Replies to This Discussion

Permalink Reply by mike4t on December 6, 2011 at 10:23am

ALL PRAISE JOHHHNY !!!!!

YOU ARE THE ALL-KNOWING SOOTHSAYER OF THINGS TO COME !!!!!

Can you give me tomorrow's lottery numbers??

Or better yet, tell me when I should sign my lease and for how much??

Permalink Reply by DKinPA on December 6, 2011 at 1:39pm

Well, actually many of those landowners have joined the Butler County Landowner Group (BCLG) which has continued to grow because landowners recognize the benefits of a group but they don't like the HUGE fees imposed by these attorney run groups.    They want a group that is run by their neighbors who have as much to gain or lose as they do and will still be here when it is all said and done.

Full disclosure?  BCLG charges a flat $25/acre fee and landowners realize that the benefits far outweigh $25.  If a landowner doesn't like the lease he doesn't pay......simple as that.  In addition members of the group recieve information on a regular basis so they don't feel like they are on an island by themselves defending against the landmen.  Maybe the landmen don't like that but we are here for the landowner!

You can learn more at: http://bclg.org

Permalink Reply by Janice L. Hancharick on December 7, 2011 at 5:14am

Are  the comments made thus far supposed to allow me to better understand the ebb and flow of the Marcellus/Utica play as it evolves in my region, and how the resulting actions are reflected across the world energy markets?  They should. This sight is for learning not blowing off steam. Monitoring just our own backyard action, and counting on neighbors to help with business decisions that will have consequences for decades throughout the US, and all countries with expanding energy needs ... does that seem reasonable?  Numbers are more than what is @ the top of a lease, or the cost of a group getting the best lease possible. Think terms, think longevity, think environment, think lifestyle ... think about the repercussions of NOT  THINKING. 

Why wouldn't a group advertise (Johnny referred to it as disclosure) its lease to everyone?  Does that happen in a car dealership? Does the saleperson (perhaps its your brother) announce to all customers the deal you're getting?  Some negotiating ploy that would be!  He'd be shooting himself in the foot! ... just as groups would be doing if lease terms and conditions were advertised publicly before negotiating was completed. 

 If each group has worked to establish its own preferred terms suitable for its region, understands that the legal-ese must come from experienced gas/oil professionals, and has set a reserved bid amount for $$$ and %, then that group WILL get the best deal possible.  To make everyone feel secure include a rule that states anyone not pleased with the final lease document, as agreed upon, can walk away.

Any individual or group contemplating signing a company lease should re-consider. 

The ABC's of leasing would be better understood if signers realized the companies want them to focus on what's IN the lease, and NOT on WHAT'S MISSING!

Who do you know who's able to go "toe-to-toe" negotiating on your behalf with Chevron, Range, Mobil, Shell ... or the smaller energy companies that will flip that lease to them?  Again I suggest ... think. 

Permalink Reply by Johhny Jacobs on December 7, 2011 at 10:05am

Ms. Janice,

The terms being asked to be disclosed are not the Lease/Addendum that will be negotiated on behalf of the 'group'; rather the costs associated with being part of this 'group'. Disclosing this would reveal exactly how much the members of the group are getting taken advantage of....think. 

So I get my property COMMITTED (or walk away at a fee) to your group XYZ...you get a great deal for the 'package' you put together involving my property from Chevron, sell the 'package', but all of my neighbors were signed with Shell or Exxon. Now I have no chance of seeing production, unless these otherwise adversarial companies decided my property is so important (in a state without forced pooling) that they need to negotiate....think.

Talk to your neighbors, talk to a versed lawyer, working for you alone (and not taking % of bonus or royalty), wait for a price your comfortable with (reference Tioga County, if you think price only goes one way). Sign a contract. Skip off in to the sunset......think.

P.S. I always get screwed at car dealerships....guess I need a relative running it to get a fair shake.

Permalink Reply by Janice L. Hancharick on December 7, 2011 at 4:09pm

Sorry about the car! 

