I'm new to "gomarcellusshale", as well as new to this business.  We have a 152 acre farm with "Clinton" gas wells which supply our needs.

We've been approached by Fossil Creek Energy Corp (FCEC) for $50/acre, 12.5% Royalty, and $10,000 if a well is drilled.  We are sitting on the Utica Strata.  I've carefully read the lease and am very suspicious of the terms.  We are consulting attorneys.  I don't see any members from Noble County..and some interesting notes from Guernsey which lead me to suspect the FCEC lease.  Can they broker a lease after signing "cheap"?

We have news of ARTEX Oil offering leases in our County, they're out of Marietta.  Any comment on FCEC, ARTEX, and my suspicions would be welcomed!

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Replies to This Discussion

Finnbear, that is the next level of service we do provide, where we utilize our results and then work for the best offer with our oil/gas attorney.   However, we realize that many landowners or their groups do not want others negotiating on their behalf, so we offer the products to help them do that as effectively as possible.
So for some % of my signing bonus you'll give me your opinion of what my lease should be worth? What happens if no one will pay that much for it? Do I get a refund?
We give you a much better idea of the value of the oil/gas under your lease than you would otherwise have, using real data that is out there, and reasonable estimates based on similar shale plays. Companies, lease flippers, etc. may not want to offer you the fair value you should get---which is why you need to know what that value is, so you can decide whether you should lease to them, or wait until a fair offer comes around.
You work for large oil companies.  Isn't there a conflict of interest in your claim to represent the landowner?
No Angela, the company I work for is not involved at all in the Utica, or Ohio, therefore there is no conflict.   Otherwise, I would agree, and could not offer this service.

Would like to know how you value the utica.  Unless you have some new technology the only way of knowing right now is to drill, frack and wait on production numbers.     I would tend to say the only information out there that you might use would be the thickness of the Utica and the expected gas/liquid/oil window.  Both of these are readily available from the internet.

 

   

I disagree on that.  We have analogs out there with very similar depths of burial, rock composition, etc., such as the Eagleford Shale in Texas.   More importantly, we have anecdotal (through the industry grapevine) and press-released Utica IP (initial production) numbers on both oil and gas wells in the Utica.   What we don't yet know is the decline, so we model a range of production scenarios based on this information, and the analog shale plays.   You can pick which production scenario seems to be most accurate based on current data, then look and see what offer is fair at that production rate.     Of course, there is still risk in the Utica.   A well could be drilled that is bone dry.   Our numbers represent a fair range of value for an economic Utica development on the property

Mark, we are working with an aggressive mid-sized operator which is getting into the Utica Shale in a big way.   They will easily beat Artex's lease offers.   We have a client in Noble County that is working with us to lease his 200 acres, and we are interested in forming a Noble County land group to increase our leverage.  If you and/or neighbors have interest, let me know.  Our fee could come from the operator, with no charge to the landowners.   We have ordered all the well logs from the ODNR, and are currently working up estimates of the Utica Shale oil reserves under Noble County, to get an idea of how that compares to surrounding areas, which we may be able to utilize to influence the lease negotiations.      

 

Shale Guy

www.virtualenergyteams.com/landowneradv.html

 

 

Hello fellow Noble Co landowners. I have 100 plus acres in noble co, Center township. I have been reading all the posts from nearby owners and it seems that everyone is concentrating on the signing bonus or $$ per acre for leasing and not on the royalties percentages. If you read the posting by Al Cramblett on the Harrison co. page, you will see that it is more advantagous to try to get more for royalties since the leasing bonus is taxed at 100 % and the royalties at 85%. Mr Cramblett states he has 15 yrs as a qualified investor in oil and gas lands. I'm not stating this is gospel, but that it would benefit us to keep watch on nearby counties for info.  Has anyone in Noble signed leasing yet? If so we should share thel info. I was approached by Fossil at $50 per acre and 12% royalty, which I consider laughable. I have lately been receiving offers to buy our property since the gas companies became interested, by people who say they are interested in the land for timber and hunting. Someone must know something since it is the first offer in over 10 yrs!!
I feel the same way, I was approached by a landman from Eclipse resourses, They want to drill in Noble county by Oct Im just not sure I believe all this guy told us, Im a coutious person by nature and not very trusting.
I believe lease money is taxed at 42% & royalty is at 35%  of your upfront money and ongoing royalty respectfully.

A seminar I attended with an accountant said lease money was taxed as ordinary income, so it depends on your income bracket and your filing status to determine your tax obligation.  Presently I receive some royalty on a shallow well and it is added to my income total and taxed as ordinary income.  I am not an expert, but just what I have heard.

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