Energy Companies

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    Chesapeake & Range Resources Peg Value of Their Marcellus Shale Holdings from $36K – $56K per Acre

    Range Resources CEO John Pinkerton said that their holdings in the Marcellus Shale play are worth more than four times the $14,000 per acre that recent deals between energy companies have brought. Chesapeake Energy CEO Aubrey McClendon says his company’s Marcellus Shale holdings are worth $35,900 per acre to the company. With 1.57 million acres leased, that’s an astonishing $53 billion worth of value for Chesapeake!

    If those values are true—and not just hype for investors—that would make the recent deals between Reliance and Atlas Energy ($14,167/acre) and Misui and Anadarko Petroleum ($14,000/acre) real bargains.

    MDN Note: These prices are not the prices energy companies pay landowners to lease land. Lease prices are more in the range of $5,000 per acre recently. Rather, this is the value energy companies say an average acre of Marcellus Shale land will eventually supply in revenue to the company. Not all land is productive, so the number is an average across all leased acreage.

    *Tulsa World/Bloomberg News (Apr 14) – Marcellus Shale assets considered valuable

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    Lehman Township, PA Approves Encana Plan to Begin Drilling This Summer

    Encana has gotten a green light from the supervisors in Lehman Township (Luzerne County, PA) to begin drilling this summer. The board approved an ordinance allowing the drilling to begin. According to Township Zoning Board Solicitor Jack Haley, the supervisors had little choice:

    According to Haley, all authority to halt drilling operations in any municipality in Pennsylvania lies in the hands of state agencies, not local governments. The township’s rules are “superseded” by the state Oil and Gas Act, he said.

    The state Supreme Court already reviewed two similar cases, he added, and decided the only authority Lehman Township has applies to what roads EnCana can use.*

    As for the motion/ordinance and what it says about the roads:

    [Board of Supervisors Vice Chairman Ray] Iwanowski outlined six conditions to the motion: that EnCana put up $13,540 to maintain Firehouse Road through the total time it is used; EnCana put up $32,192 to maintain Peaceful Valley Road similarly; all traffic related to the drilling traverse on Firehouse Road toward state Route 118; no traffic will go on Old Route 115 in the township (near the school); EnCana provide adequate insurance coverage for the township, and that a legally binding agreement be signed by EnCana holding it to its commitment.*

    *Wilkes-Barre Times Leader (Apr 14) – Lehman Township says yes to gas drilling

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    Joint Venture Between Reliance Industries and Atlas Energy Worth $3.5 Billion Over 10 Years

    Indian energy giant Reliance Industries Limited (RIL) has entered a joint venture with Atlas Energy (based in Pittsburgh). MDN previously reported on the rumors of an impending deal between the two companies. Reliance, India’s largest energy company and one of the largest energy companies in the world, will get 40 percent (120,000 acres) of Atlas Energy’s Marcellus Shale leases as part of the deal. The terms are a bit complex, but in the end, this is the largest deal to date between energy companies in the Marcellus Shale with a value of $3.5 billion over 10 years:

    Reliance will bear an acquisition cost of $339 million and pay an additional $1.36 billion as capital costs for the development programme over seven and a half years.

    However, the investment would be scaled up to $3.5 billion over the next 10 years, RIL CFO Alok Agarwal said today in Mumbai.

    The acreage will support the drilling of over 3,000 wells with a net resource potential of approximately 13.3 tcfe (5.3 tcfe net to RIL).*

    From the Atlas press statement:

    Atlas Energy, Inc. (“Atlas” or “the Company”) announces today its entry into a joint venture transaction with a wholly owned affiliate of Reliance Industries Limited (“Reliance”), the largest private sector company in India and a global energy leader, pursuant to which Atlas will transfer an interest in its Marcellus Shale position equal to 120,000 net acres in a transaction valued at $1.7 billion. Reliance will pay approximately $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry. Atlas will serve as the development operator for the joint venture. Reliance will have the option to operate in certain project areas in the coming years outside of Atlas’ core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in southwestern Pennsylvania.

    Read More “Joint Venture Between Reliance Industries and Atlas Energy Worth $3.5 Billion Over 10 Years”

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    Range Resources Increases its Marcellus Output Estimates by 25 Percent

    Range Resources, the very first horizontal driller in the Marcellus Shale, is even more bullish about the Marcellus Shale now than in the past. In a press statement released today, Range says due to the longer lateral wells they now use, the average potential gas that can be harvested from each well has gone from 3 to 4 billion cubic feet to 4 to 5 billion cubic feet, a 25 percent increase. Range estimates the total gas it can realize across all of it’s current lease holdings in the Marcellus Shale is 20 to 27 trillion cubic feet. According to Range CEO John Pinkerton, Marcellus Shale play economics are “extremely attractive even in a low gas price environment.”

