Replies to This Discussion

Permalink Reply by Kathleen on April 1, 2012 at 9:01am

I don't think Chesapeake is running into problems since they really do have a lot of continuous acres and need to start that phase to make money to show proof of the play to their share holders.I read in december in a business journal artical that they would stop leasing after the 1st quarter of 12'. That made me nervouse so we raced to sign but the timing was good.
I have to say sending out dps penn with these offers and tactics is not helping their image at all. Pulling offers, threatening, calling daily saying you better sign is just wrong and scaring people. Everyone knows dps penn is working for chesapeake.
Go around dps penn. if possible now. If you are in a good location and they are looking to drill you may get a better offer.
There are a few people who know how. My neighbor and another friend worked with someone and we will see how that worked out in a few weeks. They both are located in rural columbiana co.

Permalink Reply by Billy Park Whyde on April 1, 2012 at 10:22am

  I believe they need to put some holes in the ground to keep the leases they already have! That take funding. When they start to show some numbers with production then they will go after more land. Of course if they can get leases at 50% off they will possibly go after those leases.

  My opinion is I believe the wet gas window will extend a bit further west than what we believe, but there sure as heck isn't anything that says oil isn't worth money.

Permalink Reply by Billy Park Whyde on April 1, 2012 at 10:38am

 Wanted to add the O&Gs have already put a value upon leases, however as landowners we are the sellers and we can set the price where we landowners have not leased.

 By the way In Muskingum County today was the last day supposedly to sign up with the Muskingum Valley Landowner Group is the Group started by the law Firm of Graham and Graham of Zanesville, Ohio Graham & Graham. I have no idea as to how many acres they were able to gather.

They had a bottom line target of $3,500/acre and 16%   with Graham & Graham getting 7.5% of the lease bonus. I have not signed with anyone.

Permalink Reply by dr j on April 1, 2012 at 12:32pm

Total speculation here..... I think a couple of things are in play -

1) CHK has enough acreage being currently developed they can afford to take their time right now, drop the price and see who they can use the scare tactics on - even in a situation like yours, where they are trying to get the Ward well under way, they are not in desperate straits as there are at least half a dozen pads sitting ready waiting for the drilling rig.   CHK, landowners, everyone is at the mercy of the drilling rig.  Meanwhile there is a big pipeline focus right now.

2) There are a couple of large lawsuits, one in federal court, one in the county courts involving the old Anschutz leases.   WHile many feel those suits will not go in the landowners favor, if by chance they do, CHK saves themselves a boatload of money by re-establishing a lower "current leasing rate".  

3) Production reports out tomorrow.   No matter what happens it works in their favor to have as low a rate as possible going in.   If the current leasing norm was still 5850 and 20% gross, if those reports come out great tomorrow, where do you think the bonus would go?  Now with them sticking hard at 2500 17.5,  many landowners will be happy to go back up to 5850 etc.    If the reports are not favorable ( which I doubt) they will be able to drop form 2500 rather than 5850.    No matter what happens, it behooves them to have lower established rate right now.         

Permalink Reply by jami d on April 3, 2012 at 12:25am

Thank you all for your thoughts. Interesting about the production reports. DPS called today and wants to know what bonus/royalties we're looking for. Sent us an offer 3+ weeks ago. Timing seems interesting.

Ken, Thank you for your thoughts on BMD. I knew they tied things up. Didn't realize how long. I've had several recommendations for the atty you mention.

I am curious about the forced pooling laws in Ohio. Does CPKE have to give their best offer before it would go to a hearing? If so, then why not hold out and make them give the holdouts their top offer? If you lose at a hearing and get force pooled, it sounds like you get low royalties (12.5%) and no lease (so no bonus/protections). Unlike in some states such as Oklahoma where you get fair-market value when you are force pooled (including signing bonus and better royalties).

It is ridiculous to know that neighbors in our area signed for 5,400 and 5,800 with similar size parcles to ours.

 

 

Permalink Reply by 0i7okn54zwbdo on April 3, 2012 at 10:38am

I think CHK's original $5,000/acre+ offer was good only through the first quarter. After that their deal with Total SA kicked in. Perhaps Total, as part of the sale, set a new price since they are the ones footing the bill. Never forget that CHK had no competition for the first two years in Eastern Ohio yet they drove prices up themselves in order to get everything they could under lease. Maybe they thought they could fool people into thinking that something had changed and that prices needed to come down. Either way, if you're in Columbiana county and are yet unleased then you're in the minority. They probably think they can push you around and lowball you. Two or three dynamite wells will push prices up again.

Permalink Reply by Utica Shale on April 3, 2012 at 12:41pm

Jami D,

" ... I am curious about the forced pooling laws in Ohio ...

  Contact ODNR yourself and ask them, "How many residential acres have been forced pooled into a Horizontal Well Production Unit?"

 

"... It is ridiculous to know that neighbors in our area signed for 5,400 and 5,800 with similar size parcles to ours .."

Yes, but now you do not have the bargaining power of the group so it is not that ridiculous an idea.

It's not just the Signing Bonus ..

it is the Gross Royalties and all of the Landowner friendly Clauses!

Have you considered calling an experienced OIl & Gas attorney

like Chris Baronzzi of Harrington, Hoppe & Mitchell in Salem Ohio?

 

 

Permalink Reply by Billy Park Whyde on April 3, 2012 at 2:50pm

I came across this and found some interesting case history on O&G (Note the Favored Nation Clause Case which was a real money maker for the lessor!) http://www.gordonarata.com/720DE/assets/files/lawarticles/58thMLI.pdf

Permalink Reply by jami d on April 6, 2012 at 2:29pm

Very interesting. I definitely think there is a chance for holdouts to get more $$. We don't have a lot of land, so it doesn't matter that much. But there is a difference between 15,000 and 30,000. I don't know if we'd be able to get that clause inserted in our lease, but would be interesting to ask lawyer about it.

Permalink Reply by jami d on April 6, 2012 at 2:30pm

Utica: We haven't contacted a lawyer yet, but will be soon. Thanks for lawyer suggestion.

Permalink Reply by Utica Shale on April 5, 2012 at 9:06am

Jami,

 I heard last night that RESIDENTIAL FORCED POOLING into a Horz Well Unit recently occured near the Stark / Portage area !!! Up to that point I did not think that any residence had been force pooled into a Horz Well unit and ODNR had previously "hinted" in email that they would not enforce Forced Pooling against a residence.

 

 I still need to verify this "story" with a newspaper article or something.

 

Permalink Reply by jami d on April 6, 2012 at 2:23pm

Thank you for the info! Have you been able to verify? I am waiting for response from an environmental reporter who covers that area. I will contact ODNR directly if I can't verify that way.

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