Ax
Posts: 559
Joined: 10/22/2004
Status: online
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Musky,
Once these wells are drilled you always have to keep the roadways to them. The wells need tended every day, brine needs removed periodically, and if they are oil wells then the oil needs to be taken from the storage tanks. So once the PGC gets all these wells done you will have access roads all through the SGL.
On another note. SGL wells are notoriuous for having curtailment issues on the gas produced by gas wells. IE no infrastructure to get the gas from the well head to someone who wants to buy it. Because before this big oil and gas boom the SGL wanted no parts of gas lines running through there properties due to enviromental issues which are still there. I have my hand in this business and we have 8 wells that are currently on SGL's. Guess what only one out of these 8 wells is actually delivering gas. The other seven have great reserves but guess what we can't get the gas delivered. So just buy drilling doesn't mean great royalties.
And as far as leases go. Yes the current price is crazy for leased acreage. But what is unfortunate for the PGC is that alot of their land was leased prior to this big craze and once you sign a lease at certain terms lets just say 20/acre then that is what you get when they renew the lease every 3-5 years. Only way you will ever get more is if they don't drill on the property in the time frame and guess what they always make that time frame.
This current Marcellius Shale play may be great but until drilling companies in PA figure out to horizontal drill then they will always be lackluster wells in the drilling companies opion's and most often they will just shut them in once they recoup the costs of drilling. Then no one gets any more royalties. From my knowledge they haven't been real succesful in the Marcellius play yet. I know one well that I do believe Range drilled in Washington County has been like they projected but other than that it has been a bust so far from the actual gas produced from this shale play.
From a wise man in the oil and gas business. Drilling companies will spend more money to find out what they don't know then on what they already know. So once they get this proved up guess what all these leases will be back to $100/acre.
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RE: Meredith Shale & the PGC - 
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