Shell's 3rd Utica well in NW Tioga PA set to report..........

Happy New Year to All!

Production reports will be hitting for PA before we know it.  We already saw the results for the Neal and Gee wells, and this report will add the Synnestvedt well in Osceola township, Tioga County, PA, Shell's third Utica well in this area.  There are many looking to this well to see if the Utica does in fact reach this far north, and what type of production it has given since being drilled.  
Obviously, most, if not all of you have seen the below map.  And there seems to be quite a heavy weighting to that 'point pleasant' line, as some major line of demarcation that is not to be questioned for any reason.  However, I have yet to see concrete evidence that supports this thesis.  As a matter of fact, if the Synnestvedt well, which is well north of this 'line', is commercially viable, we have to question the validity and concern of this 'line' as a hard border.  Taking it a step further, if this well, which is on the border with NY, produces even close to the Gee well, we have to question this foregone conclusion and consider the entire northern acreage just north of the point pleasant as commercially viable and green-lighted as drillable for the operators.  This will open the door for north west Potter county and tracts in McKean county to be intensely leased.





Back to the Synnestvdet well results:  there seems to be some thought that it is on a choke.  I would not be surprised to see the well come in around the 7.5-11 mmcf 30 day IP, as it serves a few purposes on Shell's behalf.  First and foremost, they have more acreage to lease in the nw quadrant of Tioga (all you holdouts out there waiting for more money, higher royalties, and lower deducts, and i happen to agree with y'all!). So if you were Shell, would you rather report another huge Neal well, or another very solid Gee well?  
Also, if Shell is aware that the point pleasant is not meaningful for dry gas, due to reporting a giant, lease deals in northern potter get more expensive as well.  So again, it pays for them to not report a massive well on the northern border of tioga.  
Perhaps there are other reasons that it is on a 'choke', and not just purely for economic reasons, whatever the case may be, it is much more important to know the wide-open production as that gives us a better picture of what the actual potential is across the play.  That production number just might be another 6-12 months away.
Let's take a look at a few more maps.  Hmmmmm......upper devonian, another target formation.   Western and north western Potter are within its boundaries as well as south eastern McKean......... 

Inline image 1
And below, this is from EQT as well, you can visit their IR page, from their december 2014 preso, you can see these maps.  This is what they are considering commercially viable maps for the utica, no surprise, their lines DO NOT take into consideration the all knowing point pleasant line.  There is also another operator that has mentioned that the pp is meaningless for dry gas production, no surprise its not part of their press releases.
Inline image 2
 
I hope this post solicits a healthy conversation on the new Northern Utica and how the trend develops over 2015.  Expectations are for permits to begin hitting across Potter for a few Utica exploratory wells.  Hancock pad?  Leasing continues to be robust in the county, with prices at their highs for the last 5 years, last I heard they were from $2,000 - $2,500 bonus, with royalty rates as high as 15%, no deduct, either 5 year, or 5 + 5. 
Obviously, with just solid production report from Shell's Synnestvedt, an entire area north of the pp line will be opened to leasing activity and a once previously held belief will be discarded, one that seems to have been already discarded internally by a few, if not many, operators.
 

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Permalink Reply by Deb Reynolds on January 4, 2015 at 3:55am

thanks for showing this. The second and third images aren't coming thru no matter what I do. Very interested in all this!

Permalink Reply by Tim on January 4, 2015 at 4:17am

Here is the presentation.  Scroll down to page 15 and 16 to see the upper devonian and utica maps from eqt:

http://ir.eqt.com/sites/eqt.investorhq.businesswire.com/files/doc_l...

Permalink Reply by Tim on January 4, 2015 at 4:45am

To further the point, see Seneca's presentation below (page 30)  On the top right, u will see two wells labeled "Shell", these are the Neal 26mm ip and the Gee, 11mm ip.  The dotted line across the map is the infamous 'point pleasant'.  Take a moment to view to the north, up, between the two shell wells, there is a blue dot, along the NY State border, that is very near where the Synnestvedt well is located, clearly north, or above, the point pleasant 'line of demarcation'.  

http://investor.nationalfuelgas.com/files/doc_presentations/presemt...

This is the well that shell will be reporting production on and that I wrote about above.  Again, it is clearly above that point pleasant line.  There is copious amounts of nat gas North of the point pleasant line, as it is a gradual thinning or sloping deposit, NOT an either, here or not type of shale, meaning the point pleasant easily extends into NY.

