Replies to This Discussion

Permalink Reply by Oliver Perry on June 18, 2013 at 8:28am

FMV,

That would be the REX Lynn Unit. The 3H & 5H laterals have a spud date of 1/10/12 but it's possible they are just now fracking the wells. REX was just issued permits for "Alternate Waste Management Practice" for the 3H & 5H. I don't know what that is, but maybe it has something to do with the handling of fracking waste. 

I don't believe the rig is used in the fracking process. Maybe they waited to do the fracking until the pipeline was closer to being able to move the gas to market.

REX is in the permitting process for the "Lynn to XTO Pipeline", not sure what that is.

http://www.ahs.dep.pa.gov/eFACTSWeb/searchResults_singleSite.aspx?S...

Permalink Reply by FairMktValue on June 18, 2013 at 9:12am

Oliver,

That would all make perfect sense. Lynn to XTO would probably means they are going to XTO's processing plant about 1 mile and a half away. Also saw a bit of surveying activity along McAlmont Rd. Waiting to frac the well till they can sell the gas is a common way to conserve cash till they can get a return I would think.

A Butler Eagle article I read a while back when XTO opened the plant gave me the impression that they were only going to process their own gas. It did not really ring true at the time given how many wells and potential wells are close by. The plant has plenty of capacity and the ability to add more.

Just looking at Google Earth around that area you can easily pick out a spider web of pipelines with the well pads looking like flies caught in the web.

Butler Co is going to be a hot spot, just the beginning.

Permalink Reply by New Field Farm on June 22, 2013 at 9:32am

I'm told plans are to add a unit in the location, see existing lat's/lon's below.  Also, offer is from a driller.  Back in 2007, wells were drilled around my property, no bonuses, free gas, 12.5 royalty.  Landman back then said fracking but if so, my thought is the wells were verticals only, no large pads.  DEP reports don't seem to me, to indicate significant production.

existing wells in vicinity:

40.762822,-79.690782
40.760266,-79.689615
40.771208,-79.686823
40.769477,-79.683465
40.768025,-79.675845
40.762961,-79.673559

I would also think deductions should be lower if close to a processing station.

Permalink Reply by New Field Farm on June 20, 2013 at 10:09am

FMV/Oliver,

Great discussion and FMV, I think you are spot on with your comment that most do not know the value of what they have right now and we have only scratched the surface.  I'm having a difficult time deciding on a 5/5 offer at 15% with deductions.  I mean I'd feel taken advantage of if I sign only to find the true value at 8K/acre or something in 5 years.  My attorney has said up the royalty or go no deductions however the G&O says they are firm.  I'm two thousand feet or less from the Butler county line vicinity Moorehead road, Saxonburg and so I'm curious about the butler plays. 

Permalink Reply by Oliver Perry on June 20, 2013 at 11:02am

I don't think you could ever up the royalty % enough to cover the deductions. Some people in Bradford County are losing 1/3 of their royalty check to deductions. 15% is not too bad, but only with no deductions in my opinion. Good luck in your negotiations.

Permalink Reply by FairMktValue on June 20, 2013 at 5:15pm

http://gomarcellusshale.com/forum/topics/just-curious-has-anyone-ha...

NFF The link above should take you a discussion I started in the General Shale Discussions.

The is some info in there that may provide you a little ammo in negotiations.

By 5/5 I am assuming you mean 5 thousand/acre bonus 5 yr term.

That is the highest I have heard in this area. Best I have heard is 3,500 ,18%. Although I believe Clinton Twp was offered in the 4,500 range (story in the Butler Eagle, I need to see if I can find it.) I also have been told that Rex agreed to 18% no deductions. Pretty reliable source and I am going to look at the actual lease to confirm.

I believe the no deductions is the most important thing at this point.Long term - even without a lot of acreage-could very well be where the real money is at.  It very well may be at 8K in 5 years, but who knows.  The true value - who knows - w/the 4 stacked plays it really may be as much as 20K.

Personally , If I was offered 5/5, 18%, no deductions, non surface, right now, I would take it.

That said, I do not think there is a need to to be in a big rush, but I am looking to get it done in the next year or so. If I cannot get the right terms and conditions I will wait them out.

