What has Changed in the Oil Patch?

There has been a dramatic change in the enthusiasm among oil and gas landmen in leasing the oil and gas rights of landowners in Lower Michigan’s northern counties. The excitement that may have engendered the very high and unprecedented bid prices at the State’s Auction of May 4, 2010, followed on the heels of the news of a deep well into the Utica /Collingwood shale by Encana. Since then, the news regarding that well has been reserved, at best, as production does not appear to be as high as initially forecast. In the meantime, many leases that had been negotiated by landmen with landowners were not only, allegedly, not paid, but also many were also rejected by the very companies whose landmen had negotiated them. It is not clear what is actually going on since, at least among industry insiders, there is still a reasonable potential for a very big play in the Lower Michigan counties. Currently, additional wells are being drilled in an effort to establish the parameters for future exploration and it is important for landowners who may be within the play area who have not, as yet, become Lessors under accepted leases and received the “Bonus” sums agreed to, to keep informed on what is going on.

The State has scheduled another auction for October 26-28 and industry representatives have nominated more than 450,000 mineral acres to be considered at that auction, of which, reportedly, more than 120,000 acres are in Roscommon County. The total acreage, reportedly, would be the third all time in size acreage offering for a single lease auction. At this time one can only speculate as to whether the prices at the next auction would approach or even exceed those of the May 4 auction where the average amount received by the State was $1,507

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