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Permalink Reply by Craig Stull on November 9, 2011 at 1:00pm

Schnoozie, this is a real good discussion topic you started here. The man that told you whatever you decide, to get a good o/g lawyer, this man is your friend in my opinion.

There are some people on this sight that just want a piece of pie(your pie). My self I joined a non profit landowners group and right now I feel very fortunate to be in this group(alov 80,000 acres Trumbull county). Alov has a web sight and they have a math formula for two different leases. Check out it out and hope it helps you some. associated landowners of the ohio valley 

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Permalink Reply by Schnoozie on November 10, 2011 at 5:15am

Jim I have some more Questions?

Did you get paid yet? And is there a time limint to get paid?

If Hillcorp does not pay you on time, are you still held by the arrangement you have with Co-Exprise?

Did everyone sign at the same time since it was a group?

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Permalink Reply by Brian V. on November 9, 2011 at 5:00pm

The best lease bonus and royalty I have heard of for a "group deal"  was a Marcellus deal in Susquhanna & Bradford Co's ( the core of the Marcellus) negotiated by a group called the Friendville group who got $5000+/acre and 20% royalty. That group wrote there own lease and it has some wild language in it. I've heard that some terms have had to be ammended because they basically made the lease next impossable to produce. After that deal the offers in and outside of groups peaked out about a year later at around $5250 or so. Since then all offers have been much lower for any open land that is left. My point being, with everything I have read about this Utica play and its potential why are offers still not even touching even $4000/20%? If you look up other oil and gas plays across the country you'll find that 20% should be the going rate for royalties. I'm sure the current market conditions have something to do with this but if there is enough land being marketed it seems that $5000/20% is obtainable with what has been discovered thus far.

 

Schoozie-My personal experience was this. I sat back and waited for the big groups to get there deals and basically set the market. We have a decent amount of land. Once the card fell. I researched who held the leases around me. At that point I had sat in on enough meetings and done enough research (you can often find terms of many leases listed in the county courthouses) to know what was important for me and my land and what did not apply. (my issue with a group lease was that it did not cover the way my land is used). Basically the market was set. I knew what I wanted and I knew who the players were in my area (there were 3 major players) I contacted all three negotiated the terms I wanted, knowing what they had already agreed to with other landowners and groups and got my lease on my terms. The groups are fine and I appreciate what the good intentions they have for the most part. I personally don't care to have my lease dictated to me, or have a 3rd party get a piece of the action. I know a "group leader" who has banked millions on the claim of being a local farmer just looking out for neighbors. This person has swayed groups over to companies who this person had insider deals with and this person has even done contracted work directly through. Money does strange things to people.

 

Everyone has their preferences. If you feel pressured by either a group or a landman, simply step back and say I'd like out. Gather as much understanding and information as you can and when you feel ready to sign you'll know it.  

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Permalink Reply by Schnoozie on November 10, 2011 at 3:03am

This seems like solid advice, and I appreciate it. My township has not seen any activity in a very long time. We all hope that changes I just feel like I want to be in charge of my own lease and my own land. I did some more research on Co-Exprise last night and saw they split the acreage between two companies in their last deal, it was Hillcorp and Chesepeake and the M&P lawyer brochure I found said this, their site said the groups were closed, but they were still taking in the parcels of people who did not get in for a possible look.

I don't fault anyone for putting in the hours to organize these meetings, and all the legwork that goes into it. There is just something strange about the whole " we are looking out for your best interest, approach" then not letting you make a choice, the contract is pretty firm in that you will have to take the deal they get, or get left behhind. Which may be a good thing afterall.

 

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Permalink Reply by Schnoozie on November 10, 2011 at 9:09am

So you are saying you did not pay any portion of your bonus or a percentage of your royalty?

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Permalink Reply by Brian V. on November 10, 2011 at 10:35am

I have heard of a group getting a deal for say $3000/acre and the Oil and Gas Company paying $20-$25/acres to the attorneys and group leader who "brokered" the deal. Say the group is 10,000 acre by $25, that ultimately amounts to $250,000 dollars. A good years work if you ask me.

These groups are really land Brokers, much the same as a company that contracts a landman to represent the client that wants to lease an area. The way I understand it is the Oil and Gas Company contracts a "broker" to do title work and lease acquisition work. The "broker" contracts independant landmen to do this work. The abstractors and landmen make $200-$350/day while the "broker" bills the oil and gas company $25-$50 more than the independant contractors day rate to cover the expenses of the Abstractor and the Landman and the "Broker" services. If this true than really the heads of the groups should not be payed by the group but by the Oil and Gas Compan they steer the group to. IMHO

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Permalink Reply by oildude on November 12, 2011 at 9:03am

The leasing has just begun in Washington county ohio and the offers are already over $ 4000 bonus and 18.5% royalty ( in fact that was the first offer in my area). So does everyone think that the prices will increase as the available land is leased. If I can hold out longer than my neighbors will I be able to demand a larger price like the way regular real estate seems to work?

 

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Permalink Reply by Paul Martinelli on November 12, 2011 at 9:09am

depends.....

 

Just like other real estate.....location location plays a part.

It also depends on how many acres you have.

 

IMHO.......4K   and 18.5%  on a good landowner lease is good enough.

push it too far and you'll be on the sidelines watching the game.

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