Just curious...

     I am in Liberty township and a few months ago got an offer to buy my royalties for 1500 to 1800 per acre, but they would do a more in-depth look if I was serious which "mite change the numbers" slightly....even tho I am not drilled or receiving any royalties ..talked to a landsman rite b4 I contacted them and he advised caution as there will be "significant" activity in my area in the "near future"....how about it, anybody else get an offer or hear anything or see any activity here in Tioga Co. ?

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William,

Hopefully no one borrowed against future gas monies. We have advised against that practice to anyone and everyone who will listen. This gas money is a windfall, but the amount and duration remains an unknown for each and every month until received. The price of gas is a moving target, and production numbers and the decline curve can not be forecast for a year or more after production begins.....if even then.

No, pay your estimated taxes like clockwork, and what is left over can be used to improve your life, but only AFTER you have received it. The royalty will fluctuate wildly and after five years or less, will be a drop in the bucket.

Hopefully everyone read your posting Bullfrex.   But you know how it is. Far too many folks want much more then they can afford.

My own thought  is this.  If I cannot pay for it in full,  then I don't really need it!   I know folks that over extended themselves for years. And then something happened. So today they are looking over their shoulders to see if the sheriff is coming.

A good  posting and well written by you Bullfrex.  Maybe this posting will save one of the land owners a very harsh time ahead!

Granddad Ladd

What is the resolution of units which are "abandoned" after a single well is drilled? Some of the landowners' gas would have been extracted and some would be untouched.

my impression is these leases continue under HBP as Swepi leases. some of the farmers i know down valley have been held over 10 years with no money. Swepi has no need to rush and produce as these are old marcellus attemps pre utica. needless to say i could not repeat here some of the colorful language some people have for Swepi. this is why it is important to look close at Brian Day's suggestion regarding #9 addendum in East leases. anytime David can run one up Goliath gets my hat tip!

One unit I'm thinking of, was surprised to see one landowner released ... ~ 300 acres released that had been held by 30 in the unit. Assuming that natural gas remains a primary fuel, at some point supply will shrink and it will pay to drill these "abandoned" units. How is this going to get sorted out?

The irony is that a justification for forced pooling is conservation of the resource. That is, the non-participating landowners (in a unit) gas would be wasted. Shouldn't the same reasoning apply to operators?

there is way too much unknown about this example. did the 1 landowner figure the way out of an East lease based on deepest depth drilled addendum? is this a low producing marcellus well? what company, are they no longer here? is this area no longer desired due to geology? i understand the forced pooling concept but the forced drilling concept if there may be no gas , not. i can't envision any co. abandoning a potentially productive "unit". the released acres could they be engaged in better term renegotiation for utica depth? Pugh Clause? i could come up with more? dig deeper Sherlock.

I took the release as confirming that the area is now way down SWEPI's priority list. 

Tenaska is one of the companies that - for relatively short periods - were active in the Covington area.  In 2013 Tenaska teamed up with UGI for Marcellus development

min. google Tenaska for info. the area they leased is ? production. they did some leasing but i am not aware of drilling. low money leases. East never did much shale work as the sale to Swepi was  early in the process.Pegula assembled huge acreage beginning in1983 but timing never allowed for shale production of any real amount. today with JKLM we can see his methods more clearly. East and JKLM like so many others are general contractors with only 20 employees relying on contractors giving median results without technical inovation. the companys using the same contractors but demanding some inovation risks with oversight move the ball forward. i think it would be cool if Pegula paid cash for Eclipse and took it private then let the Eclipse team run the drilling program. just say'n

Eclipse uses general contractors too, and their in-house group has less experience in our area than JKLM's does. I think it's unlikely that JKLM will buy Eclipse unless it's a bargain sale, but they might trade some acreage eventually. Tenaska did a bit of drilling (some shallow) and has a nice acreage position in a couple places. But it's been for sale over the past couple years and hasn't attracted much attention. There's a core area for Utica in both Potter and Tioga County which is substantial, but not that large. Tenaska isn't in the core but Eclipse is, and I suspect they will find a buyer - it just won't be JKLM or Shell. Also, I believe that most of the old East-era vertical Marcellus wells will be plugged over the next couple years. Only a few are in areas where these old holes might be useful. Drilling patterns have changed as laterals have gotten longer - the old pads are often in the wrong places.

I disagree with many of your claims, having worked closely with Terry and his various companies for over 30 years. But you can believe what you like. It doesn't bother anyone who actually knows the story.

Before you can judge whether an operator adds value, you need to know the quality of the rock they're working with. None of us on the outside have that information, so we can't say who is making the most of their opportunities. There is no standard EUR per 1,000' of lateral that applies uniformly. People with great rock can underperform too - you and I just can't grade any of the operators in this area right now because we don't know what they have. When the day comes where Eclipse, JKLM and Shell have wells side-by-side we may get a feel for who makes the most of their opportunities. But until then, I wouldn't assume that Terry isn't fully engaged in the business or that his organization is somehow underperforming.

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