Butler County lease's

Shell is making the rounds in Cherry Twp and northern Butler County. I have seen there lease and to me it looks like they are offering $1,500  and 15%. The lease was  boilerplate!  Does anyone have any more details? I know they have an office in Butler now.  Is there any other Drillers that have been active as of late in this area?

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Permalink Reply by JMS on August 8, 2011 at 11:49pm

How close is that group to signing a lease? 

I heard they were looking for more than $3000 an acre, and 20% royalties. 

So since Shell and Exxon are both interested does that mean this is  likely to be a good drilling area?

Permalink Reply by Jon on August 9, 2011 at 8:18am

They supposedly have an offer for $3250 an acre. They've been talking to several companies. The best thing is to go to the next meeting and see. There's supposed to be a drill site in Portersville. I'm sure they'll drill near us sooner or later.

Permalink Reply by DKinPA on August 9, 2011 at 11:45am

JMS,

 

The Butler County Landowner Group is currently in discussion with Shell, Chevron and Exxon.  As we are a landowner group, the goals are set by the membership and at this point those goals have not been met.  We do believe that as the competition between these 3 picks up those numbers will go up as well.  We have seen this consistantly in other areas and there is no reason to believe it won't happen here, but we have to be patient.

Ask yourself this:  Why did Chevron just acquire Atlas?  Why did Shell just acquire East?  Why did Exxon just acquire Phillips?  All small companies that already have lease holdings in our area......Tax write off?  Probably not.  Vacation property?  Hunting camps?  Maybe, but probably not.  They have tremendous capital and they are developing a plan to lease and produce every available acre they can. 

I believe that the 2D seismic study done in our area a while back yielded excellent results and the Marcellus is about what they expected but the Utica is very good.  By doing 1280 acre units and drilling both the Marcellus and Utica simultaneously on one pad their productivity increases tremendously with a minimal increase in operating costs, making our area outstanding!  In addition the fact that we are a rural area they will face much less opposition and consequently less legal battles.

In order to maximize all of positions it is best to be united in a landowner group and we would love to have you and your neighbors join on and lets negotiate collectively rather than be picked off indivdually!

 

Permalink Reply by ShaleAdvice (Steven C. Townsend) on August 9, 2011 at 5:11pm

I would be careful of only looking at the dollar amount for royalty and bonus payments.  Although those are very important factors to consider when deciding whether to lease, there are other factors you must take into consideration.  Remember the lease is written to protect the oil company, not the landowner or mineral rights owner.  Also, there are a number of clauses and provisions that should and must be included in addendums that will protect your current and future interests. 

I am dealing with a land group now of over 130 who wished they would have looked at more than the numbers when they signed their leases. 

Permalink Reply by Jon on September 21, 2011 at 1:25pm
I was talking to someone that signed a lease elsewhere the other day and they were telling me that you have to watch what the royalties are for. Apparently the lease may say that you get commission on methane, but the well is also outputting butane, propane, etc... which the gas company can sell and not pay you for. Has anyone heard of this?
Permalink Reply by Preston Joswiak on September 21, 2011 at 2:19pm
I have seen many lease's that only pay on oil or gas. How the landowner is paid is up to the drilling company's policy. My lease we have "on oil and gas, along with all hydrocarbon and non-hydrocarbon substances produced in association" ..." realized by lessee for that produced and marketed off the leased premises"  covering the royalty payment.    The only way I won't be paid is if there is not a market for what comes out of the well.    You just have to read the lease and understand what is covered, or have your attorney explain it to you.
Permalink Reply by Jon on September 21, 2011 at 2:34pm
Thanks for the info. I'll have to keep that in mind in the future. It would be interesting to see a list of what all actually can come out of the well. I'll have to look at the next lease that comes and see what it says. Yeah, definitely on the attorney. If the lease was bad for the gas companies, they wouldn't want us to sign it.

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