Shell is backing out of leases in eastern Lawrence County

A guy my brother works with stopped over last night and told us after contacting Shell and inquiring where his money was, they tolf him they were cancelling his lease. He lives in Plain grove Twp., right off of 79.  They actually eluded to him they were low on money. What a joke. I still think there should be a law against this. If the landowner is bound the second he/she signs a lease, so should the gas company signing them.

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015334grltd9mPermalink Reply by 015334grltd9m on May 30, 2012 at 1:26am

Unfortunately, the energy companies have this right, in a window that the landowner agreed to.  In real estate lingo this is tantamount to "subject to financing."  "I will buy your house if I can get a loan."

Permalink Reply by Schnoozie on May 30, 2012 at 2:04am

What was the offer? The one he did not get. Was it $2,500 per acre? More/less?

Permalink Reply by Oliver Perry on May 30, 2012 at 1:33am

Lance,

Did you ever get paid from Shell? I have also heard that Shell has spent their budgeted money for leases in this area at least for now. I don't know if that is true or not.

 

Permalink Reply by Lance Nimmo on May 30, 2012 at 2:04am

Yeah, I did. It was Pine Twp., Mercer County. I think they figure it could be wet. I literally called down Warrendale every day until I got it. If it's true they used all of their budgeted money why in the hell is Long Consulting still signing leases?! They recorded no less than 50 leases at the courhouse in the past week. Out of money? Give me a break.

Permalink Reply by Lance Nimmo on May 30, 2012 at 2:08am

I agree it is a risky business, for both the landowner and the gas companies. The landowner is taking a leap of faith and putting trust that the companies are doing the same with them. I think if an operator can bback out of a lease at any time, the landowner should be able to do the same if a better offer from a different operator comes into a given area. Fair is fair.

 

As far as dry or wet, I am leaning towards dry. Cheeseman's well was super dry, but very productive. And as far as needing investor money to develop the area, I don't think that applies to companies like Exxon or Shell. Rex and other smaller guys, maybe.  Look up Shell's balance sheet and cash on hand. They don't need any help.

Permalink Reply by Lance Nimmo on May 30, 2012 at 4:00am

I understand that. What I'm saying it is a one sided relationship. It's like me telling my wife I'm going to the whorehouse, and I'll decide wether or not I want to participate. And if I want, I'll come home and be with her. 

PA needs a law, in my opinion, that protects landowners. None of this "option to lease" crap. If we the landowners are on the hook after signing the dotted line, then the companies should be as well.

Permalink Reply by Kathleen on May 30, 2012 at 4:38am
It's a problem in Ohio also. When we buy houses and do clauses like that we at least commit with a larger amount to hold that house until financing can be obtained and if the buyer cannot get the financing or moves on they lose that holding money within the timeframe agreed too. We were given 10 dollars by Chesapeake to allow them the 120 days (we were paid) I've never given less than a 500 dollars holding deposit for a house. That consideration money the oil co's gives should be higher if they want 90-120 days since backing out seems to easy for them to do.
I would think the lease bonus should be binding if it clearly states only if a title defect is found will you not be paid. Some lease language seems pretty clear in that clause. I know some say for any reason. Where are our legislators?
Permalink Reply by Brian V. on May 30, 2012 at 3:18am

We all know Shell and most all of these companies have a ton of cash, however that does not mean that they do not operate under a budget. A budget that is certainly subject to change depending on a variety of factors,  including surrounding well success or failure and/or gas market conditions. Most leases do contain language that the company can cancel the lease at anytime. There is also usually language in the Order of Payment having to do with a time frame for them to make bonus and rental payments. 9 times out of 10 they will make that payment. However, if the higher ups decide that they are changing directions they can cancel that payment. The thing that gets me is that when they are late with their payment they make every excuse in the book for why it is delayed and there is really nothing the Landowner can do to get out of the lease. The Landowner can usually send a certified letter of violation of lease due to non-payment in the time frame agreed upon which according to some leases gives the company 60-90 additional days to rectify the situation or cancel the lease. It is all such a complicated mess. I wish we lived in a world where a hand shake agreement would be acceptable and honored. There was a time when someone would tell you they would do something and you could count on there word. It's a sad how we treat our fellow human beings.

Permalink Reply by eric jenson on May 30, 2012 at 3:54am

Landowners in the western part of Venango County (Polk)  are being waylaid by SWIPI (flips for SHELL)  They were to be paid in late April.   But now have been told it will be July.  Why???  This is poor busines!  Thats Why one should never go more than 60 days.  It just gives them way too  much time to sit on you while they wait for something better to come along!  Only to dis you at the last second.

Permalink Reply by Schnoozie on May 30, 2012 at 3:58am

Noone has said what the offer was, I thin we did a smart thing by taking a lower offer to begin with with a company that actually has plans for the area.

 

Permalink Reply by Paul Blausey on May 30, 2012 at 4:38am

http://www.bloomberg.com/news/2012-05-30/chesapeake-valuation-seen-...

 

Here is an Artical that says Shell may buy out chesapeake... But no one knows. This could be why shell is backing out of leases?

Permalink Reply by Landowner Guernsey County on May 30, 2012 at 4:43am

Shell signed in Guernsey County which is in Ohio back in October and most people still have not been paid and our land is tied up because they have recorded the lease

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