    From the Range press statement:

    FORT WORTH, TEXAS, APRIL 12, 2010…Range Resource Corporation today provided an update of its Marcellus Shale operations. Range currently owns approximately 1.3 million net acres in the Marcellus Shale play, with approximately 900,000 net acres in the “fairway” of the play. Of the fairway acreage, approximately 600,000 net acres are located in the southwest portion of the play and 300,000 net acres are located in the northeast portion. Range had previously estimated that its horizontal wells in the southwest averaged 4.4 Bcfe per well at a development cost of $3.5 million. On average, these wells have lateral lengths of about 2,500 feet and eight stage completions.

    In mid-2009, Range began drilling wells in the southwest using longer laterals and more completion stages. In 2009, Range drilled 17 horizontal wells with average lateral lengths of 3,056 feet with an average completion of ten stages. Based on the results to date, Range estimates the longer lateral wells have reserves of 5.0 Bcfe with an average development cost of $4.0 million per well. The impact of the longer lateral wells is very favorable as Range believes it will be able to recover more of the gas in place with fewer wells, while generating higher rates of return. Range is continuing to evaluate longer laterals and more completion stages to determine the optimal design. Like other shale plays, Range believes the optimal lateral length and optimal number of completion stages will vary depending on different areas of the play.

    Read More “Range Resources Increases its Marcellus Output Estimates by 25 Percent”

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    Talisman Energy Sells Another $1.9B in Assets, Plans to Invest $1B in Marcellus Shale in 2010

    Talisman Energy, one of Canada’s biggest shale gas drillers, is following through on its stated goal of investing $1 billion in the Marcellus Shale play. Today they announced five separate deals to sell off Canadian oil and gas holdings that total $1.9 billion.

    The company has said it will use money from asset sales to fund its $5 billion capital program for 2010, which includes $1 billion towards the Marcellus shale play, said [Talisman spokeswoman Phoebe] Buckland.*

    With $1 billion in hand, it looks like Talisman will be looking for more property to lease in the Marcellus. Stay tuned.

    *The Canadian Press (Apr 7) – Talisman’s latest sale of non-core assets to reap $1.9B, support shale gas plan

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    Mesa Energy Adds Downstater from NYC Dept. of Environmental Protection to Advisory Board

    Mesa Energy keeps up the pace with the addition of former Deputy Commissioner of the New York City Department of Environmental Protection Robert Avaltroni. It certainly can’t hurt to have a downstater in your corner for the nasty fight that’s brewing over Marcellus drilling. New York City wants it banned statewide period, and City politicians regularly make noise about it. With former Gov. George Pataki (rumored to be considering a run for the NY Senate as well as a run for president), and with former New York State Senator Nicholas A. Spano, the addition of Mr. Avaltroni makes a truly formidable and influential group on Mesa’s advisory board.

    From the Mesa Energy press release:

    Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York, announced today the appointment of Robert C. Avaltroni to the Company’s Advisory Board. Mr. Avaltroni has over 23 years of experience in addressing political and environmental issues in New York, thirteen of which were spent as Deputy Commissioner of the New York City Department of Environmental Protection.

    “Robert is a great addition to our Advisory Board and rounds off a seasoned group of advisors,” said CEO of Mesa Energy Holdings, Inc., Randy M. Griffin. “His knowledge and experience regarding environmental issues as well as his longstanding relationships and extensive experience in New York city and state government will provide the Company with valuable insight and guidance as we move forward with the development of our Marcellus Shale projects in New York.”

    “It is an honor to join such an astute group of directors and Advisory Board members,” said Mr. Avaltroni. “Randy has assembled an outstanding team and has my full support as we endeavor to lead the way toward environmentally friendly development of natural gas resources in western New York. New York has a tremendous opportunity to capitalize on the economic benefits that the Marcellus Shale brings, and I expect Mesa to be at the forefront of that effort.”

