Still looking for that major update. The deal may not be dead, but it may very well be if a deal can not be reached by the year end. I don't think there is interest in another extension for most individual landowners involved.
Agree with you Keith E. I'm aware of three landowners who are lining up other offer(s) in the absence of money in hand no later than New Year's Eve. This announcement was in Oil City THE DERRICK newpaper today:
GAS & Oil Lease a tentative gas lease agreement has been reached between a gas drilling company and Tri-County Landowners‘ Coalition for Clarion, Venango and surrounding counties. The offer is $3250/acre with 18% royalty. You sign directly with the gas company and not someone who will resell your gas rights. Public Meeting. Everyone welcome to receive details. Nov 14, 2011 7:00pm at Traditions Banquet Center (3655 East End Road, Exit 60 of I-80 Shippenville) Tax Map Number required.
Thanks for info Interested Party. Our group's acreage is in Clearfield. Can't make the meeting. If this thing falls through, as I suspect it might, any info that you or anyone else posts will be looked at with great interest.
Friendsville and Wyoming County Group leases. Both were long waits. Both set new highs in NE Pa.
Groups all across the state and in other states have been very successful in getting the best written leases at the best value. It does take time and patience. But only through groups does one have the power to negotiate from a strong position to get what the landowners deserve.
Even large landowners like 500 acres have little power with these companies. They deal with tens of thousands, even hundreds of thousands of acres, on a regular basis. And 500 acres is just one drilling unit to them.
They prefer large aggregations because they want to work an area for some time. They definitely don't want to drill one or two wells and then have to relocate to another location 50 miles away. They use over 200 subcontractors and suppliers, many of them local, on each pad. Too hard to find new subs for each pad and very expensive to move all that equipment large distances.
Even more important, they want to work in areas that are proven. If they drill a successful well, they want to drill more in the area. This gives them a much higher success rate. At 5-7 mil per well, you need to minimize the risk.
Also, they need large land masses to develop all the support infrastructure necessary from pipelines to compressor stations to treatment facilities. Midstream companies must have multiple well sites for them to put in all that expensive infrastructure.
And by dealing with a group, they can move quickly into an area, establishing a base of operations from which to expand.
All of this makes groups very attractive. Groups have some downside like poor leadership, lack of consistency, and overly high expectations but they are still desirable for companies. This may be why groups have consistently raised the bar for all to benefit.
I agree with most of Tommy D's post above and most of yours, Jim. However, like Tommy's opinion above, I can't believe how many people go into these groups and pay a large % commission and tie up their acreage for months and months, free to the marketer. I've seen very successfull groups,Friendsville and Wyoming as example, that market their acreage with absolutely NO fee to the landowners. These groups were started by the landowners themselves who worked together and marketed their position.
Paying out 10% to 20% to someone who "claims" they have contacts and can market the acreage is pretty crazy in my opinion. Percentage grabbing group leaders bring very little in way of expertise in marketing the acreage.
I attended one of the MDS meetings way back when. Based upon the comments on this thread, it seems like a lot of folks think Knapp and company are crooks. I don't think this is fair. I met with these guys when they were trying to put all this together, seems like a year ago but maybe it wasn't that long. I don't think they were out to cheat anyone. They simply had an idea to get a massive pool of landowners together, then "sell" them at a premium to a gas company. On the surface, it seems like an OK idea. Of course, in order for them to have bargaining power with a gas company, they would need to be able to show they truly had a large group of landowners locked in, otherwise the gas company wouldn't believe they could deliver.
I decided not to get into the MDS deal simply because I didn't want to be locked in, not because I didn't trust Knapp and Co. Again, it seemed like a decent idea, but of course it was a bit of a gamble. Then again, this whole leasing process is a crapshoot in a lot of ways. Had they have been successful, I would have watched from the sideline, kicking myself, as his pool of landowners collected there $6000/acre bonus payments.
Anyway, I don't think the MDS thing has worked out so that's probably one of the reasons Knapp is holding his cards close to the vest. On the other hand, he might have something brewing but he doesn't want to provide all the details until he has it inked. Also, consider if you were in his shoes. He's put a lot of work into this whole thing so I'm sure he wants to try to stonewall as long as possible in order to possibly get the deal he's been dreaming of all along. I think that's understandable given the circumstances.
Again, I don't know him personally but I did meet him once and I think he's just trying to make a go of this thing with every possible means at his disposal. If my land was tied up with him, I'd be demanding more answers just like the folks here are but I wouldn't be calling him a crook.
I agree with your assessment of Mike Knapp. I have met him a couple of times and he seems to know what he is doing. But I somewhat disagree with your “plan for the worst” – having this deal fall through at this time may be a “good thing” unless you need the money right away. Lease prices don’t seem to be going down – 10 years ago anyone would be happy with $15/Acre – go to Shalebiz.com and sort current lease offers by date and you will see they continue to go up. In the next few years will see more Natural Gas Vehicles and Natural Gas Filling Stations and this should increase the demand and the price of natural gas. The gas under our properties isn’t going anywhere. Just my opinion-- but as current drilling companies start getting a return on their investment they will have capital to lease additional property --check out some of the quarterly returns of some of the bigger companies-they are doing quite well - and probably at a much higher rate than the current rates—just my "two cents"
If you don't mind me asking, what is the other company you are dealing with in your area? I have property in the MDS Sale but it is not located by any of the others so right now I am not planning on going out and buying a new car tomorrow. I am trying to find other companies that might be leasing still and contacting them. I could use the money now.