Replies to This Discussion

Permalink Reply by DKinPA on June 28, 2010 at 10:21pm

Shawn, the fact of the matter is that what the gas companies desire is under us and they will make the determination on where to drill based on the geology. When you look at the cost of drilling a Marcellus well (which is a fixed cost irrespective of location) compared to the cost of what is payed to the landowner, they will pay and have payed $5000/ acre and 20% because it is a good business decision. When they get suckers to agree to $100 or $500/acre and 12.5% it is just a higher profit margin for them.

Permalink Reply by Sam Douglass on July 3, 2010 at 6:38pm

You may lose them for a while, but they will be back and they will pay some day. The Governor has nothing to do with it; he is at least smart enough not to scare away the drillers. Google Barnett Shale and find out what Texans pay Texans -- and the Barnett is not as good as the Marcellus.

Permalink Reply by DKinPA on June 28, 2010 at 10:22pm

REMINDER: We have a meeting Wednesday at the Unionville Fire Hall (corner of Rt 8 and Mahood Rd) at 7:30pm. This meeting will be very similiar to the last meeting.
For those of you who have attended one of the previous meetings, please tell your neighbors about this meeting. We are growing in numbers and acreage...that is good for all of us and our community!
Hope to see you there!

Permalink Reply by Shawn Kaswlec on June 29, 2010 at 11:16am

I'm not saying leave money on the table by any means. The shale is not good in northern butler. Its a fractured rock the same in Fayette county. There will still be production just not great production. Hence why William, Chesapeake, T W Phillips, and Penn Virginia all are staying in the southern 6 townships of butler co. So what I'm saying is high prices per acre in areas of lower production, companies will walk. Ive seen it happen in Fayette and Westmorland Co.

I feel what people should be doing is worrying more about the lease. Like i said these leases are not five year leases, like they state they are. Companies can hold the lease for any reason they want. You are signing that.

Permalink Reply by Alan Coogan on September 9, 2010 at 10:53pm

Shawn: interesting comment on fracture properties of shale in northern Butler
where we are--what is the source of this observation? please

Alan Coogan

Permalink Reply by DKinPA on July 18, 2010 at 9:56pm

The group agreements are ready to go! If you didn't recieve yours by E-mail please let me know [email protected]

If you have property in Cherry, Clay,Concord, Marion, Venango or Washington Twp and you are not a part of this group yet, please E-mail me for more information.........Power in numbers!

Permalink Reply by DKinPA on September 9, 2010 at 10:46am

BCLG UPDATE

I wanted to keep everyone up to date on the progress of our group. As we receive your signed agreements we have been very busy contacting the landowners adjacent to your property to get them on board as well. This has allowed us to begin to form those larger areas of contiguous acreage that we had talked about, but it has been very time intensive. In order to make this process more efficient, we have ordered signs that you will begin to see around the area notifying people of our group and what we are doing. Additionally we want to get more contact with landowners, so we have been appointing a Representative for each township. This representative will be contacting your neighbors and informing them of our group and the advantages in joining.

One thing that we are most proud of with this group is the protection that it gives to our members. The land men and gas companies have been "preying" on the elderly and those that may not be as well informed as to what is fair and what options they may have, both financially and legally. Our group helps to eliminate this type of practice and helps to insure that landowners receive a fair and equitable lease.


As I am sure you have seen, Rex Energy has had a large infusion of cash recently due to a joint venture with Sumitomo Corporation. Sumotomo has bought a15% interest in the Butler County Phase 1 leases (41,000 acres) as well as a 30% interest in the 20 wells in Butler County, 11 of which are currently active. Sumitomo will pay 100% of the costs to lease the next 9,000 acres in Butler County and at the same time pay Rex Energy $1,000 per net acre as a leasing fee. In addition the processing plants that Rex has planned are moving along slowly due to the time to get permits but according to a member of the group the plan is still the same; to build several processing plants through Butler County up to I-80.


Gov. Rendell said yesterday that there will be no moratorium on drilling in Pennsylvania during the remainder of his term and that he does not believe that the legislature would support a moratorium. This is certainly good news, however the talk of a severance tax is very much on the table and the upcoming election could prove pivotal on that measure. Another measure which is on the table is the "conservation pooling act" being proposed by Reps Everett and Gergely. This is essentially forced pooling which is where the gas company can force a landowner into a group or unit against their wishes, which takes away many of our rights as landowners and gives them to the gas companies. I foresee a deal being made in the future where the legislature imposes a severance tax but in exchange they grant the gas companies the right for forced pooling making it a wash for the gas companies, a revenue explosion for the state and robs us, the landowners of our right to decide what happens with our property!

Permalink Reply by Matthew Santiago on September 12, 2010 at 9:27am

Just curious but are you going to be trying to negotiate a "no cost" lease. Also is there a minimum bonus amount that the group will not lease under. For example the group would not accept any bonus under $3500

Permalink Reply by DKinPA on September 13, 2010 at 2:23pm

Matt, not certain what you mean by no cost lease.....are you referring to the determination of royalties based on net production vs. gross production?

Regarding the bonus amounts, that will be determined by the members of the group. When they have submitted their agreements a survey is also taken as to what is most important to them and we have been tallying those results as they come in. That will determine the parameters by which the group will negotiate. However, the members also agree that a slight reduction in the bonus amount for a more significant royalty amount is a worthwhile option, so it is not always cut a dry as far as the bonus amount. Attorneys who are negotiating leases for landowners will quite often take a percentage of the bonus amount, therefore they will push up the bonus amount, sacrificing the royalty amount and costing the landowner tens of thousands; if not hundreds of thousands of dollars!

Permalink Reply by Matthew Santiago on September 14, 2010 at 9:04am

Yes, I was referring to net and gross production. What are the groups thoughts on that.

Permalink Reply by Matthew Santiago on September 14, 2010 at 9:09am

Most of the attorney's out here are negotiating for a flat fee. Yes, there are those that are negotiating for a percentage of the bonus payment but any landowner that agrees to that is being taken advantage of. A slight reduction in the bonus payment for a 1 or 2% increase in royalties doesn't make that much sense to me. There is no garuntee that you will be in a producing unit. Many things can go wrong along the way. Just voicing some concerns. Thanks

Permalink Reply by DKinPA on September 14, 2010 at 4:20pm

This is something we have discussed at our meetings and there is no doubt, we don't want this:

To pay Lessor on actual volumes of gas sold from said land, one eighth of the net amount realized by Lessee, computed at the wellhead. As used in this lease, the term "net amount realized by Lessee, computed at the wellhead" shall mean the gross proceeds received by Lessee from the sale of oil and gas minus post-production costs incurred by Lessee between the wellhead and the point of sale. As used in this Lease, the term "post production costs" shall mean all costs and expenses of (a) treating and processing oil and/or gas, and (b) separating liquid.....(c) Transporting oil and /or gas including transportation between the wellhead and treating facilities.....(d)compressing gas for transportation.....(e) metering oil and /or gas to determine the amount sold.....(f) sales charges, commissions....(g)any and all other costsand espenses of any kind or nature incurred in regard to the gas or the handling thereof.....Lessee may use it's own pipelines and equipment to provide such services....etc, etc.

They are very clever and with this in your lease you may not get much at all! They also know that by offering a high bonus payment and lower royalty they will make more for themselves....that is why they raise those bonus payments but are more stingy on the royalty. In addition we are insisting that all bonus payment be paid in full at the beginning of the lease.

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