    Robert C. Avaltroni was New York Deputy Commissioner of the Department of Environmental Protection (“DEP”) for 13 years. He was responsible for directing all environmental, chemical, biological and radiological initiatives in conjunction with the NYPD Counterterrorism/Intel Division, Dept. of Homeland Security, the Joint Terrorism Task Force, Federal Bureau of Investigation, Office of Emergency Management, and the Dept. of Energy. He was granted the highest security clearance “Q Clearance” in the United States. Mr. Avaltroni was New York Mayor’s “point person” with the White House and Senator Hillary Clinton, regarding the establishment of a 9/11 EPA led clean-up committee known as the “Blue Ribbon Panel of Experts”.

    Mr. Avaltroni enhanced DEP’s hazardous materials response capabilities as a model for the nation. In this capacity, the Division of Emergency Response and Technical Assessment became the premier response team for chemical, biological and radiological threats. He also addressed prior longstanding environmental issues resulting in a positive dialogue with environmental advocates and community groups in New York.

    In addition to being Deputy Commissioner of the DEP, Mr. Avaltroni was also First Deputy Commissioner for the New York City Sheriff’s Department, Chairman and Managing Director of Empire Commercial Services L.P. and Chief of Staff for the NYC Sheriff’s Department. Today, Mr. Avaltroni represents various entities including the Environmental Contractors Association of New York as Advisor/Consultant.*

    *Business Wire (Apr 6) – Mesa Energy Holdings, Inc. Appoints Robert C. Avaltroni, Former DEP Deputy Commissioner, to the Advisory Board

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    Mesa Energy Gets NY DEC Approval to Convert Two Existing Medina Wells into Marcellus Wells

    Mesa Energy has received a green light from the NY Department of Environmental Conservation to convert two vertical wells in Western New York from Medina gas to Marcellus gas. We also learn from the press release that the Marcellus Shale layer in the Java Field owned and operated by Mesa is about 200 feet thick across the entire area—much larger than originally thought.

    Mesa Energy press release:

    Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York today announced that the Company has received permits from the NY Department of Environmental Conservation to move forward with its re-completion plans on two existing Medina wells in its Java Field natural gas development project in Wyoming County, New York.

    “An initial round of location maintenance, through-casing logging and evaluation was completed on the two wells in December 2009, and now that we have our permits in place, we can begin the next phase,” said CEO of Mesa Energy Holdings, Inc., Randy M. Griffin. “The preliminary data obtained in December 2009 on both wells clearly supports our project in the Java Field and now that we have received permits, we can proceed with the final planning and execution of the re-completion of both wells.”

    The through-casing logs that were run in December 2009 indicated that there is nearly 200 ft. of high quality shale with good organic content in the Marcellus zone; nearly twice as much as the Company initially anticipated. The two wells are approximately three miles apart and the log over the Marcellus zone in each is almost indistinguishable from the other. This indicates that the Marcellus zone appears to be evenly distributed across the acreage.

    *Press Release (Apr 1) – Mesa Energy Holdings, Inc. Receives Permit Approval

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    Mud Spill at Drilling Site in Central PA Due to Human Error

    There was a mud spillage at a drilling site on Friday, April 2nd in Pennsylvania. The site is located on state-owned land—the Sproul State Forest in north-central Pennsylvania. The drilling was being done by Anadarko. According to reports:

    An estimated 8,000 to 12,000 gallons of mud used by Anadarko E&P Company Inc. for drilling operations overflowed at the well site due to human error, said Daniel Spandoni, spokesman for the Department of Environmental Protection in Williamsport.

    While about half of the mud spilled over the boundary of the well pad, it didn’t spread far enough to contaminate any surface waters, ground water or wetlands in the area, Spandoni said. A contractor began cleanup work Friday night. DEP officials have taken mud samples to determine a proper disposal method.

    The mud is used as a cooling agent in drilling operations. Since the mud that spilled is synthetic-based, it doesn’t contain any diesel fluids as some other agents do, said Spandoni.*

    *Hazelton Standard Speaker (Apr 2) – Mud spill at drilling site contained

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    Delaware River Basin Commission May Become Roadblock for Drilling in Wayne County, PA and Other Watershed Counties

    The City of Philadelphia is voicing their concerns to the Delaware River Basin Commission (DRBC) about Stone Energy’s request to hydraulically fracture two previously drilled wells in Wayne County, PA. Stone has also made a request to the Commission to withdraw up to 700,000 gallons of water from the West Branch of the Lackawaxen River in Mount Pleasant Township for drilling. Philly’s 17-member City Council voted unanimously to ask the DRBC to not approve the drilling permits until an environmental impact study can be done first.

