Replies to This Discussion

Permalink Reply by James Truscott on June 1, 2010 at 1:28pm

We too are in southern Wyoming County and were told by Chesapeake they were not interested "at this time". We also talked with a rep from Dick Landowners Group who informed us that Chief and Chesapeake were "not interested in Wyoming County at all".

Permalink Reply by Robin Fehrenbach Scala on June 1, 2010 at 1:40pm

I am in northeast wyoming county, at the Lackawanna County line and just south of all the action.

The explanation I am getting from professionals in the business is that this area is too close to the anthracite region and the gas companies don't yet know where the line is that separates good drilling from not so good.

What we are facing is time. It will take a little while before the obviously good lands are drilled and they can then spread out to test the further reaches. While it doesn't mean we have good prospects or DON'T have good prospects, it is just that we are unknowns.

And even if, for some reason, the marcellus didn't pan out under us because it is overcooked or whatever, that wouldn't change the chances of being able to drill in other layers (as referenced in the article above.)

Permalink Reply by Sam Douglass on July 14, 2010 at 3:45pm

The 20% is OK but it does not seem likely that there will be serious drilling in the Marcellus to generate a lot of that royalty for a long time. The lease is probably for 5 years and the bonus or advance rental [that you will pay taxes on] is $3750/acre or $750 a year opposed to say a $5000/acre or $1000 a year,

Chesapeake probably has better places to drill that Butler County for awhile - places where the Marcellus is a little thicker and the infrastructure (pipes and plants to process the gas) are in place.

As someone said on this web site, in order to hold the lease after the 5 years, the operator throws your acreage in with other acres to create units of over 800 acres. Then a couple of wells are drilled in the unit to hold the lease with production and they move on.

If the lease includes shallow gas in addition to the Marcellus, the producer may be able to hold all the leases in the unit by just drilling a minimally productive shallow well in the unit. Pay day comes later. When writing the lease consider what strata you want to include. [And maybe provision should be made so that it must be a Marcellus well to hold all of the leasehold.

Remember that there is enough Marcellus to keep the producers drilling for 20 or 30 or maybe 40 years. And recently they have discovered that in many areas they will be able to drill horizontal wells and frack in very productive tight strata immediately above and below the Marcellus - from the same Marcellus drill pads. Maybe the drilling will be going on for 50 or 60 years or more. Will you live that long?

When will they get to serious drilling involving your property? Who knows? But if they are going to tie up your land beyond the initial 5 year period with minimal operations, it may make sense to ask for a minimum royalty to be paid annually after a certain point in time so you do not wait forever for your money while they sit on your reserves. Those minimum annual payments already paid to you might be credited against royalties in excess of the minimum in any one year until the producer earns back the minimum.

sam

Permalink Reply by Janet Hall on July 15, 2010 at 8:47am

Sam, how to they put you into a "unit". If your lease is just between you and them, how does that work?

Permalink Reply by Sam Douglass on July 17, 2010 at 10:11am

Old leases did not always have a pooling and unitization clause. You can bet that any current lease has such a clause which is necessary for lessee to operate in the Marcellus. Where and how a Marcellus lessee operates rarely can follow property lines. The horizontal drilling is done pretty much in rectangular patterns underground without regard to property lines. So you get rectangular units of 400 acres or more. And the drilling must hit the shale from a certain specific direction to get the best recovery [because of how the shale is naturally fracured in a specific direction].

The lessee has limited choices as to how and where to drill. Properties must be unitized or pooled so that the operator can ignore property lines and effectively recover the gas. The lease clause allows this.

Permalink Reply by Jack on July 15, 2010 at 7:45am

there are a couple of landmen going around offering 6000 if you sign withthem. they will negotiate it to o&g companies and take the increase oer the 6000 fortheir fee. be patient, it is just starting.

Permalink Reply by Janet Hall on July 15, 2010 at 8:38am

Jack, I agree. In TX in 2008 they were getting $25,000 an acre. I don't think we've seen the end of big lease $$, it's just beginning.

Permalink Reply by James Truscott on July 18, 2010 at 2:36am

Where and what time will the meeting be, and is it for a certain landowner's group?

Permalink Reply by James Truscott on July 18, 2010 at 7:12am

Thanks for the info, is that the building on 92? next to Bartron's? Is this for landowners already signed? and what is the Kalinowski coalition?

Permalink Reply by Robin Fehrenbach Scala on July 18, 2010 at 7:24am

Yes, that's the one. I will be there too.

Permalink Reply by Janet Hall on July 20, 2010 at 9:14am

Hi, I had another meeting last night and couldn't make this one. We are signed with 1 1/2 left, but wondered there was any new info on what offers are being made, if any companies are still signing.

Also, does anyone know if there is a "pooled" unit for the Vernon well? Does the gas co. have to notify you if they are pooling?

Permalink Reply by Jim Schildt on July 20, 2010 at 11:32am

I was at the meeting in Tunkhannock on Monday evening and there was no indication of any new offers at least that they would talk about. The meeting was lead by the Wellspring group whose goal is to match up landowners with G&O companies. They seem to prefer to deal with landowners on an individual basis rather than as a group. They group landowners together where and when they can. I am still waiting for a response from them so I don't know much more than that.

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