Is it time for a HBP landgroup ?

  With the huge number of acres in the Marcellous & Utica held by production & the old leases that go with them , the general concensus seems to be "you're out of luck", yet many of those old leases have unitization limits too small to suit the horizontal drillers. Why are these acres just out of luck ? Usually landowners are told, well they had to buy the lease from the current operator or JV with them, so no bonus or higher royalty for you. Let us rewrite your old 1/8th lease to suit us or we'll go around you. But if enough HBP acres combined & said no, we want a little something too, then would we not have at least some bargaining position ? Just a thought, opinions please.

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0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on January 9, 2012 at 12:56pm

Good point...   I think it is time that some attorneys showed up on this discussion and let us know if it is possible to do something..

Permalink Reply by Robert Bond on January 9, 2012 at 1:01pm

I can't see how it is possible for them to want concessions without giving anything.  The deep rights have no value if they can not be harvested.  And this can only occur by abiding by the lease terms.  So if one party wants to change it basically the whole thing should be looked at.  This is why a group of landowners sticking togeter have some clout.

Permalink Reply by Alan Pavlik on January 9, 2012 at 1:10pm

To suit us? Shouldn't it be we? They are not out of luck, they will get royalties from a well, If the landowner doesn't want to be drilled or placed in a unit then they shouldn't sign, and yes they will be left out because they will forfeit a possible big monthly payday from a well. There are too many leases that do have the 640 acre spacing to be drilled, I think it is irresponsible to suggest otherwise.

Permalink Reply by Paul Martinelli on January 9, 2012 at 3:30pm

oh sure.....we should just bend over and take it....

If they are paying X  for a new lease and buying the HPB leaases cost Y      then the landowner should expect to receive  X-Y

Those old leases all O/G companies to do anything to the land they want.

Permalink Reply by Alan Pavlik on January 10, 2012 at 7:55am

No..you don't have to bend over and "take it". Your choice is what I stated earlier, if your lease doesn't allow for 640 unitization and a company wants to amend the lease and you do not want to be in a well unit or have the well drilled then don't sign it and then they can not put you in a drill unit simply as that. You somehow keep forgetting that the landowner gets a royalty from a new well drilled. I can tell you this most of the wells drilled so far in the heart of the Marcellus play were on landowners who signed for $5.00 acre lease and 1/8th royalty. Those landowners have been drilled first, why? because their leases were ready to be drilled and did not contain unreasonable demands and you can ask just about any one of them would they rather have had the bonus first and then what several years before they would be drilled or get royalties very soon, I'll bet they would all  say i'll take the royalties. So if you consider that they "bent over and took it" guess what? Just about all of them would do the same thing again and be happy with the 100's of thousands of dollars they are receiving" each month" in royalties. I say this from experience!

Permalink Reply by Little Cougar on January 10, 2012 at 7:01pm

Alan...right on!!!  That is what I have been saying all along...look at those old HBP leases in Greene Cty...most of us all have new horizontal wells that we are receiving royalties on more then one well...and we didn't ask for the moon...some of us got a fair upfront and some of us didn't get anything.  I weighed all my options...and when they first approached me they were not quite ready to drill and I just told them to come back to me when they were really serious about drilling wells...and that is exactly what happened with my grandfather's farm that was HBP with a still producing well...and it gave me the time to educate myself and learn all I could without costing me my first year of royalties.  I have said all along, they are going to drill those HBP first because they know what they have...lots and lots of gas...the pipelines are already there to get the NG to market and it didn't cost them much to modify those old leases to allow for unitization.  And frankly, I found them delightful to work with after they got serious...

Permalink Reply by Alan Pavlik on January 11, 2012 at 11:48am

Little Cougar

Thank you, I believe people should stop looking at this with a  "us against them mentality."

You are a prime example of the good that can happen with the shale drilling in our region.

Permalink Reply by Mark Allen on January 18, 2012 at 10:42am

In Ohio there is a company that has been promoting this idea since early 2010.  Ohioacres4u llc, they are active throughout Ohio and West Virginia.  They have educational meetings set up by the locals,with speakers from each part of the industry with the focus on educating the public to the marketplace.  Lease language is something that the owner is strongly promoting as it effects his families farm and he has been fighting the system in order to help out all HBP folks.    

Permalink Reply by Michael Lawrence on January 18, 2012 at 12:22pm

well said.. amazing how ridiculious every one is regarding "pay me up front".. instead of ."lets get this done and work together.."

Permalink Reply by Billy Park Whyde on January 9, 2012 at 8:56pm

 Interesting idea for starters. A lot of the clinton wells are owned by small producers.  In some cases these wells were sold off to others, some with the lease, some without. Some had no unitization clauses. A producer can not modify the terms of the original lease on his own thus he is stuck in a rut himself. In some cases oversights are common place example,  if it was written into a lease you could buy a well at salvage price prior to plugging and it was plugged without your knowledge perhaps a lease could be broken. 

  A lot of possibilities, as a group the question would be could we find a law firm that would have a degree of integrity to work for a group Pro Bono.  

Permalink Reply by Michael Lawrence on January 18, 2012 at 12:18pm

good luck on finding any reputable law firm in this business.

Permalink Reply by Billy Park Whyde on January 9, 2012 at 8:56pm

  

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