    An environmental impact study, an intensive and time-consuming endeavor, would determine whether natural gas drilling poses a legitimate threat to the Delaware River watershed, a 13,539-square-mile area that encompasses nearly all of Wayne County and is known for its pristine water quality and world-class trout waters.

    Commission spokesman Clarke Rupert said Monday the regulator is considering conducting such a study. A decision on a $250,000 appropriation request by the commission is not expected until late 2010.*

    In addition to permission from the State Department of Environmental Protection, drillers in the Delaware River Basin watershed area also need permission from the DRBC before they can drill. If the DRBC is not going to make a decision about whether or not to spend $250K on a study “until late 2010,” and if that study is a “time-consuming endeavor,” that means Stone’s request to drill will not be approved until sometime in 2011 at the earliest.

    If you’re a landowner (or driller) in Wayne County, or in other counties located in the Delaware River Basin, you may be in for major delays before drilling begins. Let’s hope the DRBC speeds the process along.

    *Water World (Mar 30) – Philadelphia dives in to gas drilling issue in Wayne County

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    Mesa Energy Adds Another New York Heavyweight Politico to Advisory Board

    Mesa Energy, with drilling operations in Western NY, continues to add major firepower from New York’s political class to their advisory board. Previously it was former New York Gov. George Pataki (see this post). Today, Mesa has added former NY State Senator Nicholas Spano to the board. Mr. Spano knows the people, and the system in Albany, and he will no doubt help Mesa navigate the rough regulatory seas once horizontal drilling is approved in New York.

    From the press release on Mesa’s website:

    Dallas, TX – Mesa Energy Holdings, Inc. (the “Company”) (OTCBB: MSEH.OB), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York, announced today that Nicholas A. Spano, former New York Senator, has been named to the Company’s Advisory Board. Senator Spano brings to the Company over 27 yeas of experience as a New York political leader and advocate for New York related matters.

    “We welcome Senator Spano to our Advisory Board," said CEO of Mesa Energy Holdings, Inc., Randy M. Griffin. "With his strong background as a former New York State Senator and Assemblyman, he is a recognized authority in political issues. His support and guidance will be invaluable."

    "I look forward to providing Randy with support and strategic guidance as he commences drilling activities in western New York," said Nicholas A. Spano. "With the Marcellus Shale in our backyard, there are great opportunities for the State to benefit from the Company’s activities. The Company intends to develop and produce natural gas in western New York which can potentially provide the local region with new jobs, tax dollars and a supply of natural gas."

    As New York State Assemblyman (between 1979 and 1986), Mr. Spano served as chief executive of the Office of General Services (OGS), a large State agency that provides a broad range of support services that facilitate the operations of State government and that assist local governments, public authorities, public and private agencies. He ensured OGS provided government and nonprofit agencies with innovative solutions, integrated service, and best value, enabling the State of New York to function optimally.

    In 1986, Mr. Spano was elected to New York State Senate as Senior Assistant Majority Leader. He also held various positions including Chairman of the Senate’s powerful Committee on Investigations and Government Operations; and Chairman of the Committees on Labor, Mental Health and Developmental Disabilities. Senator Spano represented District 35 in the New York State Senate until 2006.

    Since retiring from the New York State Senate in 2006, Senator Spano has maintained his vast network of relationships with New York political and business leaders. Today he serves as president of Empire Strategic Planning, an experienced lobbying and government relations firm specializing in state and local advocacy in New York. He is also an Executive Director of Rand Commercial Services, a full service real estate financial institution with expertise in commercial and investment real estate.

    Senator Spano is a member of the Richmond Children’s Center, Westchester Mental Health Association and Enrico Fermi Educational Foundation. He received a B.A. in Political Science at Iona College in New Rochelle, New York.

    Mesa Energy (Mar 26) – Mesa Energy Holdings, Inc. Names Nicholas A. Spano, Former New York Senator, to the Advisory Board

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    Statoil Takes Over Another 59,000 Acres from Chesapeake, Pays $4,325 Per Acre

    Norwegian energy giant Statoil, which has a deal with Chesapeake Energy to develop some of Chesapeake’s acreage in the Marcellus Shale, has just transferred 59,000 acres from Chesapeake’s lease holdings to their own.

    From a press statement issued by Statoil on Friday, March 26:

    Statoil has signed an agreement with Chesapeake which will add approximately 59,000 net acres to Statoil’s current 600,000 net acre positions in the Marcellus Shale.

