It happened before, two years ago. They reneged on a lot of signed leases and didn't pay, or renegotiated to pay a lot less than the contracted bonus. I don't know about this time, but something has changed. Maybe just a change in strategy? Maybe their financial backers want them to stop spending so much and start producing something...I would if it was my money invested in all those wells!
Lynn, I am not necessarily reponding to you, but just venting a little to others who seem to be unsatisfied with their current lot.
I was talking to an acquaintance with 400 acres, they made a deal and signed, and didn't get paid two years ago...... You tell me, does a Zebra change its stripes? ....and yes, I know there were good ole' local Penn. boys involved, but just like anywhere I've been, money talks and Bull.S. walks.
What any mineral owner wants, is to benefit from the minerals being produced and a monthly royalty check coming in on the 15% or 18% reserved royalty from their land, plus an upfront lease bonus on the acreage when the lease is agreed to at onset. The lease agreement and money and surface damages are not rocket science, but drilling a 3000 ft horizontal leg at 7500 ft. depths and then doing a multi stage frac along that 3000HZ leg gets real close.
It all depends on your viewpoint, or perspective. As an example, Its a hell of a Risk to me, the oil & gas producer, and no risk to the land owner. The land owner has no real skin in the game, he/she has received your up front per acre lease bonus, and all the costs and liability and risk is then on the producer. Then we have to have a pipeline to sell to, and a purchase agreement from the pipeline that won't walk the net price down from spot prices, that at these gas prices the whole deal becomes almost un-economical when the price of the acreage, the Hz drilling ,the completion, and the pipeline right of way is figured in.
If the consideration has not been paid on a lease contract, you should ask an attorney , because the agreement was never fully executed. then re-lease the land to a company with money and plans to drill over the term of the lease, thats where the real royalties come in.
Oh well , I hope the different view point of a risk taker / exploration company has some bearing .
Remember when it all boils down, it is just numbers and dollars. Just business. ( with a nice smile)
Oh I know it's just business, and the O&G companies aren't going broke on the Marcellus. Likewise, I own something valuable, and they want it; I do take the risk of having my property and/or quality of life affected. It's to landowner's benefit to look for an O&G company that offers a good bonus/royalty and a fair lease, and East's offer isn't up to the going rate for leases, even in Tioga Co.
I just pointed out that East has already reneged once as an example of why they may not be the best company to do business with; I won't deal with a company that does things like that (I wasn't involved in that; my neighbors were...I've turned down East's offer twice). Their lease terms are also very land-owner unfriendly, with the potential for a lot of damage, although, to be fair to East, I haven't heard of any complaints with all the wells they are drilling.
Your kind of full of yourself aren't you. I signed with EAST and they never paid. We as landowners (and "nothing to risk") couldn't reneg on a lease and go with a better deal Right ??? If you can fire anyone in the world as you claim, what are you even responding to these blogs for ? A deal is a deal !
As you can see I don't post much, and now you can see why.
Why should I be attacked and ridiculed for stating the truth ?
My whole point was that a "Zebra usually doesn't change its stripes".
There is no lease, if they didn't pay you, so lease to someone else. i am not defending their practice whatsoever.
I believe a deal is a deal too.
Hi Mr. Boyle.
You wrote, "As an example, Its a hell of a Risk to me, the oil & gas producer, and no risk to the land owner."
1.) Please tell me exactly how many Marcellus Shale "dry holes" have been drilled in Tioga County within the past 5 years.
2.) Then tell me how many successful “wet holes” have been drilled.
3.) Then explain to me the risk reward ratio when the G & O Company steals the ability to produce gas from a landowner (Old Phillips Lease Holders) for a mere 12.5% Royalty and no upfront payment.
4.) Then, kindly tell me the AVERAGE payback in terms of time for the AVERAGE well to break even.
5.) Finally, why don’t you explain exactly how much profit you, the o & g company will rea p from the average Marcellus Shale well in Tioga County over the life of the well.
All your answers will be interesting to see, and please do not go on and on and on and on and on and on about “how at risk you are", you have already explained that part. What we as a group are interested to know is how you are going to benefit in REAL NUMBERS.
Setting Pipe has to be done to do the frac job and see if the flow rates turn out to be economical. So yes there are not dry holes because we are not looking for oil, a completion occurs on most every shale well, so it is not considered a dry hole, but that doesn't mean its a good well, only if and when it pays out does the producer even get his original investment back , while the mineral owner has received the acreage bonus up-front with no risk , given they have a surface damage clause, and the mineral owner is receiving cost free royalty payments over the years that the producer / risk capital is waiting and hoping they will get their original costs back. Many mult-stage fracs don't go as planned or the well turns out marginal, or the horizontal leg has a failure, gets stuck in the hole etc.
as far as the Phillips lease I can not speak to you about them, but it sounds like your talking about HBP or old held by production leases. Its no different that if you had a large warehouse you leased out for .25 cents a foot for 10 years, and then later the leasee sub-leased it out a year later for $2 a square foot. there is not a legal way to take back your old 25 cent lease to run up to thr front of the line on the new $2 offer. I hope this helps your understanding of why someone i.e. phillips may not want to relinquish their old lease deals if they are HBP, just like the ware house is held by a lease
As far as 4 and 5 , well you can always participate in the producers profit, on top of your profit on the lease bonus and royalty payment you would be getting, you can do this by simply asking to participate on a prorata piece of the deal. ,,,,,,Right ?
What else is there ?
One way you could go is to take question # 1 and answer it. Then you could take question #2 and answer it and so forth; no fluff, just straight forward answers with numbers.
Or, if you don't know the answers, simply say "I don't know the answers". OR, if you don't want to answer the Questions, simp,y say, "I don't want to answer the questions". That way you are not dodging the questions and we can all move on.
What makes this site so great? Well, I think it's the fact that, quite frankly, we all have a lot at stake in this thing they call shale. But beyond that, this site is made up of individuals who have worked hard for that little yard we call home. Or, that farm on which blood, sweat and tears have fallen.[ Read More ]