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Permalink Reply by Jack Young on January 4, 2015 at 4:32am

Interesting comments - it's important to note that the Synnestvedt well could be a decent producer yet still produce from the Point Pleasant zone. The map you've used happens to be one that shows the line quite far to the south - other maps out there suggest a line further north. So once can't assume that the Synnestvedt isn't producing from the Point Pleasant - only Shell really knows at this point. Remember, all the maps you will find on line regarding the Utica in our part of the state were made with the benefit of very little data. The reality could be something quite different.

Permalink Reply by Tim on January 4, 2015 at 4:59am

Jack,

I concur.  Data/facts and 'lines' are limited as there are only a few 'deep cores' that have been drilled up that way.  My post was to draw attention that 1. the point pleasant maps up here, are 'guess work' at this time, 2.  its a gradually thinning shale, not either present or absent, 3. nat gas can and does exist north of the line, and it may be in the point pleasant, or it may be another part of the Utica (only Shell knows rt now), 4. these wells are extremely commercially viable, and just a decent Synnestvedt well will open up other near by regions, ie north east mckean, nw potter, and even north central and north east tioga (for Utica wells).  The play is too substantial for these areas, at a minimum, not to warrant test wells, even at $7-$10mln per well.

When you consider the pipeline infrastructure across the northeast, the whole northeast of the Country, $58,000,000,000 JUST IN PIPELINE for current projects, and the LNG exporting coming on line over the next 2-3 years, there will be continued exploration and testing to truly find out the exact boundaries of the Northern Utica.

Permalink Reply by David Perotto on January 4, 2015 at 4:45am

Tim,

Based upon my observations over the development of the Utica play, I conclude the following:

-The dry utica sits deeper and thus under more pressure, the pressure coaxs out the gas

- Gas migrates more easily than liquids, the utica's low permeability has shown to release gas more readily than the liquids.

-The old utica maps with the "overcooked" boundary is currently being redrawn & expanding to the east of the play. New maps will be developed, Shell in the NE and many others in the Pittsburgh area obviously helping to redraw these lines.

- Pennsylvania is sitting on a whole new pile of NG in its Utica Play. 

- NY is plain stupid to let their Utica sit untapped (personal anger here)

Permalink Reply by Tim on January 4, 2015 at 5:06am

Dave,

Good observations.  Its unfathomably what is happening up in Albany.  I come from a very small, and tight knit farming community in a very different part of the state, the North Fork of Long Island, (if you have never been, it is NOTHING like the other parts of LI) and we always had issues with Albany's agenda, but this is just flat out wrong!

I agree, the play is clearly in the process of being 're-drawn', and with Seneca's Utica wells in Mckean, Shell's wells in NW Tioga, we have Potter sitting smack dab in the middle.  Is there any wonder now why Terry Pegula and JKLM is leasing in the County, and has been for over a year?  How about Travis Peak, why are they here?

Its an exciting time for the area, and it will be very telling who are the next 'players' to start showing up in Coudersport court house to pull docs.

Permalink Reply by farmgas on January 4, 2015 at 5:46am

Is it reasonable to think that drilling into Utica Shale, although deeper and more expensive to drill, may offer greater paybacks because the layer is thicker then Marcellus Shale, and could offer greater gas volume returns?   Is there more investor interest in those gas companies with "Mega" Utica gas wells?

Permalink Reply by Tim on January 4, 2015 at 7:45am

Farmgas,

In this recent down move across the commodities, crude and nat gas, the superior E&P companies have held up well, Cabot being one standout in PA, and Anterro in WV/Ohio.

Talisman was just bot by Repsol, so that is still an unknown at this point.  For the majors, any one well, or even 'play' is such a small of % of their yearly revs that it has a limited impact.

My question is for the mineral right investors out there, what events need to occur in Potter to move from watching to buying?  

Permalink Reply by N Bohl on January 4, 2015 at 7:01pm

Maybe this is unrelated but I have noticed a recent permit in central Tioga County that is for a well to be drilled at 12,000+ feet - I think. I could be wrong about the depth but am fairly certain. Would that formation be called the Trenton? This is a site with existing Marcellus wells.

Permalink Reply by David Perotto on January 4, 2015 at 10:57pm
Seneca Resources??
Permalink Reply by David Perotto on January 4, 2015 at 11:36pm
seneca's presentation talks about a Utica delineation well, DCNR Tract 007. This is south of shells Tioga wells. The Utica is deeper as you head south and could be 12,000 depth there.

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