As reported on Marcellusdrilling.com, BP has decided not to pursue further drilling in the Utica Shale. This comes as BP spent time acquiring a large acreage position in Trumbull county but disappointing results has forced it to exit the play. This comes as a result of some initial wells that were drilled and the results were not what BP was looking for. Since BP has decided to exit Trumbull County Ohio, this leaves mineral owners in the area with less hope that future drilling will produce a huge pay off. While there could be profit in the Utica Shale in Trumbull Ohio, BP deciding that it was essentially not worth their time will turn off future operators from taking the risk as well.
Selling Leasehold Acreage
BP will now begin the process of trying to sell their leasehold acreage. It’s reported that they will be attempting to sell 105,000 acres of leasehold. With such a large sale taking place, BP will most likely be taking a substantial hit on the prices they originally paid. This means that they will take a loss so they had to take a write down of approximately $520MM related to this Utica acreage. As they work on finding a buyer for this acreage, they will likely face an uphill battle convincing other operators to take a over a position they found unprofitable.
Affect on Mineral Owners
As a mineral owner, you should always consider what stories like this could mean for you. After mineral owner initially received some great lease bonus amounts and looked forward to future drilling, the test wells proved that they were not worthwhile. The affect this has is that now the lease bonus amount is likely the only amount mineral owners will receive in the near future. With no drilling taking place, mineral owners won’t be receiving royalty checks and won’t get the benefits of oil and gas production.
In addition, this will have a huge impact on the lease bonus amounts paid in Trumbull Ohio. With BP deciding the area is not worthwhile based on their test wells, mineral owners will struggle to get anywhere near the lease bonus amounts paid in the past.
The important thing to note is how quickly the value of your mineral rights can change. Your mineral rights could seem like they are extremely valuable one day, and then be worth a fraction of the amount the next. As you decided whether sell mineral rights or lease mineral rights, consider this example in Trumbull County Ohio when deciding whether selling now is right for you.
If you have questions about your mineral rights in Trumbull County Ohio, or in the Marcellus Shale, please use the contact for below to get in touch with us:
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