Replies to This Discussion

Permalink Reply by Summer Johnston on July 16, 2014 at 3:02pm

Everyone knows that O&G companies are above reproach. If we are lucky enough to have any of them re-enter our lives, which obviously isn't going to happen, we must simply accept their offerings without complaint or scrutiny. I apologize for my skepticism. I apologize for wasting anyone's time who may have read any of this.

Try and stay focused. NO ONE said the O&G cos. were "above reproach."  Personally, I think none is as scary as Chessie, not that you asked for my opinion, but I'd buttonhole down any of 'em who showed up with a lease in hand. But that's an attribution you are reading into this. NO ONE said to "simply accept their offering without complaint or scrutiny." Again, your interpretation. What you should apologize for is not your skepticism but sarcasm. It detracts from the conversation. 

You may be right that the gascos will not return to the northern Utica. I hope that's not the case and that they develop a way to extract the NGLs. But neither you nor anyone else can expect a company to drill if it's not profitable. Remember, not everyone, self included, was fortunate enough to get even the signing bonus d/t being HBP. A lot of landowners were locked out of it. We looked south and saw all the pipelines and wells going in and all that money being spent and farmers buying new tractors, equipment, and new trucks, and wondered when it would be our turn in the north. I remember talking to employees of the Buick dealership in Columbiana and being told farmers were coming in and plunking down CASH for a new truck. People started contemplating estate planning. And there are a boatload of farmers who were hoping to be blessed by a few extra $$$ from the shale drilling without having to scratch and cobble together enough money for an unexpected machine repair.

I am afraid that the sad reality may be that if drilling occurs in earnest up here it won't be in my lifetime. And yes, it's a bitter pill to swallow.

Permalink Reply by Dexter Green on July 16, 2014 at 3:32pm

Sage,

It was a joke and you didn't get it, so you fired off some half-cocked diatribe against me because, I don't know, it made you feel better.  Just own that you didn't get the joke and move on.

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Permalink Reply by Sage59 on July 17, 2014 at 1:54am

Summer, You are correct. Sarcasm is a poor substitute for open discussion, though I will continue to resist pessimism and remain optimistic about our area. We all have a touch of sarcasm in us - Your "The little green men" comment to us carried a whiff of sarcasm. That comment has since disappeared. You know that is how conspiracy theories begin. They aren't real are they? There is so much to worry about these days, that would just be too much.

Dexter; jokes can be very subjective, I understood the source, but read my own meaning into it. My reaction to you was inappropriate and wrong. You are right in that it is time to move on.

By the way Dexter, you really remind me of someone who used to post a lot on this board. He was always a solid source of information. If so, welcome back. If not, please don't chastise me too much.

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Permalink Reply by Dexter Green on July 17, 2014 at 2:07am

Hey, I don't hold grudges and I don't think you do either.  So I'm happy to get back to the substance as I'm sure you are.  And I seem to remind a lot of people of someone else.  I'm sure I have no idea what they're talking about, of course.

Permalink Reply by Summer Johnston on July 17, 2014 at 4:10am

In June 2011, nobody was talking shale in Mahoning County and north of it--it was all about southern Ohio. By Labor Day, that's all people here were talking about. This webpage was hopping with posts about what riches lay beneath the ground, many led by Ron E. The term "shallionaire" was coined.

By December, the chatter had really tamped down and there were posts about where everyone had gone and why was it so "quiet." 

Then it was announced Halcon was buying NCL's leases and BP was leasing Trumbull and the enthusiasm returned. 

Now, they're gone again. Look, I, too, want to believe Halcon or some other gasco will come back and come back BIG. I just refuse to ride the roller coaster again. I won't buy into the maybe it's this reason or maybe it's that reason or someone has some agenda--especially when I am not reading any sound logic behind it. Show me definitive numbers.

If permits in Mahoning and Trumbull County surge--and I don't mean rigs coming back to redrill one or two wells--then I'll be a believer again. Right now, I just can't get my hopes up. Sorry. 

And yes, I found it ironic that Ron E.'s group, who boasted about the People of the Shale holding out for big leasing dollars, was only offering $500 to $1000 an acre--and in Columbiana if I recall the posting correctly.

Permalink Reply by Sage59 on July 16, 2014 at 3:57am

I agree with almost everything you state Summer. Currently they may not be easily retrievable. It is like having money in the bank but the door is presently closed for whatever reason. I disagree in that one absolutely can equate availability with production. Production can't begin without the availability. When production may begin is the only variable here. I couldn't agree more with   "People are allowed to express dissenting opinions. Nobody is being forced--by anyone--to sell any of their (unleased) rights or minerals."  No one here has said that anyone is being forced, just possibly there are numerous attempts to coerce people, to soften the target. Nothing wrong with that, it is just business. It is how a few people in the O&G business make their livings.

"If you like your minerals, you can keep your minerals."   I think you just played your hand summer. That is after all your ace in the hole.

I will remain staunchly delusional about future development in our area. I will welcome an honest partner if, and I realize that it may be a big if, they choose to knock on my door. BP came knocking with a good deal. They did teach me that the signing bonus may be all I ever see. I just will not release my rights based on disappointment. That would be a disservice to my family and myself. If no one comes knocking or offers a ridiculously low amount, no harm - no foul - and I am comfortable with no deal. I wonder what's for lunch?

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Permalink Reply by Summer Johnston on July 16, 2014 at 6:09am

I will remain staunchly delusional about future development in our area. I will welcome an honest partner if, and I realize that it may be a big if, they choose to knock on my door. BP came knocking with a good deal. They did teach me that the signing bonus may be all I ever see. I just will not release my rights based on disappointment. That would be a disservice to my family and myself. If no one comes knocking or offers a ridiculously low amount, no harm - no foul - and I am comfortable with no deal.

