Comment

Comment by gary smith on October 15, 2012 at 7:22pm

halcon bought out carizzo?  drilling for 43 million ,crawford,mercer trumbull.

Comment by Ronald L Wilcox on October 15, 2012 at 10:12am

Range announced a conference call on Oct.25th @12:00pm.For those of interest they(Range) gives 3rd. qtr. data which covers  all there holdings.I'm sure they will cover the Lippert well to some degree as this info is for share holders.You can go to ther web site and find a phone number that will include you on the call,or you can later find the published report.

Comment by Oliver Perry on October 15, 2012 at 8:24am

David,

 I'm not sure of the exact order of the permits, but I think the operator applies for a permit to drill and operate a well first. Before that permit is granted, all the other permits such as storm water management, construct a pad, and such, must be satisfied. It's simple to sign up for these email alerts and it keeps you on top of what is happening in your specific area or any other county that interests you.

Comment by Sam Douglass on October 14, 2012 at 9:51pm

As to Bob's comments below:

As to Number 1, I agree.  As to No. 2 The area is of interest and it already has extensive holding in Crawford County and the vicinity. As to Number 3 One or two wells will not be definitive.  

The Townships in the area where Range does have extensive holdings may discourage others and that will make it a one on one standoff between Range Landowners in areas where it has enough acreage to keep others away.  Range needs nearly every piece of land at some point.  Unfortunately, it has been concentrating its efforts in other areas up to now.

When will it elect to get serious about drilling in the area.  That is not likely to be revealed.  It will do whatever drilling is necessary to hold the leases it has and may acquire.  But that could mean one shallow hole on a Unit of 1280 acres with a royalty to be shared on an acreage basis.

At some point it will be necessary to begin feeding billion dollar plants for years to come.  Drilling will be necessarily spaced out to extend reserves to meet long term demands ----  for GENERATIONS.  Out of not just the Utica, but from every productive stata that can be found.  Range will not take a lease for just the Utica.  It is likely that Range will have a clause buried in its lease requiring the Lessor to waive the "implied obligation to produce" a reasonable obligation imposed by the courts of the land.

To expect Range and other to agree to a drilling program ....

Well, its not going to happen unless Range already has its own drilling program for the area - highly unlikely.

For this reason, since Range and other producers want it all == for the next 100 years or so we must look to an Advance Minimum Royalty as an answer.  If producers want to hold properties as long, long term reserves, let them pay a meaningful annual sum to the Lessor who may find his land substantially less marketable and, at least with some mortgagees, unmortgageable.

And maybe ask that the Lessee-Producer to put a clause in the lease agreeing to follow the best practices of the industry - a reasonable request on its face.

Comment by Bob Jenness on Thursday

In this case:

1. Range is clearly a capable and motivated driller.

2. The land is clearly interesting to them because they're already producing and drilling in the area. 

3. The real value of their already extensive holdings for Utica Horizontal production will soon be known from Lippert, et al.

So why can't landowners and their representatives get serious about working with Range to include an actual drilling plan in these leases???

Obviously, it couldn't be so binding as to cause financial hardship to either side from unseen market conditions or acts of God,  but it would seem that a little math, futures market knowledge, and law could be applied here to make a  real drilling lease and a win-win deal.  How about it, Sam?

Comment by Sam Douglass on October 14, 2012 at 9:21pm

Replying to Bob's comment below.

If one looks at the Range Resources web site as to what it reports investors, you may be able to find a helpful slide show about Marcellus-Utica etc.  One of its slides shows substantial holdings in Crawford County and environs as to many townships.  If it has enough for "control" of an area, other producers are likely to stay away.  But that does not mean you lose bargaining power.  The nature of these unconventional horizontal drilling plays is that the need nearly all the properties - at least when serious about drilling.

I agree with number 1, as to number 2 it is a question of "when?" and as to number 3 I agree that some information can be gained from 1 well.

As to when to get serious, Range has been showing some modest activity, but does not appear to be in a hurry.  Its offers and the deals to be closing are low ball from what might be expected - particularly in an area predicted to have the more valuable oil and wet gas. In other parts of the country Range has been paying considerably more.  Why is Appalachia short changed?  Because we will accept less here.  And after tying up your property for several generations, do not expect a major drilling program with sustained income.  Nobody except the royalty owners want to see full production from every earth layer tomorrow.  

