McKean County, PA

Comment

Comment by Jim Litwinowicz on January 8, 2012 at 9:27pm

Another point is patience. It took my local group of 1500 acres 3 1/2 years before we leased. The offers started at $350/acre way back in '08. When we joined the Mt Jackson group a little over a year ago offers were at $1500/acre/15% with deductions. After several months of negotiating last spring, we had no good offers. The group's agreement with Co-X expired at the end of May. At the last meeting in May we decided to extend the agreement for six additional months. By the end of June we had a much better offer and in July we received several more. By the end of August we had a deal with Hilcorp.

There are no secrets in this modern world. With over a thousand landowners in the group, I'm sure the gas companies knew our agreement expired at the end of May. It would appear they waited until the deadline passed, hoping the group would fall apart. Soon after we extended the agreement, the offers came in.

There is no way to be sure that is what happened but the timing was pretty amazing. It was only by sticking together, and showing we would stay together, that brought the companies to the table.

I'd advise you stay together longer. The alternative is to just take what the companies have been offering all along.

Comment by Janice L. Hancharick on January 6, 2012 at 8:27pm

Strategies.  As soon as the size, quality, & existing infrastructure in our shale play was recognized by the foreign energy powers, the acquisition of Marcellus/Utica resources became more a game of strategies than "civilians" could ever imagine.  There's a new roll of the dice daily as companies merge, and JV's (joint ventures) become more numerous.  What the major world players see clearly,  they DON'T want "civilians" to know until all is said & done.  That's why so many meetings have been held across all the states involved.  Education.  Learn how the systems really work ... all of them.  Think through what can be read and heard by those that work it every day.

Comment by Jim Litwinowicz on January 6, 2012 at 6:13pm

R.East; not necessarily true if it is marketed properly.  It is not required that all parcels are sold to the same company at the same price. The offer can be divided into segments based on location and concentration. It may work out that one company will offer more for the southern part and and another is more interested in different parts, based on their geology, specialty, and previous footprint.

The Mt Jackson group grew to over 45,000 acres. It sold of in three major groups to two companies, after about six companies were involved in serious negotiations.  One went form BPO(best previous offer) of $1250/acre to a signing of 2250/acre. (I don't know the royalties as I wasn't involved in that one.) My area went from $1500/15% BPO to $3000/17% . The third, the smallest of the three,  also got a much better offer than BPO.

I don't know enough about the NY situation but I had thought that the moratorium would be lifted soon. Those people could get an offer and then be held by force majeure until it is lifted.

These companies deal with very large groups. The Fryburg and Fortuna groups were much larger than the Mt Jackson groups and got great deals.  Some foreign companies have bought hundreds of thousands at a time from some of the domestic players.  And if you accumulate a large group, it gets attention world wide.

They key is to get enough to attract new players to your area. That can force local companies to compete instead of just giving the standard offer.

Comment by R. East on January 6, 2012 at 3:18pm

Jim - As I mentioned previously, I agree that size does make a difference and would also agree that 15,000 acres is a good number to attract attention from good companies, however, I also believe that once you aggregate a group of more than 25,000, it becomes more difficult to market. 

Janice - I still respectfully disagree with your statement:

We are NOT being held back or dragged down by NY  acreage.  Putting production units together on either side of the border (which has been done) means a market is created.  Those are the areas that will soon be setting the negotiations in motion.

There's still a moritorium on drilling in NYS and, if and when the moritorium gets lifted, many industry follower's feel strongly that the regulations will be so far left that it will be very, very difficult to drill. Now having said that, I'm sure if we ever see natural gas at $7.00 Mcf, that may change. Additionally, from the companies I've talked to, they feel the Marcellus is uneconomic in northern Mckean and in the southern tier of NYS. The Utica, Rhinestreet and a couple other shales could be a play down the road..........but we feel its a long road. If 4 County/CoX throw's all the acreage into one sale we feel any acreage they may get south of RT 6 will be negatively affective.

For the sake of all McKean Countians, I really hope we are able to benefit from the resources we hold.

Comment by Janice L. Hancharick on January 6, 2012 at 1:13pm

A VERY GOOD explanation!  The public can now realize how and why 4-County Leasing efforts have risen to the top ... like cream from milk.

Good things come from diligence and patience.

Comment by Jim Litwinowicz on January 6, 2012 at 9:55am

When aggregating a group for marketing gas rights size does matter. The whole idea of getting a group together is to get the group large enough to attract new companies to an area and increase competition. Companies already established will rarely increase their offer unless forced to do so by outside competition.

