Replies to This Discussion

Permalink Reply by Marshall Ives on July 27, 2011 at 3:54am

Hi Lynn and group!

   Same thing happened here!  requesting seismic testing.....and part of our property is in borough.  I told them that I need to be contacted by "leasing" first, which must be resolved, since we are not leased, still have not received an answer.  May I have Andrea's email?? or phone.. anyone can contact me on cell 786-499-8570.  

   This blog is absolutely great!

   Marshall

Permalink Reply by Lynn Wigglesworth on July 27, 2011 at 4:15am

Hi Marshall! Andrea's email is: Andrea.Garrity@shell.com

She really got things moving for me.

Permalink Reply by Marshall Ives on July 27, 2011 at 4:26am

thank you,

I just wrote her!

lets see...

Permalink Reply by Lynn Wigglesworth on July 27, 2011 at 7:11am

The guy dropped off the lease. It's pretty standard boiler-plate. $2000/15%. He's looking into getting a non-surface lease for me, but he aid they might make it with a lower bonus. The only addendum they would consider would be the 'no deduction', but only as written by Shell.

The nice thing about dealing with Shell is that they will have the bank draft ready when I sign...no waiting 90 days, only to have your lease voided like with East.

I have to look over the lease, but I think this is the best I'm likely to get. One interesting thing; he had a map of the area and all but a handful of properties are leased (by Shell). They have unit after unit all laid out...WITH small spaces between, cutting out unleased properties...they will definitely go around you if you don't lease. He said that they are likely to "snug up" the units so they are next to each other if I lease; that would take care of my fear that half my property is 'hang out' between units. But there's no guarantee they will do that. My across-the-street neighbor has a tiny fraction of his property in the next unit over...his whole property is held, but he'll get next to nothing in royalties. The rest of his property and half of my property will be sitting in a narrow strip between units if they don't move the unit boundaries to include us. That's worrisome, but having half my property in a unit is better than nothing.

Permalink Reply by Brian Day on July 27, 2011 at 7:36am

I wouldn't worry too much right now about the bounderies of the projected units you are seeing.  Those units are really set up to grab and lock up properties, as was done toi the neighbor that you describe.  When horizontal wells are actually drilled and fracked, the geology will determine more of unit size and shape.  If units are held to less than 640 acres by lease wording, they probably cannot exceed the 640 acres for each well.  In actuality, a one mile long well does not seem to draw from more than two or three hundred acres.  If, one the other hand, the gascos get leases ammended to greater size than 640 acres or that limit is not enforced in a Pennsylvania court of law (of course that would never happen), then very long horizontal wells could be projected for the future and much larger tracts of land could be tied up with the customary single vertical well.  If you can get a limit of unit size of 640 acres or less, take it.  I'll bet that they will not include that in a lease anymore.  As things stand now Lynn, I probably would take their money and run to the bank with it.  Progress in Tioga County may be at a snail,s pace for the next year or two at best.

Permalink Reply by Lynn Wigglesworth on July 27, 2011 at 8:44am

You hit it, Brian...the new lease says a unit  "...shall not exceed 1,280 acres...". Interesting, but most of my neighbors have the old (640 acre) lease, so that option couldn't be used here. Certainly something to be aware of, though!

Permalink Reply by Brian V. on July 27, 2011 at 7:40am

Lynn, If they already have a well pad determined and a unit filed a non-surface clause shouldn't be so important to you IMHO. I don't know where you sit in that unit or any future units but it seems that at this point the only surface use you may have to worry about would be for a pipeline ROW. But then again peace of mind is priceless. I still think that $2000/per acre and 15% is low but they don't seem to have any competition in your area so they can offer almost anything they want. In the end it is the rights to your minerals and perhaps the right to put a lateral under your land they want so tell them they can keep the offer were it is N/S or not, or they can walk. It's kind of like a game of chicken. 

Permalink Reply by Lynn Wigglesworth on July 27, 2011 at 8:51am

The vertical well is already drilled, so the half of my property that is in the unit is safe from surface disturbance...the other half is not in the unit, but I don't think there's enough area in this half of the property to drill on, so maybe I'm safe anyway. I still want all the addenda with things they CAN'T do to my property...waste wells, etc.

 

I don't like playing games of chicken with my future and my kids' futures. To Shell, I'm just another landowner, ho hum. TO me, this is important and I want to get it right.

Another question: on the lease, the royalty (15%) is filled in, the the bonus amount is left blank. I asked why it was blank, and he just said "Oh, it's $2000". Does that mean they might be willing to go higher?

Permalink Reply by paleface on July 27, 2011 at 9:52am

 There is alot of 16-18-20% leases out there with deductions right now they run about 2-4% so a clean 15% is pretty good and thats where you'll make your money any way.There's talk we have Utica shale that they are experimenting with and the rumors are it has similaritys to the Bokken shale so if they start drilling and producing that shale it might be quite costly to refine,so my point is that could be a big deduction from your royalty that you won't have?

Permalink Reply by jeff k on July 29, 2011 at 9:02am

  Make sure the lease hase the termanology "free royalty", i.e. no deductions, other than applicable taxes ...people signed for higher %'s and never realized gas companies could take deductions for drilling expenses etc.

  Most likely they will go back to other lease holders that have the max. set at 640 ac. and "convince" them to increase up to the 1280 ac. unit...good bargening power to get a few things left out in their lease when they originally signed.

Permalink Reply by Ann Ticopa on July 28, 2011 at 6:42am

A couple questions for my information:
Did the landman say whether the non-surface would be a separate lease or an addendum?

Really, NO other addenda (than no deduction)?   Last summer when they did the sweep of unsigned landowners, the lease package that was offered to those who wanted non-surface had that addendum, the no-deduction, and well testing. 

Did the landman - or does the paperwork - say how long Shell would have to decide whether to authorize their bank to pay the bank draft $$ to your bank?  (Not srprising East didn't use them.  What bank would have guaranteed that East was good for the $$.) 

Permalink Reply by paleface on July 28, 2011 at 7:18am

 Lynn send the Shell landman over to Ann's house with a lease she's ready to sign.

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