The infrastructure is starting to settle in place and if gas prices can get to even 4.30 -4,50 I think you will see things pick up considerably.

I need to go and post on the other thread . Cheers.

Permalink Reply by New Field Farm on June 20, 2013 at 8:18pm

FMV,

Sorry, no, 5year/5year, 3k/3k, 15% with deductions.  Good advice, thanks.

Permalink Reply by Oliver Perry on June 21, 2013 at 5:43pm

I believe the highest offer in northern Butler County by Swepi was $3250 & 18% no deductions. Many people signed for that and it's what I was offered and accepted until they inexplicably pulled the deal out from under me a little over a year ago.

Swepi is currently leasing only near existing & permitted well sites. I don't know what the current terms are, but I would appreciate it if someone that has leased recently with Swepi would care to share what they signed for.

Permalink Reply by FairMktValue on June 21, 2013 at 6:56pm

Not a bad offer Oliver. Pretty close to what I would take for a non surface lease.

Rex did somewhat of the same thing to me. I was very close to signing for $3000 & 17% - deductions still on the table. That also was a little over a year ago.  Then the disappeared  till about 4-5 mo ago.

The landman came strutting in with a pretty smug attitude. "We got ya surrounded"he says.  Well I already knew everybody around me except my next door neighbor had signed w/REX.  "OK- so what" I said." Whats your offer?"

He puffed up and said " $1500 non surface, $ 2000 surface, 15% net".

I laughed so loud the windows rattled. "OK gimmie the real #".

"Thats it, we are just trying to clean up some loose ends. We are good to go with what we got".  Ya, maybe you are, funny though how you still want me to sign, I am thinkin.

Go for it buddy, drill around me. I say.

Well then he gives me the "your gonna lose out spiel".  No dice, come back when you are serious.

He has been back, upped it $500 - he will be back again.

Between my neighbor and myself we have 27 ac smack in the middle and oddly shaped enough to be in the way of the NE/SW angle they like to drill. Also there is a pipeline staked out right along my neighbors property line. Hmmm.

Well, we shall see if they really need me or not. I am bettin they want every sq in they can get. And as I have posted, REX has signed for $3500 and 18 gross nearby.

I know my long story there don't help you w/Swepi Oliver but maybe there is some value in the fact that Rex is coming back to better $$. Different companies-different plans. When they get close enough to you I think you may see a decent offer.

Just a side note - REXs "stacked pays" have me thinking to be a bit more "hard nosed" about signing. Even just as a lever on the no deductions and maybe an extra $500.

Cheers

Permalink Reply by Oliver Perry on June 21, 2013 at 8:59pm

Eventually Swepi will need me to round out a unit when they get around to drilling my area, I have no doubt about that. The longer that they wait, the more I am learning about these stacked plays. Swepi is also very interested in the Burkett Shale since they have at least a dozen permits to drill it at various sites. And I will not be leasing for anything less than what I feel are fair terms.

Permalink Reply by FairMktValue on June 21, 2013 at 9:52pm

" And I will not be leasing for anything less than what I feel are fair terms."

AMEN Brother !!!  LOL

Oliver ,you are a guy that does his homework double overtime. I ain't just blowin smoke. Your posts of plats, units, permits, ect. are extremely valuable information. You do a heroes job of digging out so much of this information that most of us don't not have the time or expertise, or are too darn lazy to try. 

Before I go on a rant (which I most likely will do at some point) about how most landowners do not have a clue what they have, I want to say thank you for puttinup  up that great info !!

Better info - better decisions!

Cheers

Permalink Reply by New Field Farm on June 22, 2013 at 8:20am

FMV/Oliver,

Agree, you guys contribute good info.  I too am learning more every day.  I guess I didn't understand until just days ago the proposal offered to me is indefinite so long as they operate which.....once pulled into a unit, that constitutes operations.  So, the offer is for all plays forever, no pugh clause.  And having seen posts stating that deductions can be as much as 1/3 royalties, that effectively drops below state minimum.  The more I read and learn, the more I want to wait out 5 more years.  

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