The question becomes how many acres are required to get outside offers and concentrated must they be. These companies usually want units of 600 to 1280 acres each. But having just a couple of units in an area is not enough to entice a company to move drilling rigs, frac units, heavy equipment, engineering, and other support staff. They want to have enough land to do many, many units to justify the cost of such a move. Thus someone that owns 500 acres or a small group of 1500 acres will not be sufficient to draw the attention of companies not already established in the area.

Its been the experience of Co-eXprise (which I am affiliated with) that it takes 15,000 to 20,000 acres to get serious attention from outside companies. They need not be fully contiguous but should have enough "clumps" to allow for unitization. And these clumps could be several miles apart.

If you are just trying to get the best deal from established companies at current offer numbers, then joining a large group may not be the ticket for you. But if you would like to see new companies move in at a higher rate for you and your neighbors, than joining a larger group like to 4-county is the best bet.

For me, the best local offer in Lawrence Co was $1500/acre15% royalty. We built a large group called the Mt Jackson group. Co-X brought in an outside firm called Hilcorp and got us all $3000/acre 17% with great terms. And now the company that had told us they would never go above $1500/15% is now offering $3250/18%

A lot of factors come into play. But only a group large enough to attract outside players can make a dramatic change in current offers.

Comment by Janice L. Hancharick on January 5, 2012 at 11:31pm

TG, I always appreciate your level-headedness and great sites to do further research.  You've been on GMS many times, and those that read your comments would do well (no Pun!) to let your words sink in.  In other recent comments I see a misunderstanding of how 4-County operates ... how CX operates. 

For The Rest of the Readers: 4-County has always charged absolutely nothing for attending our public meetings, for private meetings, for web-ex meetings, and yet there are those out there who have not been in the audience once, or called me or Co-Exprise!  Study, Learn, then Comment.  So much has changed throughout the Marcellu/Utica fairway.  Current members and those waiting for current leases to expire soon know that NO  ROYALTY FEE is being charged at this time.  The bonus % is 6%.  These #'s are in place until negotiations are in earnest.  The fine print in the lease we developed for market has no hidden clauses that negate what's promised up front.

The professional journals and online sites I subscribe to describe the quadrupling of pipelines across PA/NY by 2015.  JV's (joint ventures) are happening all over the place with  continuing foreign capital flooding in to the major oil/gas companies whose names we're familiar with ... Chesapeake, Range, Shell (Oops that's Royal Dutch Shell).  I find all this action totally amazing.  This is a portion of the info available @ the meetings.

We are NOT being held back or dragged down by NY  acreage.  Putting production units together on either side of the border (which has been done) means a market is created.  Those are the areas that will soon be setting the negotiations in motion.

I appreciate it when issues are raised here or @ meetings.  Then the various aspects of the Group's actions can be explained.  Making a choice AFTER learning all one can is the best way, the smart way.

Stay in touch you all, and if you can ... come to a meeting. Check the Solomon's Word news blog for locations, dates, etc..  Just Google it up!

Comment by tg mott on January 5, 2012 at 5:34pm

Hi,

I am not in a position to say -- yes or no--

But as a group there will be more powerful Negation position with interested partys than by individuals with prospective buyers alone.

When a SINGLE WELL COST IS IN THE 2 TO 7 MILLION $$$$$$$.xx to compleat, they will delay while return on investment is being proved to them. At this time can not find wht the UTICA expermental wells look to be on production. This are look to be wet gas?? and may be more value able than the dry gas well's in other areas. This is to be a new selling point if the UTICA wells are wet.

 they are most difficult to deal with by a lonesome individual.

 

Your choice on that, may be best to visit the the 2 gatherings in coming week to see what your choice may be about your OGM rights.

Smithport Jan 17, 6:30 PM or Little Valley Jan 18, 6:30 pm

http://solomonswords.blogspot.com/

is a good site to track McKean Co news.

 

TG MOTT

Comment by R. East on January 5, 2012 at 5:28pm

BW..........just to let you know, our family has a few hundred acres south of Rt 6 in McKean County and, myself and several other landowners, feel that the 4 County Group is not the right choice for us. We feel that land south of RT 6 has a better chance of marketabilty at this point and aggregating it with less prospective acreage in New York State and extreme nothern Mckean/Potter will discourage prospective buyers. Additionally, we dont feel comfortable with the fee they are charging and tying up our land with them. 

I am not here to slam 4 County, however, I am not impressed with the progress, or lack thereof, of their marketing efforts. Perhaps if they looked at other marketing techniques/company's we would take a closer look.

Comment by BW on January 5, 2012 at 5:01pm

Hi tg mott,

Are you saying that the 4-County group is a smart move?  My family has land in both Potter and McKean... 

Thank you for the information.

BW

• ‹ Previous
• 1
• 2
• 3
• 4
• Next ›
• Page