AGGREGATING ACRES IN COUNTY-WIDE GROUPS
Putting several large OGM holdings together to market as production units for shale fracking in more than one shale layer is smart business for landowners and companies alike. In spite of the better leases ($$$'s and protections) achieved by the landowners, companies also come out ahead using technology and single action deals for thousands of acres without creating "bad press". In case you haven't noticed, creating "bad press" isn't in any company's best interest. County-wide landowner groups have become "the norm" in recent years ... different from smaller groupings of landowners within a township.
Seeking the most for the least and can easily be achieved when dealing with a small group, but with minimal lease benefits for the landowners. If Leasing By Itself is all a few landowners are looking for then going this route may be a temporary fix for immediate financial problems. It's unfortunate when people find themselves in this fix, but there are always companies willing to help these folks out.
Misunderstood by some is the concept that a county-wide group will be able to deliver the same $$$ for all townships simultaneously just because of it's size. Companies definitely look @ size, but also important to them is each townships geology and infrastructure, and the depth of company pockets in a specific business quarter. What product from the well will be most marketable when the well reaches completion ... a time frame that may not be a long as it would seem?
The point here: county-wide groups achieve more for their members due to size, but the time-frame is likely to differ from one collection of 3-4 townships to the neighboring group of townships. AGAIN it is the geology, the infrastructure, and the market that drives the timeframe of a deal.
County groups choose to highlight the best their regions have to offer, including the population's pro-drilling attitude when leases are environmentally and owner friendly. If this massive marketing effort isn't done by experienced firms with an established footprint in the energy industry, then resources won't reach their full potential to improve landowners and a region's financial future. Whether a person's acreage is sitting atop a diamond field, a gold mine, or natural gas/oil deposits, not having it marketed and developed the best way possible is simply a waste on so many levels.
This is why county groups are formed & how they deliver.
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Replies to This Discussion
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Permalink Reply by Craig on
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If it is CX, for whom Janice works, their cut is somewhere between 6% and 8%. And for this, CX really does nothing other than tie up someones land for 6-18 months so they can gather other acreage and "sell" it when they don't own any rights to it, and have no idea of the mineral ownership underneath it.
Some of the flippers at least were paying the leases they took and then turned around and sold them after doing the title and taking the risk, but CX takes no real risk, yet their deals fall apart just as others do, so "having an energy industry 'footprint' " is not so advantageous. They are good marketing guys but don't really know the energy industry - they have gotten lucky and been in the right place at the right time, and done some good negotiations at times, but nothing that I havent seen landowners do on their own, if they stick to it and get some advice.
Janis put together a group, called the "4-county group" starting back in 2007. They are still unleased and not drilled. That's problematic for me - I know they wanted to get top dollar, but just because lease bonuses are 2500-3000 per acre 30 miles away does not mean they will ever be that in your area. And, if we look at opportunity costrs of money - well, 500/acre in 2007, would have been much better than 0 in 2013. even if they do get 3000 per acre in 2014 - what could 500/ acre be made into in 6 years? In the past two years, farmers in PA had the opportunity to make 30-100% on some monies invested - there was risk, but I know it could be done, for I did it.
I would rather have 1500/acre than wait 2-3 years for 3000/acre, for I get to control the monies in the meantime, and often can make that difference up, especially when you factor in the increase in taxes, the opportunity costs, etc.
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Yes Bob, it does appear to be the same person. Janice Hancharick. She/her family owns some land in Mckean County on the border of Potter, and possibly some in Potter County. She started a group up there, using a guy that works for the state of PA and sidelines as a group marketer - didn't work out well - no leases, and I don't think she was going to get a cut. She has invested a lot of her own time, monies and efforts into getting the group together, but just because someone has pull in a community, does not mean they have good discernment when dealing with Oil and Gas issues. The same thing is happening in Crawford County right now as well.
There are multiple marketing companies in the county, and if a big landowner signs up with them, then the others follow suit, and then companies leasing land find someplace else to go, since the marketing companies are really looking out for themselves - they have to have enough acreage to make big dollars on the 6% ot 8% or even 10% that they take off the bonus for doing not much.
The landowner agreement says there is consideration - well, at the end of the agreement, what does the landowner have? If no lease, then NOTHING, doesn't sound like consideration to me, sounds like just another way for someone to dupe the landowner.
