All things pertaining to the Marcellus & Utica Shale
Lordstown landowners getting Halcon Resources offers
By Bob DowningPublished: November 12, 2012
from the Marcellus Drilling News:
Very important for landowners in and around Trumbull County, Ohio: Halcon Resources, which took possession of some 31,000 acres of 20-50 year old gas drilling leases in northeastern Ohio, is approaching landowners about amending their leases to allow drilling in the Utica Shale. It’s a good opportunity for landowners to make money from drilling, but also a good opportunity to negotiate new protections.
A new landowner group has just formed in Lordstown, OH to help landowners navigate the offers being made by Halcon:
More than 30 landowners in and around Lordstown have formed the Lordstown Regional Landowners Group to maximize their mineral rights opportunities following the transfer of leases to Halcon Resources Corp. that affect 31,000 acres
Michael Hodak, president of the group, and attorney Alan D. Wenger, who heads the oil and gas practice at Harrington, Hoppe & Mitchell Ltd. Youngstown, announced the formation of the group Sunday.
The group owns 5,000 of the 31,000 acres affected, Hodak said. The leases were transferred last August.
The landowners group is scheduled to meet at 6 p.m. Thursday in the hall of Local 1714 of the United Auto Workers, 2121 Salt Springs Road.
“We are looking forward to working with Halcon to develop a mutually agreeable arrangement as soon as possible,” Hodak said in a prepared statement.
Most of the leases Halcon has assumed were signed 20 to 50 years ago when energy companies were drilling relatively shallow wells, Wenger noted. Today Halcon, based in Houston, wants to drill in the Utica shale and its representatives have been approaching landowners and asking them to amend their leases.
The landowners group sees Halcon’s interest in amending the leases as an opportunity to secure more protections and increase compensation due them. To that end the group has retained Wenger who has begun drafting amendments the landowners would like to see made.
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Replies to This Discussion
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Permalink Reply by Jim Litwinowicz on -
To my knowledge, this is the first group of landowner with rights already HBPd formed to negotiate on the amending of existing leases...something I have encouraged several times on this site. Will be very interesting to see how successful they are. Hope they do great!
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Permalink Reply by Marcus Grayson on
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That's not 100% true. There's been a group quietly forming since August.
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Permalink Reply by Jim Litwinowicz on
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Actually, it was 100% right because I said "To my knowledge" :-{) We had a discussion about this possibility on this site a couple of months ago. I didn't know that some people had started such a group.
It will take a lot of patience since the leases are HBPd. and the companies can wait quite a long time. The key will be where there is a mix of old HBPd leases and new ones that will expire without new drilling. That would give people some leverage on the companies to strike a deal. Knowing the percentage of lands around them with new leases and how long before they expire would be good intel to know.
Hopefully, they can get some financial and/or some better lease terms. I would suggest that both Halcon and the shallow operators will pitch in to get a deal since both will benefit from the deep wells drilled in the future. But it will not be the same as people without existing leases but hopefully they will get some.
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Permalink Reply by Fang F Fang on
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Jack,
What you can expect varies upon where your property is located. It is my understanding that the company is focused on a limited number of drill pad sites. So they will be working on issues with the land owners affected. I do not believe there is an all out effort by the company to deal with every issue with all land owners who were HBP by NCL.
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Permalink Reply by Jack on
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Seems to me that if all land owners stuck together it would be better for everybody. As the old leases read the properties are worthless to Halcon unless they are amended by property owners
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Permalink Reply by Fang F Fang on
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Jack,
Aren't the land owners shooting themselves in the foot?
I'm not saying I have an opinion one way or the other.
But here is a company willing to develop the resource under their property and those land owners will profit from royalties, shouldn't they take advantage of that opportunity ?
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Of course but at the same time shouldnt we get something up front for doing what they want?
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Permalink Reply by Fang F Fang on
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Jack,
I'm not sure about the answer to that question. For argument sake how much do you think a land owner who is HBP should be paid up front for modifications to their lease ?
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Honestly I have no idea how much a landowner should be paid to amend a lease. The bottom line is that it cant be drilled unless it is amended. I don't know how it all works but wouldnt it make sense to a company to get the leases amended before they bought them? Such as NCL get them amended before they were sold.
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Permalink Reply by Fang F Fang on
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Jack,
That was my thought too.
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Permalink Reply by Billy Park Whyde on -
They can't drill without the land and if the old lease prevents pooling/unitization then it takes a signature. Whats the price? Today we are not looking at Clinton wells but wells that with new technology being devised every day increases overall profit. Inflation hits us all why should the landowner be told you'er not allowed to enjoy inflation value for what you have. After all does anyone know of a land owner that buys gasoline at a discount because there is a well on their property?
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