Gas Lease Agreement Update

[Admin]

TriCounty Lease Group

Update:  by Sal 1-16-2012

Mr. Frederick, the consultant that shopped the lease to 17 gas companies is no longer accepting sign-up agreements.  None of the companies were interested in land leases and it is not expected that any of them would be interested in the near future.

There are many reasons why the gas companies are not interested in leasing at this time.
We are on the outskirts of proven reserves.  Natural gas prices are depressed.  There is a glut of natural gas and lack of distribution.  Gas companies are having difficulty keeping up with drilling on proven reserves and in some cases loosing leases because they can’t drill fast enough.   It will likely take years for the situation to improve.

In the meantime, landmen may try to peddle leases.  Do not sign a lease without getting legal advice and make sure that you know what you are doing.  You could end up with a bad lease that will tie up your property for a very long time.

[Admin]

Small Update for the TriCounty Group       June 28, 2010

From: Mr. Frederick

Status

We have assembled approximately 80 landowners with ~7000 acres and a possibility of 5000 more - S Wyoming, E Lackawanna and N Lucerne Counties

We have identified 8 potential gas company lease partners.  Some will be more interested than others.

If you have any other neighbors or friends that may be interested, now is the time to have them contact us.

Lease Provisions

We have a comprehensive set of provisions to start.  We have received little feedback to date, please express concerns you have so they can be incorporated into the requested lease.

Prospectivity

While mid to N Wyoming County is seeing advancing permitting and drilling activity,  a good sign, the areas more south including  S Wyoming, E Lackawanna and N Lucerne  have geologic controversies  Thermal maturity is what is in question, commonly known in the industry, it will take the drill bit  and hard data to prove one way or the other.  A risk in leasing is take some sure $$ now or wait and possible win more, but risk getting nothing.  Early on geologic prospecting is an art, using limited existing information prospectivity is rated, then it moves to science as hard data reveals absolutes.  Each company will have its own views and that will determine their level of interest.

       We plan top put the offering on the table by the 3rd week of July.  Please feel free to email with any questions.

[Admin]

TRICOUNTY GAS LEASE GROUP UPDATE   September 25, 2010

Marcellus Greetings:

Status
We  have  not  yet  submitted  our  acreage  offering  to  any  gas  companies.    More
acreage has been coming in, good news we are up to about 10,000 acres.  Low natural gas
prices  and  geologic  controversies  have  turned  the  lease  market  somewhat  sluggish.
Conversations with a few companies are warm but not anxious; they do want to look at
our  acreage.    At  the  same  time  broad  Marcellus  success  keeps  growing  and  there  are companies who stalled early but now want a position.  

I  will  be  attending  the  Eastern  Section,  American  Association  of  Petroleum
Geologist’s (AAPG) annual conference, Kalamazoo MI, September 26-28. Hot Marcellus
topics will be covered and I will be networking, gathering intelligence and gauging views
on TriCounty geographic area’s prospects.  

Geologic Questions
The core areas of mid to upper Lycoming County up through northern Sullivan,
across  Bradford  and  into  Susquehanna  keep  reporting  ever  higher  numbers.    The  first
Wyoming  County  Marcellus  producing  well  is  near  Mehoopany,  Citrus  Energy’s  P&G
PG2_#1H, which in just 22 days up until June 30, 2010, produced 221,015 Mcf (thousand
cubic  feet  or  an  average  of  10.046  million  cubic  feet  per  day.    That  is  a  gangbuster success and portends well for NW Wyoming County.  Cheers.

The  “play”  is  searching  for  its  geologic  and  commercial  boundaries.    Coming
south of the P&G well, and all along a line stretching from Southern Lycoming through
upper  Columbia  and  Luzerne  and  on  up  to  mid  section  Wayne  County,  the  concern  is thermal  maturity-  did  the    Marcellus  formation  in  this  section  “over  cook”  as  organics were turned into hydro carbons.  

As this is written, test wells are underway in the upper most portions of Columbia,
and Luzerne. Results won’t likely become public but behind the scenes results will be a
big determinant of degree of interest in leasing our group’s lands.

General Observations
- Current estimate is the Marcellus is now producing 1 BCF / day - huge achievement in
such a short time.  Range Resources believes several years out they will be producing 2-3
BCF / day, similar in BTU content to Arco’s Prudhoe bay peak.  For perspective, the US
uses about 60 BCF/ day.  

-  SW  and  NE  PA  are  in  full  exploitation  and  development  mode.    Other  areas  are
searching for viable geologic boundaries. Risk along the southern edge of the SW to NE
band is maturity.  Risk along the northern SW to NE line is pressure / depth.

-  The  Eagleford  is  touted  as  a  big  competitor,  and  it  is,  more  gas  liquids,  which  add incremental value.  But word is it is turning out less uniform than anticipated. It is much
smaller than the Marcellus as well.  

-  Wayne  County  Update.    Hess  and  Newfield  have  several  test  wells  underway.
Chesapeake and Stone wells drilled to date are believed to be no good. Parts of upper N
Wayne are still prospective, all will be known within 4-6 months.

- The Marcellus is believed to be in the top 2-3 US Gas plays economically.  The further
prices sink, the sooner more marginal fields will cease drilling, a long term positive for
the Marcellus.  

- Not commonly known COAL fact: today coal is the fastest growing fuel source (+5%)
year and makes up ~30% of global energy consumption, up from a low of 25% in 1999.  

- Estimates of the size of the play keep adjusting; currently the industry # is 8-12 million
acres.  Though it will ramp up, the % being drilled year to year is small.  EVERYONE
won’t get drilled within 5, 10 or even 15 years!

Sample of area permits: purple-Chesapeake, yellow-XTO, red-Williams, green- EnCana  

Map Source: Google    Dashed blue line portrays the general geologic trend axis.  

We will report in after the AAPG conference and share more definitive plans.

Mr. Frederick
Marcellus Resource Lease / Analyst Consultant

[Admin]

Update 12-7-10: From Mr. Frederick

The preliminary inquiry of interest for the approximate 12,000 acres in the Tri-County Lease Group has been submitted to seventeen publicly traded and/or private oil and gas operators with interest in NE PA Marcellus.

Those potential lessees indicating further interest will be asked to sign confidentially agreements and then will be given detailed parcel and lease expectation information.

The good news out there is overall the Marcellus is speeding to ever greater success. The only negative is weak natural gas prices. Historically weak commodity prices are self curing.

Good luck to us all.

[Admin]

None of the gas companies were interested in leasing land at this time.
See the first post at the top of this page.