I have foun out that all of the property that surronds our property is under contract with a different company. Will this stop or delay royalties ?????? We held out and got a much higher bonus as well as percentage, but in the big scheme of things if it holds back drilling under the property we it worth it ????????
Man do I need to use spell check.
whoever leased your property will either join in the unit or trade your parcel to whoever holds the leases around you. Its not that big of a deal.
by the way, who did you lease with and when?
Tallisman, in Dec of 2009
if you look at landex you will see plenty of Talisman/Chesapeake/Anadarko units out there. Almost every inch of bradford will be drilled in the next 10 to 15 years. Barring a major development you will just need to wait your turn.
Thanks Mike, I am not in any hurry. Just wondering how it may impact my family.
It definitely could delay drilling and/or royalties. The gascos today have more land to drill than they know what to do with. Why mess with doughnut holes when there are fifty other solid units a company can and needs to work. Talisman, in particular BTW, is known to be shifting focus to the Eagle Ford on account of the better wet gas prospects there. A lot also depends on the SIZE of your parcel, which you do not tell us. If it's a smaller parcel and they drill at all, they might just drill around you. If larger, they might not drill at all . . . for now.
There's no guarantee Talisman will flip to the other company . . . which again you don't tell us. Today there is no law forcing them to do that. Is there a provision in your lease which compels Talisman to flip if (when) the DU surrounding your doughnut hole gets drilled? If not, leasing to Talisman might not have been worth it. However, your lawyer should have handled this for you and protected you in your lease. If he/she did not, then you might have had the wrong lawyer.
Thanks for the info Frank, I will look at my lease sometime today. Our property is 41.3 acers and Chesapeak is surrounding us. We did get a letter from Chesapeak about consumptive water use and the property was shown on the site map as well as the property owners. As far as my lawyer is concerned, I have called her about some questions and her assistant told me she is way to busy at the time and would not be calling back. !!!!!!! Not to worry, my best friend is a lawyer down in Philadelphia. Whatever we may need is covered. This is just not an aera that he deals with on a daily basis.
Mark: No problemo.
A few things, full disclosure first:
I am leased to the dominant driller, the only gas company, operating here where I live. So I lack "hands on" knowledge in the realm of doughnut holes. Kindly remain fully aware of that when you read anything I write on the subject.
I think what you wrote about your lawyer is remarkable and surprising. I'm sure you caught the attention of many readers here. I'm at a loss for words.
In fairness to her, I am assuming she was aware at the time she did your lease of your doughnut hole situation. Her only excuse would be if that situation was not existing when the lease was drawn up.
The size of your acreage, to my mind, places you betwixt and between. For smaller parcels, ten or twenty acres, they're just going to drill around you and capture a lot of your gas without paying. For larger parcels, eighty or one hundred acres, they most likely would try to cut a deal.
At forty acres, plus or minus, much will depend on the shape of your land and its orientation vis a vis the layout of the gasco's laterals. It's impractical, here, to go through all the various possibilities. To offer a couple of examples:
Suppose your land lies at the very end of their lateral(s). Then they can simply drill short and not bother with you. That will cost Chesapeake money, some anyway. But it might be preferable, in their view, to dealing with Talisman.
Or suppose your land is long, not all that deep, and can be (more or less) contained between two of their laterals. In that case they're going to capture a lot of your gas anyway, without drilling you or including you in the DU. They would risk a frac trespass, though, in that situation. The legality, or otherwise, of frac trespass has not been court tested in PA. It should be made illegal, but any PA court scrutiny is years away. The definitive frac trespass case outside PA is the famous "Garza" decision (Coastal Oil & Gas Corp. v. Garza Energy Trust) in Texas. You can look it up here on the net, and given your situation, you probably should.
Please forgive I am not knowledgeable regarding "consumptive water use". But if it's something you can use to prod Chesapeake into seeking a flip from Talisman, for God's sake try!!
Finally, regarding your friend, the Philadelphia lawyer:
There are no dumb Philadelphia lawyers. They all are legal eagles. However, there is no Marcellus drilling anywhere near to Philadelphia. If there is other drilling I am unaware. Oil and gas law being such a specialized and intensely inbred legal realm I have to observe that, for this situation only, you might be better off if your best friend lived in Houston.
Once again Thank You Frank !!!!!! My friend will be happy to hear your view on Philadelphia lawyers. I made some calls to see what Talismen had in mind, they said it was porprietarty. I did get a calendar from them !!!!!!!! We have more mail from Chesapeak than anyone at this point. I just can not see Talisman dishing out 258k to not drill or develop. We signed with a ownership group and were suprised we were not red flaged due to our location. I have a contact with Chesapeak, they are running a pipeline thru our property as well. If you live in Bradford County I would like to buy you a beer and a sandwitch. Your info is excelent. I owe you one.
Not at all. And besides you already repaid me:
"I made some calls to see what Talismen had in mind, they said it was proprietary. I did get a calendar from them !!!!!!!"
That's one of the funniest lines I have read so far. You didn't get the well . . . but you got the calendar!
FWIW, I have no clue what they're thinking. They can't put a well on you . . not enough land. At best your land is trade bait for them. Perhaps they are awaiting (what is to their collective minds) the proper trading opportunity. IOW, they might place on your property an extremely high strategic value (imputed to Chesapeake) and be awaiting the proper opportunity to spend (i.e., exchange) their prize for a property they want, currently controlled by Chesapeake, which is by their assessment of equivalent value.
Said another way, their focus might be less on the intrinsic value of your property, and more on its strategic value.
But, obviously, that's all guesswork and speculation intended as a response to your reference to the large amount of bonus money they paid for their prize. One thing to bear in mind is that Talisman's is a vanishing asset. It lasts only until your lease expires. It does not endure forever. At some point that aspect should assert itself.
I am sure that your friend in Philly is an excellent lawyer; however, as others have said, the need for a gas savvy lawyer is huge. Even lawyers that SAID they knew all about this a few years ago are being shown to have known, in fact, very little about this.
Ideally you find a lawyer with a company doing many many gas leases, with experience in Texas or Oklahoma in terms of some training, and who is constantly learning about new wrinkles. The gas companies have tons of lawyers who only do gas leases and are really good at wording things to the company's advantage.
Perhaps your friend in Philly can help you find a knowledgeable lawyer here, or there may be a place for referrals on this website.....i'm new and haven't explored the whole site yet.
Just BE CAREFUL.