Replies to This Discussion

Permalink Reply by Janice L. Hancharick on December 13, 2014 at 3:18pm

A   P.S.   to my own reply.  Really. Not much business being done in the remainder of 2014 so you suggest folks "quickly sign" renewals?  When is it wise to make a life-changing decision quickly?  On the report card of leasing knowledge (if one actually existed) OGM holders have gone literally from F to B+ (some even A's) since 2000, thanks to the efforts of many ... like Penn State's MCOR, MDN,  GMS, Group efforts, county commissioners, and countless others.  Now you're asking them to sign quickly???  They know better!

Permalink Reply by Jack Young on December 13, 2014 at 4:16pm

Let's look at November gas prices. The NYMEX settlement (for gas at Henry Hub in Erath, Louisiana) was $3.728 for November. But for Transco Leidy (our part of Pennsylvania) the price was just $1.95. Those are real numbers, not fruits. Having gas in our area has gone from being a significant plus five years ago (worth more because it's closer to the markets) to being a major negative now that some of our gas has to go to the Gulf Coast to find a home.

Ultra (now Shell) has interests in over 20,000 acres of our oil and gas rights under lease - that's a substantial portion of what we have in the far-eastern townships of Potter County. I'm putting my money where my mouth is. And I'm making sure that nobody is going to blame me if lease prices drop substantially by the time those old Ultra leases expire. Which I expect will be the case in the areas that Shell controls.

Permalink Reply by Janice L. Hancharick on December 14, 2014 at 4:36pm

Jack,

Pushing numbers with questions going unanswered from the post before is not your best move.  Our region's gas 5 yrs. ago (your reference) did not include Utica.  While it was understood that eventually Utica would be our cash cow, it wasn't a "significant plus" back then because all the major action had skipped over this area to OH and southwest PA. There was big money to be made in wet gas and oil ... not our shale play. The big negative as you referred to Potter townships indicates you are looking ahead, but for whom. Do you really want to convince OGM holders that what they have is worth little and will soon be worth even less?  Surely that's not a good way to point out the value in signing a pitiful lease, when right across the county line Shell's glory holes for 2014 are on our doorstep.  Here are 5 more points for you to ignore:

1.Identify the WHO makes up the 20,000 AC Shell has under lease you mentioned.  

2. WHAT twps. are part of your reference?

3. If you're so sure Potter will see lease prices drop like a rock then WHY in the Sam Hill is Shell wanting to renew leases  when they expire?  Is the company more excited to take over old Ultra leases on the cheap  ... possibly invest in dry nat gas since oil has plummeted?

4. Why would the public blame you if gas goes to the Gulf Coast?

5. And where is it your money is going according to your mouth?

Let these points be ignored as earlier ones were, or help the people of this area, i.e. Potter and McKean plus those in western Tioga.  

**Lease renewal deals are popping up but signing on for a repeat of what went down before is not a renewal. (According to Mr. Webster and Mr. Roget "to renew" means to make better, to rouse from inactivity, to impart energy and strength ...)  These days the signing numbers may be a bit higher, but not-so-much the royalty %'s because now folks expect a "no deduction" clause.  They also expect  better terms in all areas of the lease ... better than those skimmed over a few years ago for the benefit of industry.  

U.S.EIA:  Spot prices for Nat. Gas @ Henry Hub 3rd Quarter 2014  $4.08,   4th Quarter $4.12,  1st Quarter 2015 --- $4.07,  2nd Quarter ---April to June, $3.74 ... drop seen as a seasonal adjustment that rises to $4.09 as winter approaches.  2015 numbers are projected according to current trends.

These numbers reflect the short -term energy outlook in dollars per thousand cubic feet.  Away from the Henry Hub ... in Residential, Commercial, and Industrial sectors across the Mid-Atlantic region the trends are nearly the same, but the numbers considerably higher.  This info supports the Natural Gas Monthly, DOE/EIA-0130.

I do my homework too.  Nonetheless ... bottom line.  Anyone who has not become King of the Hill during the last lease term or the one about to expire should think twice. O&G companies are suffering with the downtrend in oil prices over the past few months.  They must focus on natural gas and dry gas is the cheapest to get to market. 

I am eager to see what happens at this winter's NAPE gathering!

Permalink Reply by Jack Young on December 15, 2014 at 5:05am

Maybe you shouldn't post stuff late at night - it's easy to say things you may regret later.

I'll answer your questions, however, if it will make you stop posted stuff like this.

1.Identify the WHO makes up the 20,000 AC Shell has under lease you mentioned.

We own it all.

2. WHAT twps. are part of your reference?

Ulysses, Pike, West Branch, Abbott and Hector.

Permalink Reply by Jack Young on December 15, 2014 at 5:11am

3. If you're so sure Potter will see lease prices drop like a rock then WHY in the Sam Hill is Shell wanting to renew leases  when they expire?  Is the company more excited to take over old Ultra leases on the cheap  ... possibly invest in dry nat gas since oil has plummeted?

Shell isn't renewing the leases they got from Ultra at present. Their agreement with Ultra reserved the right to renew to Ultra until essentially the end of 2014. Nobody will drill oil, wet gas or dry gas wells unless the wells would be profitable. And Shell's cash flow will be much smaller next year due to falling gas and oil prices, hence their drilling and leasing budgets will both shrink. It's hard to see how that's a positive for Potter County, an area which doesn't have a single successful Utica well to its credit at this point.

