Marcellus Drilling News linked to an article from the Gas and Oil Mag which reports that the City of St. Clairsville, OH got $8,700 an acre to sign a lease on a 195 acre tract of city property.  The deal was with Rice Energy, which has a really great well in the vicinity.

I’d like to point out just how close St. Clairsville is to Wetzel and Marshall counties here in West Virginia.  Google Maps gives me a distance of 11.2 miles from St. Clairsville to Wheeling.

To me, that means that leases in West Virginia have been going for next to nothing.  Sure, the Utica is deeper, but it produces dry gas in huge quantities.  Exhibit A is Stone Energy’s Pribble 6H well in Wetzel County, producing 30 MMcf per day when it came in, and Exhibit B is Magnum Hunter’s Stewart Winland well in Tyler County, producing 45.6 MMcf per day when it came in.  Also, the Marcellus underlies the same acreage, and produces wet gas in large quantities.  It’s a two-for-one deal.

I can’t think of a lease I’ve seen in West Virginia that went for more that $5,000 an acre, unless we’re talking about State property, which has gotten up over $6,000 an acre.

The recent downturn in oil prices has driven gas prices down, and consequently chilled oil and gas leasing.  But it hasn’t stopped leasing altogether, and negotiated prices haven’t dropped much.  I still think that West Virginia oil and gas properties are being leased for much less than they could be.