ALOV and Northern Trumbull County- Updated Discussion to include BP Lessor's and Bonus money Payment's

Hello all!

 I have been doing a little research and speaking with friends and neighbors about forming a group to address the needs of those of us not yet represented by a landowners group.

This led me to call ALOV after hearing that they had accepted some acreage in Trumbull county.

I paid little attention to ALOV earlier as their website did not list Trumbull county as an area of interest, although the work they were doing was certainly of great interest to me.

 From what i gather there was a cut-off of June 30 for sign-up with ALOV, they extended that and also had a meeting at RD banks Chevy in Champion. This may not be news to some of you, but i had not come across the posting until after. The word i got from an individual at ALOV was that Chesapeake set a northern geographical cut-off in Trumbull county of St.Rt.88, again this may not be a newsworthy flash to some. Many landowners attended, more than expected according again to a source at ALOV, and signed up their acreage.

Now heres the news, ALOV has agreed to start a "Waiting List" of still more interested parties from areas north of St.Rt.88. If you call them with name, address and phone number they will put you on the list, and depending on level of interest, they may choose to represent us as a group in a similiar fashion, with the same or even better terms to Chesapeake, or another interested party.

So call up ALOV, their number is listed on their site www.alov.us , and ask to be included in their next go around. From where i stand why re-invent the wheel, they already have done the groundwork and have the attention of the industry on favorable terms, lets ask them to either start another "Pool" to include us, or come work with us to the same end.

If you have information to share, please join in the discussion, Thanks 

 Hello again to all my fellow Utica Shale Owners. I Just stopped in to ask if there were any who signed with BP from the ALOV Northern Trumbull county group, that resulted from these efforts, still around.

Has anyone had any conversations/correspondence from BP concerning title defects, or other issues that would delay payment or affect your lease, or gotten a check for Bonus money? 

 

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Permalink Reply by KLB on July 26, 2012 at 3:41am

I am not suggesting that anyone lied or even made a misrepresentation to anyone during this process.  My comments are just that as both a landowner and an attorney that the title issues are very complex and fact intensive.  There are many many many old leases in the record that were not released when they expired by their terms and probably nearly as many that are HBP ("held by production").  One would expect that this latter category of landowners would know they have a problem since some level of royalty payment should be being tendered to keep the lease in effect.  However these old leases were written by the energy companies and generally signed carte blanche by the landowners at a time when the primary motivation was "getting the free gas."

 

In my personal circumstance, I thought I was fully unencumbered as our property had been in the family for 4 generations.  However, during a sleepless night after meeting with some clients who also thought they were "golden" but out of an abundance of caution wanted to check into their title; I searched and found that a lease was signed by my grandparents in the late 1950's, which was released, and another that was signed in the 1970's that was clearly expired by its term of years but never released of record.  I spent much of the next two days running down the proper land manager at Atlas Energy to look into why the lease was not released, preparing statutory demand letters to utilize the lease forfeiture statute (ORC Section 5301.332) and praying that I could get this cleared up before ALOV came up with a Lessee.

 

In the end, Atlas released and indicated that this was "one that slipped through the cracks"; but how many like that are there?  In addition, during my research of the lease that was a potential encumbrance on my land, I learned that Atlas had given a blanket assignment of all the deep rights it held vis-a-vis old ONG leases that were HBP to Chevron.  I spoke to the Chevron land manager, who was extremely nice but who stated bluntly that he had no idea whether my lands were in the 15 to 20 bankers boxes of leases that he had just gotten or not, but that if it was that Chevron would not release without a significant fight, including possible litigation.

 

I hope that these types of clearly expired leases are "overlooked" by BP; but given the money that is at stake I am not sure that they this is likely.  BP certainly will not want to move forward with a lease where there is a potential for another company to assert a priority interest.  My point of all of this was to speak to the issue of why is this taking so long and why do they have to go back so far and not to scare anyone.

 

Finally, I am not sure that anyone ever promised that the 60 day cure window would be sufficient to address any title defect, but in my experience with addressing old ONG leases that are not HBP (like my example above) it takes a minimum of 75 to 80 days to implement the Lease Forfeiture contemplated by the statute and any litigation that may become needed with be measured in years.

Permalink Reply by KLB on July 26, 2012 at 3:52am

I have interacted with some of the lower tier players that are looking for immediately drillable tracts not to be bulk landholders; these companies and I suspect to an even greater extent the big players "horse trade" their HBP leased lands all day long.  Once the unencumbered lands are in their collective portfolios they will trade among themselves to build out the drillable units.  The HBP landowners are not out of the picture; they are simply bound to the terms of the old ONG leases that encumber their lands.  Specifically, no bonus money and whatever royalty percentage the old ONG lease provided, which was usually 1/8.

Permalink Reply by Billy Park Whyde on July 27, 2012 at 8:58am

Well it all depends the lease an a FLAT OUT NO  can put them into the drivers seat!

Permalink Reply by Sage59 on July 31, 2012 at 3:52am

Hello Fang. I have read your posts with interest, as you seem to have a good knowledge of the business and are straightforward in your opinions. I'd rather have an honest and painful answer than someone blowing smoke. I think a growing number of us in Trumbull Co that signed with ALOV have begun to realize that we may be HBP for a myriad of reasons. We have a well that is capped and abandoned on our property, but have found out recently that there may still be some problems. Paranoia grows with each Fed Ex truck that passes without stopping. Do you think we have any leverage at all, if our land isn't cleared, in the fact that our old Clinton leases only allow for (in my case) 80 acre drilling units, and they need at least 640 acres. Is that in your opinion a place for us to lever things like better percentage and possibly a signing bonus with the existing company, or will they be able to just steam roll us. I have been talking to some friends and neighbors, and said I would throw the question out there. Any one else is welcome to chime in on ideas also. Thanks in advance for any ideas or opinions.

Permalink Reply by tomvargo706 on July 27, 2012 at 6:17am

I wonder if BP even sent any checks this week.  Its been quiet for a while. 

Permalink Reply by Debby Melvin on July 27, 2012 at 8:51am

I have talked to a couple of FedEx drivers from the area and they haven't heard or seen anything.

Permalink Reply by Debby Melvin on July 31, 2012 at 1:50am

Has anyone heard anything concerning either the checks being issued or what is going on?  It seems that something is going on...yes, I know the title search is a long process but this is getting ridiculous.  It seems that maybe this project is dead in the water.

Permalink Reply by Steven Kacerski on July 31, 2012 at 2:31am

I heard BP reported a $1.4 billion loss for the 2nd quarter.  No news on the checks.  They legally still have two months to pay for those who signed in April and three months for those who signed in May. 

Permalink Reply by Debby Melvin on July 31, 2012 at 3:28am

Well, if they are going to back out, I wish they would be up front about it.  Maybe it would give some of us the opportunity to shop around for another company.

Permalink Reply by tomvargo706 on July 31, 2012 at 5:57am

I doubt they will back out considering they just did a big press conference about drilling in ohio and how many jobs they will create here.

Permalink Reply by Steven Kacerski on July 31, 2012 at 6:28am

Agreed.  It wouldn't be very good PR for them.  It takes time to go through 1500 to 2000 landowners title work.  I'm sure they're trying to do the job as quickly as possible since it is costing them money to have 100 people or so at the recorders office digging through title work. We were all told at the March meeting it was going to be a monumental task, which is why ALOV gave BP 180 days instead of 90 days to complete their due diligence.

Permalink Reply by Steven Kacerski on August 1, 2012 at 2:39pm

Fang,

How do they actually have until november and december without requesting an extension?

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