Permalink Reply by Jack Young on December 15, 2014 at 5:18am

4. Why would the public blame you if gas goes to the Gulf Coast?

5. And where is it your money is going according to your mouth?

OK, I'm not completely sure what you're talking about here.

I would feel guilty if I told everyone to want until 2015 to lease and prices fell as I think likely. Clearly you aren't so worried that people might take your advice and regret it. Of course, you hope to make money off them as part of your leasing group, so you do face a trickier ethical challenge.

And the money thing - I'm signing an extension with Ultra, which is exactly what I suggested others might want to do. That's another way of saying I have faith in what I'm suggesting and am willing to take my own advice. That's usually considered the ethical thing to do.

Permalink Reply by Jack Young on December 15, 2014 at 5:25am

I don't even want to comment on the rest of the stuff you wrote. Some of it is just embarrassing. You clearly don't understand the business, and didn't even use a legal dictionary to get your definition of "renew". Good luck to you and your 4 County Leasing Group - anyone who listens to you will need it!

Permalink Reply by R. East on December 15, 2014 at 6:45am

Mr. Young - Clearly your understanding of the oil and gas industry is head and shoulders above anyone that has anything to do with 4 County Leasing/CX. 

Please, someone correct me if I'm wrong, but I'm pretty sure that Mr. Young and his family own substantial mineral holdings in several counties in PA/NY and his comments are posted to help people make informative choices.

Ms. Hancharick - I believe it's well documented that you are part of the 4 County/CX team that has been trying to flip acreage in McKean/Potter counties for 4 or 5 years with no success? You can blame "market conditions and poor timing" all you want, but the truth of the matter you're efforts to flip have been unsuccessful and have left a bitter taste in a lot of landowners mouths.

I am surprise, but thankful, that Mr. Young continues to offer us advice based on his 30 yrs of experience in the industry and I (and many others on this site) will continue to pay close attention to his comments as opposed to someone who is "trying to make a buck" off the landowners and has very little knowledge of the oil and gas industry.

Permalink Reply by Janice L. Hancharick on December 15, 2014 at 8:27am

It's time for this discussion to end because while Jack and I sometimes have the same view on O&G issues that affect state and national economies, plus noting the progress in pipeline growth and drilling technology, it's possible we'll won't  see eye to eye any time soon re: "average man" leasing efforts.

The average OGM holder does not own 20,000 AC nor is the average person have a law degree to advance his/her own financial welfare.  Small wonder that what makes sense for 4-County doesn't suit Mr. Young.  

4-County and CX-Energy are not one and the same.  The history of the Group's relationship with CX began in the winter 2010.  The representation 4-County had previously fell through during the beginning of the Great Recession (as economists and businessmen now refer to it), back in 2008.  Since that time we've grown from 25,000 AC to 125,000+ on the PA side and nearly the same on the NY side.

If Jack is able to single-handedly get a fantastic deal due to his holdings and  status in the O&G world then he's not a general in search of an army  but rather more of a pretty good one-man show.

He's done well for himself.

His opposite IS 4-County. A very large group of hard-working individuals that have come together for bargaining strength... not just to get a lease that comes out of someone's files, but one that includes decent numbers and is negotiable for things like a stand of cherry or oak, a "sugar bush" holding, a prime farm setting, and anything else that is pleasing and necessary to maintain our rural setting.  4-County people have kept up on the many changes that have affected the drilling industry. Their increased knowledge about our own geology has provided a realistic understanding of what we'll likely see as oil continues to fall while OPEC strives to sink U.S. oil and related industries on the global market.  The Natural Gas side of our O&G industries may well become everyone's saving grace.  Perhaps that's why the flurry of activity and anxious urgings are upon folks to sign... sign that form and "work the details out later"??  Really??

With 16 days left in 2014 are the hundreds of 4-County members  OR ANY ONE ELSE going to believe they should run out and sign a renewal OR a new lease?  Haste makes waste is not a new saying dreamed up yesterday.

Could R. East be an East Resources employee? ... offices still around!  Forget the Head and Shoulders reference R.East made, 4-County is not made up of flakes nor are the other OGM holders in this region.

No more questions here.  Jack & I & many others use the same charts to quote numbers ... like my #5 above.  Whoop-tee-do. Crystal balls are just that ... projections.

 I'm going to take a breather and enjoy the spirit of Christmas we're all meant to take pleasure in.  Jack, this is where you come in and say "Amen!"  And in all sincerity "Ditto!"

Permalink Reply by jb379 on December 15, 2014 at 8:35am

Many thanks Jack for what appears to be sharing of factual information for the benefit of others on this site. I am afraid I cannot offer the same sentiments to Janice who, while continuing to beat her own drum rather loudly, has yet to capitalize for her sheep.  Let the praises for keeping her flock safe begin now...at least one of you should sleep well at night.  

Permalink Reply by Jack Young on December 15, 2014 at 11:38am

I'm happy to help - thanks very much. The leasing markets move up and down quickly and sometimes surprisingly. Who would have expected PGE to essentially pull out of Potter County a couple weeks ago after offering $2,000/acre just beforehand? But there are things going on that even industry insiders find hard to get a handle on, and that's why landowner forums are so useful. Working together, we're likely to come up with good answers sooner. I learn things here myself.

Permalink Reply by Tim on December 17, 2014 at 6:31pm

Jklm now @ $2,200/acre In Potter.

Anyone hear the royalty?

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