    The cost to Statoil of the transaction is $253 million, with an average acreage cost of $4,325 per acre.

    As part of Statoil’s joint venture agreement with Chesapeake in 2008, Statoil has the right to periodically acquire its share of leasehold that Chesapeake continues to acquire in the Marcellus Shale. Statoil has now exercised such acquisition rights on a series of Chesapeake Marcellus Shale acquisitions.

    Statoil has seen very encouraging production performance since the entry into the Marcellus play in late 2008. This new acreage is expected to strengthen the position of Statoil and our cooperation with Chesapeake as the largest lease holders in one of the most prospective US shale gas plays.

    This acquisition will enable the partnership to optimize its development activity and secure additional developments in the play. Statoil expects to continue to grow its Marcellus position together with Chesapeake.

    Andy Winkle, VP for the Marcellus Asset, says “We were an early mover into the Marcellus and we will continue to build a long term position in what we expect will become a legacy asset and reach our goal of 50,000 boepd production by 2012.”

    *Statoil Website (Mar 26) – Statoil strengthens US shale gas position

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    Newfield Exploration Set to Drill 10 Wells in Wayne County, PA This Summer

    Drilling is coming to Wayne County, Pennsylvania this summer according to officials with Newfield Exploration. They are waiting for approvals from regulators to begin drilling up to 10 exploration wells. If those wells show promising results, they will likely be turned into full production wells.

    A Houston-based natural gas production company is laying the groundwork to fulfill its promise to drill up to 10 exploration wells in northern Wayne County this summer, with permits now trickling into the state Department of Environmental Protection.

    Newfield Exploration Co., which partnered with international oil and gas production firm Hess Corp. to develop a 140,000-acre leasehold in Wayne and Susquehanna counties, recently filed for its first four natural gas drilling permits in Damascus and Manchester Twps.

    The company has three pending drilling permits in Damascus Twp. [Wayne County] and one pending permit in Manchester Twp. [York County], according to state environmental regulator records. These permits, filed in late February and March, are on track to be approved by late April or May.*

    *The Scranton Times Tribune (Mar 24) – Gas driller seeks permits for Wayne County wells

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    Mesa Energy Fracking Two Wells in NY, Plans to Drill Additional 80 Vertical Marcellus Shale Wells in Java Field

    As MDN previously reported, Mesa Energy, which owns the Java Field in Wyoming County, NY, is planning to convert two of the 19 gas wells on the property from Medina sandstone wells to Marcellus Shale wells. These are already drilled, vertical wells. We now have more details about what Mesa plans to do with these two wells, and with the Java Field. They are moving aggressively with Marcellus Shale gas using vertical drilling, giving them a head start on other energy companies.

    From a press release by Mesa Energy issued today:

    Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York has announced that it has begun initial testing in its Java Field natural gas development project in Wyoming County, New York.

    The Company has selected two of its nineteen existing Medina wells for testing of the Marcellus Shale. The two wells selected are approximately three miles apart. The testing process began in December 2009 with an initial round of location maintenance, logging and evaluation and the two wells will be re-completed once the required permits have been approved. The data obtained in December 2009 will be combined with additional data to design a frac program for both wells with these operations expected to be completed in the second quarter of 2010.

    The Company believes that there are multiple stacked pay zones present in the field, including the Medina and Marcellus Shale zones and, possibly, the Utica Shale zone, and that there is also significant potential to enhance the production and lifespan of the existing Medina wells using modern technology.

    The Company recently announced the results of an independent engineering review of its material assets in the Java Field. Based on this review, as modified by the Company to better reflect the actual acreage acquired, the potential gas in place in the Marcellus and associated shales is believed to be in a range from 106 billion cubic feet (BCF) at 50 feet of shale thickness to 425 BCF at 200 feet of shale thickness. Based on these numbers, potential recoverable gas reserves using a 25% recovery factor and 200 feet of shale thickness would be approximately 106 BCF. The Company projects total potential net revenue over the life of the project to be as much as $405 million gross before expenses, or $332 million net of expenses ($151 million at PV 10). These projections are based on a price of $5 per thousand cubic feet (MCF) of gas.

    CEO of Mesa Energy Holdings, Inc., Randy M. Griffin said, “The test results from the first two wells will be an integral part of our evaluation to determine the potential production capability of additional existing wells in the Marcellus Shale. We have already submitted permit applications and expect to receive approval shortly. We will update our shareholders on our progress.”

