"Why Land Groups Fizzle Out"

In the beginning God created a Play, on the first day the oil company adept at leasing swooped in.  On the second day land groups formed and united the earth with great lawyers spearheading the crusade.  Oil companies enticed with hundreds and the thousands, lawyers told the flock this is good, let us rest.  Then the rigs moved in and substantiated the gold and more giants moved in.

 

Alas!  production revealed , bonuses corrected themselves and hundreds of earth owners were left wondering why they took the first offers.  "We were in a landgroup and they told us this is the best we could get." 

 

I have nothing against Landgroups and I have nothing against any property owner who wishes to lease at anytime.  What I do have a problem with is when landowners regret that they prematurely leased.  Well, what do we expect when we were led by non-business people, in fact leaders with no O&G experience at all.  Most landowners have an inate logic of knowing how to deal with their property, I believe it was the dazzle of oil which caused many to not look into themselves on when to lease.  Most property owners know value and know when to sell their corn.  As a business landowner, I have not leased and am watching the nearest wells and production.  It is basically real estate, location, location, location.  I will not regret what I lease for, even it goes up, it is not being greedy that drives me, I just do not want to be had.  The Utica's sweet spot is finite, and they will eventually need everything, I am looking towards a well, production, not swapping paper. 

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Permalink Reply by Bluflame on February 20, 2013 at 8:06pm

Ron,

  I stopped by at 3:00 this afternoon and your lovely young assistant told me you'd just left for Lowe's. Sorry I missed you...see you next visit to Struthers!

BluFlame

Permalink Reply by Ron Eiselstein on February 20, 2013 at 8:11pm

Flame,

She was wrong, I walked in the door three minutes after you left, I rushed back to the store to see you.  Sorry, communication with Faith got mixed up, I wondered why you didn't wait.

Ron

Permalink Reply by melissa humphrey on February 20, 2013 at 5:01pm

Disagree completely. land groups need good leaders who keep expectations in check and execute.

People who realy doin't wish to lease or think their 15 A deserves some special addendum, should be allowed in.

NE PA bubbles with group sucesses, severl great sucesses in Bradford, Lackawanna, Wayne, Lycoming Counties to start.

I am told the Wayne County Group corraled 110,000 acres, 1600 owners and took down a nice deal in 2009 with Hess/Newfield.  

 

The only entities who don't like groups are GAS COMPANIES!!!

Permalink Reply by Jim Litwinowicz on February 23, 2013 at 2:02pm

melissa; not exactly true.  Others are land men and their agencies, lawyers, and "consultants" that do individual leases. 

Permalink Reply by melissa humphrey on February 20, 2013 at 5:04pm

There were Group disasters in SE New York, 2008-2009 era. Leaders had bad informtion/judgement regarding their attractiveness and failing to take the best bids offered.

If a gascompany really though the risk was worth it, they would have bid more.

Now, as prospectivity knowledge has advanced - bids are zero in SE NY.

Permalink Reply by Ron Eiselstein on February 20, 2013 at 8:00pm

Maybe because all of NY has a ban on drilling?

Permalink Reply by Ron Eiselstein on February 23, 2013 at 7:24am

Most landgroups are led by leaders with no experience in oil and gas at all, this is fact.

Permalink Reply by Sue E. Timmons on February 21, 2013 at 8:06am

I'd add to those who don't like groups - people who shunned the groups thinking they knew best but then they find they got screwed.  They don't like the groups who made out OK.  It's like rubbing salt in a wound for them.  Caveat:  That is, groups with a good atty and who still do their due diligence by reading the contracts, discussing the contents, and being willing to stand up if they disagree with anything. 

Permalink Reply by Glenn Armstrong on February 23, 2013 at 3:11pm

From what I see in my area , the first landowners being produced are those who were picked up way early before anyone even heard of landowner groups , or even Marcellus & Utica Shale for that matter. For sure , they likely are signed at the PA State minimum of 12.5% and have none of the gingerbread addenda , and received tiny bonuses ,  but they now have what few of us do , and that is Royalty Checks............

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