It is simply unrealistic to expect these producers to agree to a drilling program and make it stick.  You may find that Range even asks the Lessor to give up on the implied obligation to drill imposed as reasonable by the courts.  They are investing in reserves to feed billion dollar plants etc. for generations to come.

That is why an advance minimum royalty payment is important.  You will know that you will get some return over the next 100 years that the lease is held - unless they drop the lease.

Comment by Bob Jenness on Thursday

In this case:

1. Range is clearly a capable and motivated driller.

2. The land is clearly interesting to them because they're already producing and drilling in the area. 

3. The real value of their already extensive holdings for Utica Horizontal production will soon be known from Lippert, et al.

So why can't landowners and their representatives get serious about working with Range to include an actual drilling plan in these leases???

Obviously, it couldn't be so binding as to cause financial hardship to either side from unseen market conditions or acts of God,  but it would seem that a little math, futures market knowledge, and law could be applied here to make a  real drilling lease and a win-win deal.  How about it, Sam?

Comment by David Hunt on October 14, 2012 at 8:55pm

Oliver Storm water management is probably the place. If you are signed up in Butler Co. do you get notification that a permit has been applied for to do the well site before a permit for the well itself? 

Comment by Sam Douglass on October 14, 2012 at 8:31pm

For those of you with old leases and see DEP production figures for the old well on your property know that the numbers may not be close to being reliable. While it may seem crazy, instead of accurately reporting numbers for each well to the state, more than likely the producer will take the production from all the wells feeding into one line, divide by the  number of wells and assign the average production to each well for purposes of reporting.  If there is a meter on the will on your property, it might be useful to keep an eye on it to know what is really coming out of that well.

DEP is so busy it does not even know where all the wells are located.  The wells mapped and shown on its website are not complete.  It is not clear how much actual inspection is done by DEP.  Maybe DEP relies on reports coming in from producers.  Many of the producers are very careful about their work and procedures.

With increase in fees, DEP seems to have enough staff to review and approve permits pretty speedily.  DEP may be lacking money for enforcement and keeping track of what happens after the permits are issued.

Comment by Sam Douglass on October 14, 2012 at 8:17pm

Companies may be getting ready for a new budget year in January that might increase activity somewhat.

However, many permits that these companies pick up during the land acquisition process are allowed to die automatically from inaction within a year.  One would think that units would be established before any drilling occurs.  You may get word that your property is in a unit.  Some permit applications may show at least a vague outline of a unit.  I am not sure how they can drill in a unit without having all the properties in the unit leased.

Amounts offered as bonuses etc in this discussion stream are not particularly exciting.  A lot more has been offered for dry gas leases and the companies have, for the most part, stopped land acquisition in dry gas areas because the wet gas and oil are better.  One would expect the offers to be even higher.

If you have patience, know that the producers need every property - at some point.  Naturally, the first offer will not be the highest offer.  It is logical to tie up as much land at a low price before moving a step higher to make the offers more attractive.  Who can blame the companies for wanting to buy leases as cheaply as possible.  That is what their stockholders expect.

Comment by Oliver Perry on October 14, 2012 at 7:42pm

I have signed up to the DEP site and get emails for any permit issued in Butler County. I have never seen a permit for earth or land disturbance. Could it possibly be storm water management?

Comment by David Hunt on October 13, 2012 at 2:52am

I have never been to the DEP site but somewhere on there you can sign up for alerts when a permit is applied for or given you will be notified. My buddy has that and told me at least two weeks ago. I also know that Halcon will be if they haven't already applied for 3 permits in Crawford. I think 2 in north Shenango and 1 in south Shenango could all be North Shenango and they will be close together also like Samuel said. One will be on the same site as the well that was started last year on Linesville rd by  Reserve and Eclips  another on Bullis road on the Staub property and the third is close by but can't remember where. 2000 to 4000 ft. apart Is there a place on the Dep site for Storm water run off? If so look there not sure if it is Earth disturbance or land disturbance. I still have dial up so it takes forever to search this stuff but I will tell you my source has not given be bad info yet so keep your eyes and ears open it is coming 

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