Replies to This Discussion

Permalink Reply by JMS on August 18, 2011 at 1:28pm

Very helpful explanation, Scott.

It does seem a bit like the stock market to me...you just gotta "take the plunge" when the time seems right. 

Good luck to all of you...to our environment, and to our children and grandchildren's futures! 

Permalink Reply by scott peterson on August 18, 2011 at 2:04pm

amen brother.......

Permalink Reply by Jon Henderson on August 17, 2011 at 6:22am

I realize this is a serious question, and I have been criticized for bringing it up. However, it was Chesapeake Energy that stated that the "Utica was going to be more productive than the Eagle Ford" (paraphrased). We Ohio landowners did not make that claim, they did. I also assume this means it will be more productive that the Barnett.

Permalink Reply by AT on August 16, 2011 at 4:32pm

I like the signing bonuses for the 3 year primary term and the 2 year extension on this lease: http://mysite.verizon.net/hlgasgroup/files/Hidden_Lakes_XTO_Lease_F...

 

Looks like the 25% royalty is net?

Permalink Reply by Shower Bath on August 22, 2011 at 1:55am

Here is kind of a "state of the play" article from this mornings' Ohio.com:

http://www.ohio.com/news/local/ohio-landowners-joining-up-to-get-a-...

 

Randy

Permalink Reply by Freddy H on August 26, 2011 at 7:39pm

OK, with all that being said 1) the BJ article, 2) Chesapeake CEO stating the OH Utica looks to be more productive than Eagle Ford and 3) Barnett leases with language like this that Jon found:

 

Principal "deal" terms:

    * Minerals covered- Only oil and gas and related hydrocarbons.                       
    * Primary term- 3 year initial (or primary) term, plus Lessee has option to renew for 2 years.

    * Bonus- $5,250 for first three years, and $2,500 for the additional 2 option years if Lessee exercises their option.  (Note: All dollar amounts and %'s are to be proportionately reduced and are per net mineral acre.  For example, if you own a ½ acre of minerals, your initial bonus amount would be $2,625.)

    * Royalty-
          o  25% on oil and gas.
          o No deductions for the costs of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and/or marketing the gas.  (Note: Exception is that Lessee can pass on to Lessor a share of costs charged by an unaffiliated pipeline company to enhance the value of the gas, if (i) the costs are reasonable and actually incurred by Lessee, (ii) the value is enhanced, and (iii) only to the extent of any enhanced value. (This means gross not net here folks as I understand it)

  And no surface activity...

 

Why are so many landowners signing for a pittance and not joining together like this community did to get a decent lease? I keep asking this and wondering why there is not more action? Any ideas?

 

Permalink Reply by Nelson Roe on August 27, 2011 at 2:49am

Freddy,

The only thing I can think of is that a lot of the people around here were used to the old oil & gas leases that paid maybe 5, 10 or 20 dollars per acre for an upfront bonus & allowed for the standard 12.5% royalty.  With these old wells, most people just wanted the free gas for their homes.  So, I guess if they didn't take the time to educate themselves, then some of the initial deals would have been rather shocking & many of them probably figured they should grab the first deal before it disappeared...

Permalink Reply by Freddy H on August 27, 2011 at 4:39am

I agree Nelson, as a kid they came around to my parents and said "sign up or you will lose out" no bonus, and little talk of royalty, and my folks said no thanks. Then about 20 years ago they came around again and said $20 an acre and a little royalty, and my folks said no thanks again. Now they come around and want the whole farm for $350 an acre and 1/8th royalty and our first reaction is, there must be something more here than meets the eye, we better get informed on what is going on. That started me down the path I am on now, and I am so glad we did. My neighbor who is part of a large family farm signed early with their lease and is now having some issues with the O&G Co. about well placement and royalties and land held with no production, etc. and looks like he is going to be on the short end of the deal. I feel very sorry for his family's predicament. That is why it is so frustrating to me to see such cases where the interests of the landowner get pushed aside because some cash is placed in front of those who could really use it now with promises that may or may not be met in the future with little recourse for the farmer or landowner. That's why I am for getting together to protect everyone's rights, and get the best agreements for both the industry and the landowners and try to make it a "win - win" for all.

  OK, I'll get off my soapbox now ... hehehe

Permalink Reply by Jon Henderson on August 27, 2011 at 7:55am

Freddy,

That is why a bunch of us  (18,000 acres) have grouped with KWGD and are going after this thing together. It has given us a very Landowner Friendly Lease and Large negotiating power. The sad thing is there are still a lot of landowners out there that didn't get into the group. Now we are pretty much closed up from anyone new joining and I know there are others that are just beginning to find all this out. The best thing I can say to people is learn all you can. Investigate and search the net for information and chat on this site.

 

That's it for now.

 

Permalink Reply by Nelson Roe on August 27, 2011 at 3:43pm

That is true... The current KWGD group is closed.  However that does not mean that they will not be starting another one.  Also, I am sure that there are other reputable groups out there.  Just make sure that you are comfortable with the terms of the lease as well as the people that are in the group with you.

Permalink Reply by Jon Henderson on August 28, 2011 at 12:49am

Anyone heard anything about the Little Indian Well? (I know that's not what it's called, but you know which one). I ran into an old aquaintance from 30 some years ago and he states he has actually been onsite. Says they have had about 40 workers out there all the time. Some actually sleep there (as we knew). Said that Chesapeake was spending roughly $100k a day on the well and of course some of that goes into our community. Why doesn't the news cover any of that? It's like nothing is going on around here. This guy says he has personally benefitted as have the local hotels.

Permalink Reply by Red Skelton on August 28, 2011 at 6:15am

Jon,isn't that the way it always is in this county, everything is a big secret unless it has to do with tourism. I'm sure one of the hotshots will come up with well tours or some such. This area should be very thankful for what this industry will do for the economy here. I've noticed the car dealers are already starting to stock more pickups. A sure sign of upcoming prosperity.

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