Hall Kistler & Company: Oil and gas producers in Ohio after the Utica shale discovery

Insights from Hall Kistler & Company: What has happened to the legacy oil and gas producers in Ohio after the Utica shale discovery?

By Mike Eberhart, CPA, CVA, Senior Partner

I lead the Oil and Gas team at Hall, Kistler & Company and have done extensive work in the Oil & Gas industry throughout my career. You might call the Utica shale discovery a “boom/bust” for the legacy oil and gas producers in Ohio (also known as the vertical well drillers). The “boom” has given them the ability to monetize their deep rights, namely the Utica, Point Pleasant and Marcellus shales. The “bust” for these Ohio producers is the inability to lease acreage, unless they want to pay $5,000 an acre, even if the landowner is allowed to retain their deep rights.  The lease boom in the last several years has educated the landowners that they can get around $5,000 per acre. Plus, the oil and gas companies drilling the horizontal wells do not want acreage with a shallow well on it. The other part of the “bust” is the increased costs for oil and gas services and equipment due to the shale boom.  The service companies and suppliers are busy with the horizontal wells and are able to charge the highest rates for services and equipment. Two questions remain going forward for these legacy producers: (1) how long will the shale boom last? And (2) will the technological advances be great enough that the cost of drilling a horizontal well is such that they can even consider getting into that business?

To learn more about the work Hall Kistler & Company does in the oil and gas industry, visit http://www.hallkistler.com/oil-and-gas

 

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About Mike Eberhart

Mike has been a member of Hall, Kistler & Company LLP since 1969 and became managing partner in 1990. In 2011, he decided to step down from the managing partner role to spend more time with his clients as senior partner. Mike has brought tremendous stability to Hall, Kistler and has helped to develop a number of the firm’s niches, most notably Oil & Gas where he serves as the firms’ Chairman; Mike has spent more than 35 years servicing our clients in the oil & gas industry. His experience involves oil field service, oil & gas producers, operators, gas utility companies and drillers. Mike’s skills include auditing, financial statement preparation, tax planning, return preparations and performing due diligence in reserve acquisitions for these entities, both privately held and publicly held. He has also provides expert testimony for the industry and its investors. Our oil & gas clients have benefited from Mike’s assistance in: obtaining financing, the acquisition and sale of properties, due diligence on prospective acquisitions, business valuations of operations for oil & gas producers, oil field service companies, and provided support to legal counsel for litigation. Mike earned his Bachelor of Arts Degree in Accounting from Walsh University. He is a member of the American Institute of Certified Public Accountants, the Ohio Society of Certified Public Accountants, and the Ohio Oil & Gas Association where he serves as the Audit Committee chair and member of the Taxation Committee. He is also involved in the Council of Petroleum Accountant’s Societies-Appalachia, the National Association of Certified Valuation Analyst (NACVA), and participates in several committees within the NACVA. Mike also serves on the Business Valuation Committee of BKR International, a global association of financial professionals.

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