If I were to sign with one of these companies, I would at lease want them to run title and, if they did not get a lease for me by the end of the six months, then I get a copy of the title run, and they get the boot.
Based on what I know from abstractors in the courthouse, most get 300/day, and they say it ususally takes 3-5 days to run a title chain. This does not include the time needed to clean things up, or find documents to clear up items, but at least that way, I would get some consideration worth 1200 dollars or so.
IMHO - people wil do what they want to do - I had some long conversatons with friends following a landowner in Union township, and friends listening to marketers in East and West Mead, to no avail, and they signed with the marketers - some over a year ago, and have no offers through the marketers, but they all turned down 2500 to 3000 dollar an acre offers that knocked on their doors, because the marketers told them there would be more monety coming. Go to Crawford County pages and they are talking about all they here now is crickets - no one leasing. That worked out well, yes?
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"Frankly, county-wide groups simply enrich the lawyers, brokers and channel partners that push them. "
This. County-wide groups give landowners the "one size fits all" option and ignore the fact that some landowners want different things from their lease.
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The. "One size fits all' is not an option that makes sense. General lease terms for all encompass terms and regulations mandated by gov'ts.. Like them or not, such lease wording cannot be over-ruled or ignored by individuals. They are what they are. ALL county groups are held to terminology over which they have no control.
At each 4-County meeting individualized options are discussed that allow for special wording as needed. Sugar-bush operations, Christmas tree sections, a stand of valued timber or specialized crop fields are excellent examples of WHY we expect some lease wording to be altered. These are valuable resources that don't have to be bull_dozed by drilling operations. Painting the picture that "different" wording can't exist in a county group is totally misleading.
The final option OGM holders have while contracted professionals are doing their jobs, i.e. marketing and negotiating the best leases possible, is to Not Sign the Lease! No arm-twisting here, just an exercise in common sense.
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"Like them or not, such lease wording cannot be over-ruled or ignored by individuals. They are what they are. ALL county groups are held to terminology over which they have no control."
And yet there are individuals who have gotten leases with specific clauses that were important to them inserted into their leases and such would not necessarily have been an option in a group.
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Of course "not necessarily"! It would depend on the quality and savvy bargaining skills of the negotiator. Let see ... any individual versus Shell's, Chesapeake's, etc. bank of lawyers AND years of experience, OR an entire firm doing this type of work for years and focusing on nothing else. It IS a choice.
If you are going to quote use the FULL quote so as not to mislead.
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I call bullstuffin on the bull_dozing the tree farm by drilling operations, if the landowner is in business, they are compensated handsomely or fair market value for those said bull_dozed crops and that is what they are is crops, that is just fear mongering and that is what all lawyers, marketing group, channel "whatever" do create a sense of fear and prey on the landowner.
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Permalink Reply by Billy Park Whyde on -
Oh please, "It's unfortunate when people find themselves in this fix, but there are always companies willing to help these folks out." Hip wader time, na make that chest waders!
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Perhaps there is more bull out there than sheep, for it seems that the same labels/comments/ or 1/2 names pop up whenever the writers who respond to discussions feel threatened or the companies they're involved with pay them to come out with the same old rhetoric. Bringing up 1/4 or even 1/2 truths do nothing to educate the public what safe leasing in current times is all about. Technology, global happenings, increased uses for natural gas, and new geological findings change this industry yearly.
Do some homework. Change your focus from creating confusion to education and meaningful messages. It's amazing how many people respond to positive and updated information ... case in point ... the other quality and well-educated groups that have joined in w/4-County.
Case-closed unless these naysayers want to continue mumbling among themselves.
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Permalink Reply by donald mckuhn on
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talked to a guy yesterday who signed with rex engery last fall didnt join a group they came to him. guess what he got pd.and i think a prety good deal for warren county. 1500 an acre and 15%sounds good to me. hey rex give me a call i own fifty acres
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Please take your focus beyond the numbers to the fine print.Wonderful numbers have masked what's behind that print in many leases. If your "guy" set up a solid lease agreement w/Rex and is satisfied ... fine. Wonderful. I just wonder what song he'll be singing over the next few years.
Every single one of us have heard all manner of sad songs about leases gone sour after the fact. The words are very familiar. Then often the courts are called upon to correct these industry-friendly leases, and O&G companies are painted as ne'er-do-wells. Whose arm was twisted to sign such deals?
Everything about this business is a choice.
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