The most popular 'GUESS' about the offer has been $3600 per acre.. I would turn this offer DOWN....All around us the offers have been $5000 or more.
Like one guy said, land is only separated by mythical county lines, so the idea that we should accept around $1400-$2200 less per acre, doesn't seem right or fair or business saavy.
Also, a 'no vote' wouldn't end the process. There would eventually be other companies or the same company with better offers...I again base that on our surrounding areas per acre offers...
My vote will be nothing less than $5000. I want to hear you MINIMUM level. If some are willing to settle for $3600, or around that, then we know...This isn't about cutting anyone down for what they deem as acceptable. I would just like to get an expectation of people's votes for this Monday.
So what is YOUR minimum per acre level that you will accept?
The Milton Twp. well right on the Mahoning / Trumbull line appears to be the closest thing to an actual well in Trumbull. They worked 16 months on it wheras they're knocking them out in a month or 2 once the rig sets up in Columbiana Co. & south. They have a pump jack there as well. Something I haven't seen on the other horizontal wells. Is it a dud ? Nobody knows, but something was certainly different than what they're running into in the counties south of there. Certainly the industry knows, & it could be a factor in future leasing in surrounding areas.
I would think between the Milton well and the well in Parkman, they should have a ballpark idea of how the geology changes as you move north.
According to an article...
Now lets wrap this back around to the question, Why would Chesapeake pull out of Parkman? If Chesapeake finds that the Parkman well is proven then that would bring competition into northeast Ohio. Chesapeake is no longer, "currently" interested in that region because the JV must not include that specific area. It takes up to $8,000,000 to build a deep, horizontal well. This industry is driven by market price and shareholder wealth. Chesapeake is not going to be the nice guy on the block and complete a well, have the results find it is proven, and then go complete the JV in another area and not profit from their efforts in Parkman while their competition is rolling in the revenues. But, if they pull out of Parkman, keep speculation low and keep that area dubbed as unproven, then competition will not be scrambling to be the first to set up shop in Trumbull, Geauga, Ashtabula, etc.
In other words, as long as this area is called 'unproven', they can pay less per acre.....
Lets say a drilling company is targeting east-central Ohio and they are offering $5,000 per acre and are looking to build a 1,280 acre unit. That means, the initial funding to landowners needs to be 6.4 million dollars (5,000 x 1,280 = 6.4 million). These drilling companies are publicly traded companies, i.e. Anadarko Petroleum Corporation, stock ticker: APC or Chesapeake Energy Corporation, stock ticker: CHK. There is no way they would risk $5,000 per acre if they were not absolutely sure that they would receive a premium ROI from that specific unit. (Keep in mind it can cost anywhere between 4 and 8 million dollars to build and produce a deep, horizontal well)
Now lets take that same project to northeast Ohio, aka an unproven area. Not only is this area unproven, the geological formation of the Utica shale is not ideal in terms of thickness of the shale and the depth of the desired shale. Those same drilling companies would never pay $5,000 per acre to pool together the needed 1,280 acres like they would in the above scenario. 1) The region is not proven, 2) the region is not proven, and 3) the region is not proven.
* Deer season. Auto complete on my phone... Technology sucks ;)
Does anyone have any advice for signing a gas lease? I have an offer of $4000 per acre at 20% net royalties....i have tried negotiating for 20% gross and Chesapeake thru Mason Dixon is saying this is it...take it or leave....any advice on what to do? My property is in South Mahoning county.
Option #1 - join a Landowners Group
Option #2 - consult with an O&G attorney
Call a law firm that negotiates O&G leases ...
Harrington, Hoppe & Mitchell
They wrote the ALOV lease.
The fact that you are on this board asking for (legal) help leads me to believe you need a lawyer.
Thanks for the advice. I will give the lawyer a call. What is a good landowners group to join? I haven't read anything on the boards lately about Buckeye Mineral....did they ever sign that big group that they were negotaiting for? This was the group that was put together after the $5800 per acre group....last Nov time frame.