that Chesapeake has a stack of new drilling permits they are going to submit very soon.  With all that, the forecast is quite good.

Permalink Reply by Finnbear on May 26, 2011 at 6:59am

That is good to hear. I hope that good news extends all the way down through Belmont County.

Permalink Reply by william on May 26, 2011 at 2:00am

I heard that lease prices per acre in western Pennsylvania approached $5000-$6000 per acre. Does anyone know if what caused the surge? Could those figures be attainable in Harrison county?

Permalink Reply by Buckeye Fan on May 26, 2011 at 2:33am

http://www.dispatch.com/live/content/local_news/stories/2011/05/26/...

 

Article in today's Dispatch (Columbus) about drilling on park land.

Permalink Reply by Paul Martinelli on June 1, 2011 at 10:15am

last lease I've heard is  $2400/acre  17.5% royalty....signed with CHK in the past 24 hours.....they out bid Gulfport....who I hear is making a big deal with State owned lands.

Permalink Reply by Brent Laner on June 1, 2011 at 2:36pm

Paul,

The numbers are correct, but nothing has been signed just yet. Should happen in the next ten days.

Permalink Reply by Josh on June 2, 2011 at 1:39am

what about this group in carroll county signing for $3500 and 20% ?  Is harrison county not as valuable?

Permalink Reply by James Harber on June 2, 2011 at 2:26am

Josh,

Harrison County is every bit as valuable, if not more with the production coming in just from the Buell well alone. But, what you have to understand and I know you already do, is people think that they are going to miss out on the $$ and get left behind, which is not even close to the truth. We are just seeing a trickle down effect here in Eastern OH and you will see as time goes on that lease bonus prices will go up as well.

I know some of those landowners in Carroll County and they followed some of my advice, didn't get in a hurry, contacted the companies direct, asked for offers and to discuss leases, addendum's, wording, etc. It is because of their taking their time and not jumping at the first offer that they were able to get great lease bonus and probably the highest royalty paid out so far by anyone in Eastern OH, and they got a lease that they could live with and are happy about the whole deal all the way around.

 

Can it happen in Harrison County, you bet, that is if you can get people to cooperate with one another, who knows if that will happen. At least, I hope it does for everyones best interest.

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