Comment

Comment by Dan on January 4, 2011 at 3:03pm

Nate, I see what you're saying. Thanks for the insight.

Comment by Nate on January 4, 2011 at 1:48pm

I don't think you can sweeten the pot. Producers already hold thousands of acres, some scattered, some already in large blocks. They know how to read leases and how the business works already so having an ambulance chaser slap an exhibit A on the back of a lease and saying "8% and some of your override please" is not enticing whatsover.

Comment by Nate on January 4, 2011 at 12:01pm

Sorry, "Held By Production"

Comment by Dan on January 4, 2011 at 12:00pm

what sweetens the pot?  lots of acreage?  what about a a great producing well nearby?  Anything else?

Comment by Dan on January 4, 2011 at 11:58am

HBP?

Comment by Nate on January 4, 2011 at 11:24am

Producers with HBP are in contact with not only chk but other companies as well (Anadarko, Sierra, Marquette, and private individuals with financial backing to name a few). Why I don't believe they would want to join these groups is they don't need a head hunter or lawyer making their deal for them and taking a cut. You'd really have to sweeten a pot for them to want to join the commune.

Comment by Peter Schueler on January 4, 2011 at 10:21am

Dan, If you do the math on the Wyoming County Chesapeake lease it comes to $172.5 million. 30,000 acres amounts to about 12% of the total land area of Wyoming County (259,200 acres). Harrison County has a land area of 263,000 acres of which about 15,000 acres is state land. There's a lot of land held by production and owned by coal companies that may not be available for pooling in a landowners group UNLESS we as individuals get together with the State, with producers who have major acreage tied up with production but would be interested in a farmout and with large owners like coal companies. It would seem we all have a common interest in maximizing the potential in our county with the most favorable terms.

Comment by Dan on January 4, 2011 at 9:47am

Peter, that is a good clause to put in to make sure that they won't let the lease go unpaid.  I've heard of brokers paying that also, not just producers. I really don't see Kenyon accepting that clause, even though it doesn't cost them anymore money as long as they were really going to pay it anyway.  Kenyon probably just can't do it because they don't have access to cash from Chesapeake to pay that quickly.

That Wyoming Co Landowners group has a lease that operates on a higher level than anything I have seen around here.  30,000 acres can demand anything, I guess, even from Chesapeake. Could anything like that happen here?

Comment by Dan on January 4, 2011 at 9:30am

That's a good point Nate.  I suppose it really comes down to finances then right, since it cost magnitudes greater of millions of dollars to do a horizontal well than a vertical?

I bet even though Chesapeake owns 27-odd rigs that they probably contract some their wells out too.

Comment by Dan on January 4, 2011 at 9:24am

Yes Tom, my neighbor was approached by Tri-Star Energy, LLC around the same time as Peter. I checked back with my neighbor and they were brokers, not drillers.  The guy who contacted him was David Brown with a WV cell-phone number and the Parkersburg office address on his card. The guy never called my neighbor again when he found out what Kenyon was offering.

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