Actually companies that are adversarial  in their attempts to get you to sign, are not that way about late-signing donut-hole parcels once the dust settles.  They often decide that whatever driller has the bigger area to develop, go ahead and begin the drilling process on the entire unit (however that has been mapped out between them).  EX. My unsigned 30 AC parcel is surrounded ... or nearly so, by a company that has already closed negotiations in my region. Now I'm sorry that for whatever reason I couldn't be a part of that deal ... perhaps my old lease expires finally. Another company has the next production-unit size group of parcels just over the hill.  It's quite reasonable for the second firm to offer me a lease, probably not as good as the one bordering my property but definitely better than what I had!  Financially it makes good sense for company #2  to have company #1 develop my 30 AC along with the rest of the unit, and send them the bill for the labor.  #1 will make $$ whether it strikes a payload or not, and a portion of the payout if production occurs.  Company # 2 is taking a chance, but there is an element of chance in every well and #2 knows that with any company profit to be made it will get the lion's share.  Me?  I get whatever my lease dictates regardless. 

This scenario plays out all the time.

From your early statements, I gather that you are either against "just" compensation for Expert and Experienced Services in this field, or believe that Neighbor Ned can accomplish anything!  If you ever need dentistry done, please don't go to Mr. Door-Knob!

Seriously, too many OGM owners have signed for $$$ they felt "comfortable" with and have grossly under-estimated the value of what they have ... only to find that out too late.  May-be Marcellus and/or Utica are super in your area, may-be not.  But every year companies learn more about our sub-surface resources.  There ARE other shale plays underfoot.  Rein in what you're willing to sign away, and expand what your lease states beyond $$$ and %.

Good luck from the 4-County Leasing Group!

Permalink Reply by James Brink, Esq. on December 8, 2011 at 8:29am

WOW! A Beast?  I assure you that I do not have fangs or an eye in the middle of my forehead.  We at ShaleAdvice have no intention of holding anybody's land hostage.  We'll leave that to the gas company with a 10 year lease and a 5 year extension under their purported "Pugh" clause.  Yes, our fee is a percentage of the bonus, but that includes legal representation for years to come.

As far as a percentage of the production royalty, yes, that part WAS true.  We added that provision at the request of landowners who felt a need to pay for an extended period of time to guarantee continued representation.  However, this provision has been removed from our agency agreement, so there will be NO production royalties owed by the landowners.

We would never refer to any of our clients as "morons."  As with any complex business issue, there are folks less informed than others.  Our expertise is explaning the terms of the lease so that the landowner truly understands its meaning.  Indeed, we have taken many calls from landowners after they have signed a lease asking us to explain it to them.  Unfortunately, it is too late then.  More important, when the dozers show up, we will be there to assure that the terms of the lease and addendum are followed to the letter.

We will be at the Scrubgrass Grange Hall outside of Clintonville next Tuesday, December 13, at 6:30 if you want to make sure we are not the beast as described.  I believe you will find that our true interests lie with you, the landowners.  Hope to see you then.

 

Permalink Reply by Joe on December 15, 2011 at 8:01am

Does anyone have any information on the Dick land owners deal?

It seems the deal is not quite finished yet. They claim to have 3000 plus acres signed. Now I understand that out of the goodness of their heart they're going to rebate 5% of the 15% fee on the signing bonus. Has anyone seen and have an opinion on the lease and addendum? With 3000 plus acres signed and who knows how many considered but didn't sign, surely someone's had an attorney look at the lease. If there's an attorney that's familiar with this lease let me know your fee for your expert advice.  

Permalink Reply by Janice L. Hancharick on December 15, 2011 at 11:42am

I am aware that more than one A+ att'y has looked and tweaked this lease to suit the Group's clients a.k.a. the contract signers, Group members, etc..  Based on comments made months ago by other Groups these people have successfully put together and represented, there should be happy folks walking away with a good lease this time too.

Permalink Reply by Joe on January 4, 2012 at 9:27am

The Dick land owners group claims to have 7000 acres signed but, I can't find anyone who has signed in Butler co. I'll ask again does anyone have any info about the lease. Is it a good deal??

Permalink Reply by Janice L. Hancharick on January 5, 2012 at 5:29am

Joe, It is possible to have 1,000's of AC signed w/o one person living in the area.  In the 4-County Group the biggest OGM holders signed live in FL, CA, CO,TX, ME, MI ...   You get the picture.  Not all of these people have been able to attend a meeting, so to accomodate them we've held lengthy phone conversations, web-ex meetings using phone and internet.  If you are absolutely unable to attend meetings and want to learn about the lease, call Ken Dick.  Have in mind what you consider a "good lease", certainly one that has more than #'s , and ask what makes his group's lease good for the landowner.  I'm sure this approach will get you the answers you need.