Indiana County Marchand Unit

Does anyone have an update on the Marchand Unit in North Mahoning Township.  One unit is producing and four additional permits are on the books.

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Permalink Reply by Harpo on March 26, 2018 at 7:43am

I own some property with O & G rights in the county and follow activity within same. I am not aware of what is happening with the XTO Winslow well in Jefferson Co. I attached the well permit

CNX is flaring the Marchand Well again. Last several days they had a crew with scaffolding working on the wellhead. 

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Permalink Reply by farmgas on March 29, 2018 at 2:54pm

Michael - has the flare been extinguished yet or is it still burning?   Any other changes to the operation?

Permalink Reply by BW_Appalachia on March 28, 2018 at 6:34am

Just wanted to chime in that it's typically not quite to the extent of 'no assurances,' when these deep operators sell off their shallow rights and wells. There is generally a JUA (joint use agreement) requiring the shallow operator to do more than simply provide records. These usually go to the point of requiring the shallow operator to take necessary steps to hold a lease, and notify the deep operator if there is a last well on lease situation.

These operators have a lot of money invested in these leases and aren't simply going to let them expire in an active area.

Permalink Reply by farmgas on March 28, 2018 at 8:28am

Thanks BW_Appalachia...Your comments are very welcomed and offer needed insight into my concerns over this sale of shallow wells.  So, the deep operators aren`t at the mercy of the shallow operators!  Good news!  My concern for the new owner of these shallow wells in the Central PA area is their commitment to maintenance of these wells and infrastructure needed for the wells, ie., pipelines, access roads, etc.  Do you have any experience with or knowledge about Diversified Gas & Oil?  Research shows them to be an investment company from London, England.   Will they be more interested in profits rather then long term relations with landowners?

Permalink Reply by BW_Appalachia on March 28, 2018 at 9:17am

farmgas, I wouldn't consider the JUA setup as a foolproof slam dunk, but it at least attempts to act as a safeguard for the deep operators. There will surely be instances of wells and leases falling through the cracks and terminating. That essentially falls on the deep operators to determine their priority areas of focus.

Diversified is based out of Birmingham, AL, but its operational roots are in WV and PA. To your concern, I would take a look at their most recent investor presentations and the sheer volume of wells that are now under their control. It will be interesting to see their plan in maintaining such a vast portfolio.

Permalink Reply by farmgas on March 28, 2018 at 9:29am

BW -  my concern isn`t only focused on the deep operators best interests, but rather the landowners continuation of receiving gas royalties and the attention needed to maintain wells and related infrastructure.  Will Diversified have a similar well tender & local presence as did CNX, for example?  Will they invest in the wells to maximize their potential or let them diminish in production to minimize their costs?  Do you know where their PA operations are located?

Permalink Reply by BW_Appalachia on March 28, 2018 at 9:47am

farmgas, I definitely follow your concern. I pointed out the deep operators interest because the area of focus is where the dollars and attention will be focused towards the shallow production, if the deep operator has near term development plans there.

I can't really speak to Diversifed's plan for their recent acquisitions. However, there are maps on their recent investor presentation's on their site that lay out their legacy position, combined with their two large 2018 acquisitions.

Permalink Reply by Spike's Kin on March 26, 2018 at 1:46pm
Farmgas, there isn't any difficulty to maintaining an old lease and keeping it active if the lessee follows the terms of the old lease, and existing stripper wells are good for that. The old boilerplate leases generally included all strata, and allow for farmouts to a 3rd party. But if the high pressure occasional Dry Utica well puts their existing legacy wells out of commission --say if the gathering system pressure is now much higher and they don't have the money or see the point to upgrading their compressor to make it work-- it will be very disruptive for them. (18 months of flat high production is much worse versus Marcellus wells with their typical 3 month spike-- which has itself been disruptive.)
Permalink Reply by Spike's Kin on March 26, 2018 at 1:58pm
All that to say the 1961 O&G Conservation Law has not really been very applicable until the Utica. But someday soon it may be the thing to move along certain stubborn stripper well holdouts camped out on Utica shale rights they're not developing.( I've got a HBD lease like this with a regional stripper operator on one of the parcels where I have O&G rights so I'm keen on seeing this occur)
Permalink Reply by Harpo on March 29, 2018 at 4:27pm
Permalink Reply by farmgas on March 29, 2018 at 4:36pm

Thanks Michael - is it typical to flare so long, and in particular, two flares?  What could it mean?  Could it reflect on how much water was used for fracking?  Does the various colors mean anything?

Permalink Reply by BW_Appalachia on March 29, 2018 at 4:48pm

farmgas - the two flares could be due to expected volumes, or just noise mitigation.

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