    The Company believes that, in addition to enhancing its existing 19 wells, it can potentially drill and complete up to 80 new vertical Marcellus Shale wells on the project acreage and that the shales in the Java Field and surrounding area could provide an excellent opportunity to achieve significant daily production rates.

    *Business Wire (Mar 25) – Mesa Energy Holdings, Inc. Announces Initial Testing in the Java Field

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    SRBC Fines Southwestern Energy $50K for Lack of Proper Approvals

    Although the details are somewhat slim in the newspaper account, the known facts are that Southwestern Energy started construction on a well conductor pipe at a site in Wyalusing Township (Bradford County, PA) in early January, before the Susquehanna River Basin Commission (SRBC) had given its approval for said construction—something required by law. So the SRBC slapped them with a fine:

    Under a settlement agreement between Southwestern and the commission, which was approved by both sides, Southwestern was required to make a $50,000 “payment in lieu of a penalty” to the commission.*

    MDN firmly believes drilling companies need to be responsible and follow the rules, especially since the issue of drilling has been so distorted by anti-drilling propaganda. On the other hand, was this just an oversight on Southwestern’s part? Did someone not get the paperwork filed properly? Who knows. It does seem to be a case of “Simon Says” or “Mother May I?” Since the SRBC didn’t give the go-ahead, Southwestern was fined. Now that the paperwork is filed, have they gone ahead with construction at the site? Did the SRBC find any problems with the application once it was reviewed?

    So, is SRBC’s action vigilant oversight of the public interest? Or a shakedown? You decide.

    *Towanda Daily Review (Mar 24) – Southwestern Energy fined $50,000 for violation in Wyalusing Township

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    Breaking News: PA Supreme Court Rules Against Landowner Seeking to Invalidate Lease

    Last year, Susquehanna County landowner Herbert Kilmer sued ElexCo Land Services Inc. and Southwestern Energy Production to invalidate his lease. The reason? He said that by deducting drilling costs from his royalty payments, his payments fell below Pennsylvania’s law that a minimum one-eighth share of royalties are guaranteed to the landowner. A Susquehanna County judge ruled against the landowner and in favor of the energy companies. Other people started filing lawsuits, so the energy companies asked the PA Supreme Court to take up the matter. The Supremes did, and today they also ruled in favor of the energy companies:

    Pennsylvania’s high court sided Wednesday with the natural gas industry in a dispute with landowners who had sought to invalidate the leases they signed before the Marcellus Shale rush intensified and drove up land values.

    In a 6-0 decision, the Supreme Court upheld a Susquehanna County judge’s ruling that validated lease agreements that subtract drilling costs from the calculation of landowners’ natural gas royalties.

    Justice Max Baer, who wrote the court’s decision, noted that the term “royalty” and the method of calculating a one-eighth share is not defined by the state’s Guaranteed Minimum Royalty Act. However, he cited various texts on the industry that say a royalty is paid from the net amount remaining after deduction of certain production and well development costs.*

    This case will now force similar pending cases to be settled or dismissed. Landowners beware: (1) There is no such thing as a “standard” contract, and (2) Always have an attorney review a lease agreement first.

    *BND.com (Mar 24) – Pa. justices side with gas industry over landowner

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    Mesa Energy Using Conventional Vertical Drilling for Two Marcellus Gas Wells in Western NY

    It seems hardly a day doesn’t go by that Marcellus Drilling News doesn’t observe a new press release, interview or other mention of Mesa Energy and their recent drive into gas drilling in Western New York State. The latest is a clever move by Mesa—they’re converting two of 19 gas wells they own in the Java Field from Medina sandstone to Marcellus Shale wells.

    For about 30 years, the 3,235-acre site called Java Field has been home to 19 natural-gas wells, all of them sunk into Medina sandstone. Mesa Energy Holdings recently took ownership of the site, and it has submitted applications to the state Department of Environmental Conservation to convert two of those wells into Marcellus Shale wells.

    The DEC hasn’t issued the permits yet, but has posted a notice saying it intends to.

    Because Mesa is proposing traditional wells, rather than a deep horizontal well that would use hydraulic fracturing, its project can move ahead.*

    What remains to be seen is if the vertical well transformation will yield production levels profitable enough to make it worthwhile.

    *Rochester City Newspaper (Mar 22) – Marcellus Shale’s northern promise