And that's the risk landowners take. Know when to hold 'em and when to fold 'em. I absolutely believe that no deal to sell minerals is better than a bad deal to sell. Why encumber your property? 

But so many of these heated discussions are related to the low-ball offers people are supposedly being offered, esp. in the northern Utica. People don't like the offers? Don't sell. This talk of forced pooling or forced unitization? Only applies if the land is within a drilling unit. In the northern Utica, that's pretty remote at the moment. 

People can speculate all they want as to why companies are not drilling in the northern Utica. The bottom line is, it doesn't matter. Whatever rationale people want to believe in as to why wells aren't being drilled, the result is the same: Companies simply are not aggressively drilling the northern Utica at this time. 

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Permalink Reply by Joseph-Ohio on July 16, 2014 at 6:32am

I've been advised that many acres in the north are HBP and / or stuck in pre-Utica era tailgate class leaseholds which most of the time have small drilling units specified and also include all intervals.

If that's true what would stop the industry from 1st attempting to get the drilling unit size limitations increased and then force pooling / force unitizing even the unleased into an old deficient tailgate class lease ?

I see a lot of Clinton wells in the north so I think that the 1st paragraph of this reply is probably true (still guessing here as a layman landowner must trying to see through the fog) hence the word 'probably').

So, I agree with you at this moment 'remote' but should / when developers begin in the north probably not 'remote'.

And to me all of it matters and I think it ought to matter to all of us (as landowners).

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Permalink Reply by Joseph-Ohio on July 16, 2014 at 2:38am

To Mr. Dexter Green,

In your replies to at least a couple of my entries within this discussion you've suggested that I've fallen just short of accusing gas and oil interests and government of criminal behaviors / conspiracy and that I'm walking some kind of 'thin line' in voicing my inquiries / interpretations as I struggle with wrapping my head around it all.  Since my entries make no such accusations I resent and reject the implication mightily.

You indicated also that oil and gas interests must report accurately to government agencies and their investors implying that my entries suggest that they have not. Since my entries do not so suggest I also mightily resent and reject that implication.

But, as long as we're talking about reporting accuracy I'd like to ask your opinion of those 'Investor Presentations' that we've all seen and (speaking for myself) try to interpret. One thing I've noticed is that they all (the ones I've seen anyway) have an initial paragraph or two or more titled 'Forward Looking Statements' which I've been interpreting as a caveat / disclaimer regarding accuracy.

What's your take ?

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Permalink Reply by Dexter Green on July 16, 2014 at 3:21am

Forward Looking Statements are a catchall CYA.  They mostly apply to future production, revenue growth, realized prices, et al.  If a company, we'll use CHK, says that the EUR for wells within X area are 400,000 boe then that number is relied upon by investors when trying to value the company.  If the EUR comes in 30% lower than that the investors would obviously be pretty upset.  Without the FLS they could attempt to sue CHK for misinforming them and point to the investor presentation as evidence.  The FLS gives cover to these companies because it makes clear that their numbers and estimations are not material fact but rather the guesswork of smart but imperfect people.  

Reporting an IP is easy.  The number is acquired right there at the well and you can then go show that off to anyone and everyone.  Extrapolating decline, EUR, and total NPV of a well based on that IP is much trickier.  Thus the FLS protects companies from their own mistakes.

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Permalink Reply by Joseph-Ohio on July 16, 2014 at 3:35am

Thank you sir.

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Permalink Reply by Aaron R on July 16, 2014 at 4:07pm

I am not sure why the people negative on the northern Utica are so sure of the future. The present is not good, but the future is very difficult to predict.   Here is my summarization of the positives and negatives of what we know:

Negatives:  BP, Halcon, Devon, Chesapeake and Enervest have been trying to sell their acreage and none of them have been able to sell.

Production from initial exploratory wells has not been very good in general.

Core samples are showing that the northern Utica is lower porosity and underpressured when compared to the southern Utica.

Infrastructure is not in place.

Northern Utica is not complemented by other plays such as Marcellus and Upper Devonian.

Positives:

BP, Halcon, Devon, Chesapeake and Carrizo all made large investments in the northern Utica based on very expensive seismic data and past core samples.  My own property has seen both 3D and 2D seismic.  Their best scientists thought it was a reasonable risk.

BP and Halcon are not known to have very good expertise in horizontal drilling and therefore it is tough to gauge their results.

In general, the large players such as Shell, Exxon, BP an Chevron have not proven to be very good at unconventional drilling.  Halcon is known to be a flip.  The best drillers are Gulfport, Cabot, Range, etc - all medium sized, long term players.  The only one we have like them in the northern Utica is Hilcorp.  Unfortunately they are a private company and we don't know what they are thinking, but they have not exited the area.

The industry has stated that every shale play has turned out to be different in some ways and it takes time and investment to "crack the code" in each play. 

As recently as 10 years ago everyone in the oil and gas industry except for George Mitchell thought that trying to drill into the source rock was ridiculous.

Technology continues to change.  I personally know a scientist who has a new way to frack that is much more effective than the explosives used now.  This technology will be tested within the next year.  The use of proppants alone has changed dramatically over the past year.

Although the porosity is poor, the thickness and organic content in the Northern Utica are good.

The Northern Utica is in the wet gas range that is most attractive for investment returns.

Bottom line:  In some ways the northern Utica is the most fascinating area of the entire Utica.  This is going to be very interesting to follow.  I personally am in the Joseph Ohio camp and believe that technology will continue to improve and will eventually tap the hydrocarbons that we know are there.  As in other areas, the shallow drilling that was done in this area represents the small amount of hydrocarbons that leaked out of the source rock over millions of years.  It may take 10 years, but these drillers have done some amazing things.

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