Well drilled to hold lease capped and untouched for three years.

Does anyone have any thoughts about getting xto to start production on a well that was drilled 3 years ago and is still just sitting there. There are 600 acres involved in butler county.

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Permalink Reply by Armstrong Land on October 13, 2012 at 6:55am

wait for nisource line to come in 2013 - likely the market - are you referring to the quinn?

Permalink Reply by sandra garbisch on October 13, 2012 at 8:04am
Don't understand your answer. Please explain.
Permalink Reply by Kathleen on October 13, 2012 at 9:09am
NiSource is a natural gas transmission, storage and distribution co. They are putting in a pipeline in Western Pa.
The market is still depressed for NG so most likely due to that and no good way to move the gas has kept you shut in.
Once the pipeline comes in if it is near the well you are talking about it should start production. If the NG prices go up and up they will start production.
Permalink Reply by sandra garbisch on October 15, 2012 at 1:03am
Thank you, I googled it and get it.
Permalink Reply by Jack Straw on October 13, 2012 at 12:23pm

As these tight shale wells tend to produce a significant proportion of their ultimate production during the first several years of their (long) life; it is best to see this flush gas sell at a higher price than we have recently observed.

Consulting a plot of Henry Hub Spot Prices, natural gas (at that hub) was selling for $1.90 this past April.

The Spot Price closed Friday at $3.38.

Due to the current regional over supply and the lack of sufficient infrastructure, the Marcellus gas tends to currently sell at a discount to Henry Hub.

It is my hope that we might see Natural Gas prices reach (and hopefully exceed $4.50 next year (February Futures closed Friday at $4.01). And, it is my hope that the infrastrucure will soon arrive - and do so without unduly depressing prices.

Patience may be difficult, not sure if it is really a virtue - but, it might well pay significant dividends to endure the delays should it result in much higher royalties resulting from much higher prices.

It is difficult and dangerous to predict future prices, but I hope that last April's very low prices will not be repeated.

 

All IMHO,

                JS

 

 

 

 

 

 

Permalink Reply by sandra garbisch on October 15, 2012 at 1:04am
Thank you for helping me understand the situation. We need so much infrastructure to make this move along.
Permalink Reply by Tom McConnell on October 14, 2012 at 2:45pm
Sandra is likely talking about the well near Evans city in forward township. XTO recently ran a gathering line through the area and didn't tie it in. it was a very early on exploratory vertical well. they flared it and appeared impressive for a vertical. No idea why they wouldn't have tied it in but they are surely shutting all the county wells in until the central processing facility goes operational. Supposed to be commissioned early next year I hear. Good luck though.
Permalink Reply by Jack Straw on October 14, 2012 at 6:03pm

RE: "No idea why they wouldn't have tied it in but they are surely shutting all the county wells in until the central processing facility goes operational."

Looking at Henry Hub prices as an example:

If they produced and sold the gas Friday (on the spot market) they would have received $3.38/mcf.

If they sold it Friday, forward for February delivery, they would have received $4.01/mcf.

That amounts to a 59% return, when calculated on an annual basis.

Either way, they would have gotten the money on Friday .... it is just that the gas stays in the ground for another three months ... and another three months until they have to pay royalties (four months when you take into account the one month delay from production to payment),

Never under estimate the ability of O&G accountants to find a way to maximize profits!

Forty years later, the words of a "Nickel & Dime" Beancounter still ring in my ears: "Son, my job is to see that you get every penny that you are entitled to, and not one nickel more!". That all said (as I discovered later) while he was cheating me out of thousands of dollars.

 

JS

Permalink Reply by sandra garbisch on October 14, 2012 at 6:56pm
Sounds like Romney.
Permalink Reply by Alan Pavlik on October 15, 2012 at 12:02am

Sandra Garbish

No more like Obama.....except he doesn't want you to have the nickel you've earned because remember "you didn't build that" so how could you have earned it. If Obama is reelected he is going to have the EPA take charge of all shale gas Hydrofracing permitting, which will be  a wet blanket thrown on the drilling of these wells you want online. There has been a 3 year study done by the EPA on the enviromental effect on hydrofracing. "Their results" come out January of 2013. Guess what Obama......does not like hydrocarbons plain and simple. So Sandra your wondering about when your well is going into production? Vote for Obama and I would bet a shiney nickel that it will be delayed even longer than if Romney is elected, of course that's just my opinion!

Permalink Reply by sandra garbisch on October 15, 2012 at 12:59am
Actually Obama has proposed opening natural gas stations all the way across the country so that trucks can switch to natural gas. Improving the infrastructure is vital to using more natural gas. Romney has no plan for our crumbling infrastructure. I would agree Obama wants to reduce coal consumption and a big part of the reduction is increased use of natural gas. Get your facts straight. I will vote for Obama proudly. Romney wants to throw more money to the wealthy and destroy medicare and social security. I know that's not what he said recently because he says whatever he thinks will get him elected. And for natural gas to work we desperately need infrastructure changes and we didn't build that. And we didn't build the natural gas under our property, God and nature did.
Permalink Reply by sandra garbisch on October 15, 2012 at 1:05am
You are correct. Thank you for your reply.

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