Replies to This Discussion

Permalink Reply by Schnoozie on April 20, 2012 at 12:25pm

Pedro offers you his protection.

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Permalink Reply by hector on April 20, 2012 at 11:49am

Tracy

I may have missed it in an earlier post, but would you mind revealing what State and County you are in. thanks.

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Permalink Reply by Tracy on April 20, 2012 at 1:04pm

Mercer County, PA

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Permalink Reply by Mike C. on April 20, 2012 at 1:49pm

How anyone can think paying $250 an acre for a service that should cost at most $250 per party is beyond me. I know they like to use the line strength in numbers but that really only means strength for them. Oil and gas companies want contiguous acres. These groups grab every acre they can from across the county and then try to market it. They cost the contiguous acreage value by doing this. There is nothing about their service that puts the landowner first.

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Permalink Reply by Schnoozie on April 20, 2012 at 2:08pm

Except their very very polished sales pitch from Experienced landmen who demonize and slander Landmen and the legal profession, But are in fact landmen and lawyers.

I was hounded hard by two of these guys until I caught on. There is no individual protection for your land and whats yours, in the end what they offered was asking the landowners to almost feel sorry for them for how hard they worked and take it or leave it.

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Permalink Reply by Mike C. on April 20, 2012 at 2:16pm

They had a meeting a few nights ago and told everyone that the price was $250 if they signed up in the next two weeks after that it would go up to $800. Couple that with the fact that a landownwer with 100 acres pays ten times more than someone with ten acres for the SAME service amd it makes you scratch your head and wonder who is this group really for?

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Permalink Reply by Lauren on April 20, 2012 at 2:33pm

The meeting the other night said 6% which would go up to 8% as they moved into lease negotiations with oil and gas companies (as an incentive for people to join early, which works to the theory that the more contiguous acreage associated with the group as they move into negotiations the better the overall deal for the group is). The actual amount a landowner will pay per acre will depend on how good of a deal they negotiate.

Their "sales pitch" is they employ a full time staff of lawyers, those out there growing the group (to over 20,000 acres in under 3 months), and those pitching the group to multiple oil and gas companies. This team has successfully (and relatively quickly) helped other landowners lease their acreage in the past - and in Tracy's case, provided them with "the best lease around" and put more money in their pockets compared to other landowners in the area.

The check Tracy is waiting for is not coming from M&P or CX, it is delayed because of Western Land Services was delayed with their title work, and now Hilcorp is taking a 7-10 days to write a check (which is pretty normal for any company to issue a check).

They also state that when an offer is on the table, even if you are a member of the group, you do not have to sign it. If you decide the terms are not up to par, or the price is not what you wanted and the group as a whole still accepts the offer - you are still able to make an individual decision to not sign.

There are many 'oil and gas' lawyers, "independent" landowner groups, and professional/full time landowner groups out there - all trying to make money for someone, and all with different fees associated with their services. When preparing to sign or negotiate a lease most would agree you should hire an expert in some capacity, so it seems obvious that the best thing to do is to hear each one out and decide for yourself what is best for you.

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Permalink Reply by Mike C. on April 20, 2012 at 2:44pm

So using modest numbers, 2000 acres at $3k per acre at 6% is $360k. Does that seem balanced? My point is that there are plenty of.folks that will sign up that have zero contiguous parcels due to hbp throughout a great deal of mercer county. Why would a group of contiguous parcels want to have any affiliation with a parcel that will bring down their value? Also why on earth should a landowner give away their own negotiating rights for six months? in six months the oil and gas game changesmore.often than the weather.

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Permalink Reply by Schnoozie on April 20, 2012 at 3:06pm

I see I have to explain things to you like a toddler. Have a seat there Mikey with your bowl of Life cereal. You are obviously not a landowner, dont pay alot of taxes. Dont' have a family or children, didnt see your investments collapse in 2008 from the multidirectional lies.  

If you are within an area that has a big pile of acreage, and you are not comfortable with the lease, for reasons that are your own.. and also that of your council. You will get left behind. The BS statement thay you dont have to sign is exactly that, BS. So actually the group strength thing works the opposite for you. You will be like the little square in the middle in Dont-break-the-Ice. Once wells start getting drilled, no other company will ever look at you because of pipeline and compressing issues and a host of other things. 

I could fluff this up more if you like. We are not getting left behind, I got the lease I wanted, with good terms, and I was flexable on the dollar figure. Thats why I got it. This is actually less about me than it is for my children. They will ultimately be the benefactors one day.

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Permalink Reply by Mike C. on April 20, 2012 at 3:14pm

Schnoozie I agree with everything you have to say and I do pay taxes, I do own land and I do have kids, my beef is with these groups and the tactics they use. Groups make sense but they are not for everyone. I know folks that have great leases in front of them at good rates. But these groups scare them into thinking that they are about to be fleeced when in reality they are going to cost them dearly long term. Some of these parcels that are not contiguous will be cut out of production units because they are signed with someone that has no intention of ever producing them. That is an injustice.

Permalink Reply by Jim Litwinowicz on April 20, 2012 at 3:24pm

Just because a parcel is not contiguous with others does not mean it brings down the value of others.  To understand why not, you have to look at how the whole system works.

Companies need to have enough contiguous parcels to form a drilling unit, at least several hundred acres. In our area, a large percentage of the parcels are HBPd and these are often smaller parcels because the old wells were often in small 40 acre units. This means that it is very common for companies to fail to get large drilling units or to have some isolated parcels.

These companies have developed a system to handle these "orphans"  They can form joint ventures to jointly develop a unit or they will assign, ie, swap, different parcels with each other so they may form a large enough unit to produce. They may also just buy out needed parcels and sell others they don't need.  This is such a common occurrence that companies will accept isolated parcels just for the purposes of trading them to build a unit elsewhere.

The most important thing is to get a good lease in the first place.  It doesn't matter who you sign with as your parcel may be traded four or five times before it is placed in a unit...and even more times after a unit is formed and put into production. A good lease is critical as the terms of the lease are still in force no matter who ends up with the lease.

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Permalink Reply by Schnoozie on April 20, 2012 at 2:46pm

let me translate the above:

This is 5 paragraphs of. Take our deal, or get left behind.

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