Appalachia has been hit especially hard with lower commodity prices. Many RI/ORRI owners have seen their checks cut to almost zero in the past few months with little explanation. Some have also probably seen large costs associated with post-production (another issue all together). Many don't know all of the reasons why this has occurred.
On top of lower commodity pricing pipelines have been adding many costs to transportation of hydrocarbons. This can occur in marketing, tariffs, etc. making the realized price per MCF around $1. This has also hit NGL and Oil prices as the same fees apply. All of this leads many operators to shutting in wells that are older or newer in order to preserve reserves. If a well is older the costs associated with producing might be higher than the revenue received from selling the produced hydrocarbons. On the flip side many new wells will not be turned on because shale wells make the most money in the first months due to flash/flush production, etc. Personally, I have seen revenue checks in the Marcellus wells we are involved in go from six figures to less than three in the past months, I can only assume RI/ORRI have seen the same.
Many operators including Stone Energy, Gastar, etc. have cut their Marcellus drilling budgets and released rigs. Many owners who had received notice of a permit on their property will now not be having wells drilled which is a disappointment. However, do not forget the Utica. Utica test wells in the region have been phenomenal. With operator slashing budgets however, this gain of a new formation and revenue source will not be recognized for awhile. The question is for how long?
Stone Energy, Antero and Gastar are the two prominent players in Wetzel County and North and South of Wetzel. Gastar is in financial trouble and has cut their drilling budget. Antero has acreage within the Utica in Ohio and due to lower costs will probably continue to drill those wells over WV. Stone has released their Marcellus rig as of a few weeks ago and is taking a 6-month hiatus from drilling. They will be coming back however to drill Utica wells exclusively on previous Marcellus pads. It will be 1 YEAR OR MORE before royalty owners will benefit from these wells but is worth the wait. The test wells came in as the second highest reported Utica well per thousand feet, ever. Many owners will start to feel the pinch over the next year because their royalty checks will basically be nothing.
Mineral and RI/ORRI purchasers will be circling like vultures on people who have extended themselves or think that it will never recover. Do not buy into this, it will recover and will continue as it is profitable to drill regardless of pricing at the production coming off from these wells (Marcellus is indefinitely shut down). Find someone who will loan against current production if you need a holdover for life's events but do not sell out if you do not have to. It is impossible to value what the Utica will be able to pay out for mineral owners as these test wells have only been online for 6 months or less but from the production data we receive from these wells it is far better to hold onto your rights than to sell and lose out on future income.