Replies to This Discussion

Permalink Reply by Julsieg1 on September 22, 2011 at 4:36pm

Please don't forget to mention that BCLG is not working with every township nearby.  We are in Slippery Rock twp and attended one of your meetings only to be told that we could not join.

Permalink Reply by tomcats58 on September 19, 2011 at 5:37pm

1280 ac units are ridiculous, no other company is getting more than  a max of 640 acres. watch for them to drill a " test' well then hold that entire 1280 acres as HBP for the next 50 years with no further production. I feel sorry for anyone who signed that sort of lease without pugh clause protection.

Permalink Reply by Bill on September 20, 2011 at 11:08am

Actually the offer from Shell has a Pugh clause (at least ours does have the addendum added), and we are getting ready to sign.  I wonder - why would a company gather leases and HBP for the next 50 years?  What could they possibly gain, while others are drilling and selling gas?

 

Just a thought.

 

Bill

Permalink Reply by Julsieg1 on September 22, 2011 at 4:38pm

I can't imagine that a large company such as Shell will hold anything for 50 years without production.  All they want is to get the gas and make the money... if they feel that it's there, they're going for it!

Permalink Reply by tomcats58 on September 23, 2011 at 11:25am

absolutely they will. 1st they can state all their HBP acreage as an asset on their books  thus increasing the book value of the company and in turn it raises the stock price.

Secondly they lease 24/7 365 days a year all over the world they continually lose leases because they do not have the time to drill all they lease. If you are HBP you are not on their radar as a need to be developed area. Also the going flip rate for HBP acres on the international market is $30,000 per acre.

Permalink Reply by JMS on September 17, 2011 at 2:32pm

I have heard that infrastructure is the holdup...Looks like Ohio is going gangbusters...is that because the infrastructure is already in place there?  

I am glad to hear that leasing is on the upswing in our area.

Lots of negotiating going on with our landgroup, but not much else.

I guess patience is the name of the game. 

Permalink Reply by Terry W. on September 24, 2011 at 10:04am

And now with the news about the outcome of Rex drilling into the

Upper Devonian Shale.  Which is suppose to be under Butler County.

Shell is here, and they intend to stay and drill.  After they drill their

exploratory wells, then the infrastructure will begin, and can happen

fast.  As soon as the units are put together (up to 1280). could be 400

acres if they want...read the lease "production units shall not exceed one

thousand eighty (1,280) acres or such size as may be permitted to conform

to the rules and regulations........

Permalink Reply by tomcats58 on September 28, 2011 at 7:31pm

Ask any oil and gas lawyer if you should sign a lease that allows for units of 1280ac (about 2 square miles) I am sure he/she will tell you no as soon as they stop laughing.

Permalink Reply by Joshua Smith on September 30, 2011 at 4:22pm

But wouldn't a bigger unit allow them to drill more wells off the pad site? 

 

For example, 12 horizontal wells instead of 6?

Permalink Reply by tomcats58 on October 1, 2011 at 10:55am

No, the only function of larger units is to let producers tie up the maximum amount of property possible as HBP, (Held By Production). Smaller units force companies to fully develop what they lease.

Example: A vertical well according to most experts will drain roughly 40 acres once fracked even though most producers will require 80 ac to be held by a vertical. Some companies like Shell are saying that they can hold 1280 ac, (almost two square miles) with any kind of well. It doesn't matter if they drill a horizontal, vertical or even a shallow well. That is nothing more than an attempt to ripoff the land owners and hold as much property as they possible can with the least amount of investment.

On a 5yr lease with a 5 yr option, which is cheaper, drill a shallow well @ a cost of $200,000 and hold 1280 ac forever, or end up having to pay all those land owners a second round of bonus payments and then still having to drill a well?

They will of course deny it. They will tell you that they plan to fully develop the 1280 ac. Easy enough to prove, tell them to put it in writing.

Never, ever, accept what landmen tell you verbally. In a short time they are nowhere to be found and all companies will maximize the lease to their advantage.

Next the landmen will say, "why would we leave all those profits in the ground and not develop it?"

Here are 2 reasons:

First, currently the international market price for HBP acreage is $30,000 per acre. So they can flip at a great profit. Or entice international investment $.

Second: HBP acreage is considered an asset and listed as such on the companies books for accounting purposes, in turn that value is then reflected in a companies stock price. making stock holders billions of dollars.

There are states that won't even allow units larger than 640 acres. Pa will catch up but right now PA leasing is the wild west and they grab what ever they can as cheap as they can.

Permalink Reply by ann wolbert on November 13, 2011 at 10:17am

Terry,

My family owns undeveloped land in Clay Twp.  I checked with Pa Geological and was there is Marcellus and Utica shale on land.  How do we go about contacting a land agent?  Thanks

Permalink Reply by DKinPA on November 13, 2011 at 11:02am

Ann, certainly you can check with the landmen but I would suggest you do what many of your neighbors in Clay Twp have done and that is join the Butler County Landowners Group (BCLG).  It is a group made up of your fellow landowners to negotiate a fair lease.  You can send an E-mail to BCLG@zoominternet.net for more information.

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