Appalachian Issues Snapshot Report on Land & Natural Resources in Pennsylvania
July 15, 2012
Fishermen often hear "You should have been here yesterday!" And so it is with the historic, biggest natural gas investment opportunity ever in Pennsylvania: Figuratively speaking, yesterday, as in a couple of years ago, was definitely better than it is today.
Natural gas is being produced at higher supplies than current demand, so prices have plunged to just over two dollars per thousand cubic feet. Thousands of shale wells in the Marcellus and Utica formations are producing much more gas than can be used; new wells are being capped. Additionally, low demand persists because of the slow national economy. What this means for investors is that while you needed to be patient a few years ago, now you need to be patient like Job, knowing that lots of investors in oil and gas elsewhere have made enormous sums of money.
Gas leasing is almost non-existent, except where existing gas development projects are under way. Lease payments are much lower than they were just a couple of years ago. A year ago, Pennsylvania had over a hundred drilling rigs actively developing gas resources. Today, the number of rigs is below 80, as drillers take their crack crews and rigs westward, toward "wet" gas plays in Ohio and nearby regions.
Land prices continue to fluctuate as the economy hammers what were once (now past) middle income families and investors, who must now divest themselves of their second homes and investment properties.
Timber is all over the map, although demand is up and the increased log truck traffic is a coarse but useful indicator that in fact, timber prices have increased to the point where sellers don't feel like they are going to take a big hit.
Finally, Pennsylvania's core land conservation program, the Keystone Fund, was protected from the budget axe, so Pennsylvania state government will be doing some land conservation along the way over the coming year. If you are looking to conserve properties in the 50 to 250-acre range, my bet is that Pennsylvania government will probably be able to buy you out, one way or another.
That's all for now. Stop on back in a couple of months to see how things are faring then. Thanks for visiting!