Replies to This Discussion

Permalink Reply by Ashley McLaughlin on October 27, 2014 at 6:19am

Is Exco accepting a "royalties without deductions" lease?

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Permalink Reply by Victoria Ayers on October 29, 2014 at 12:31am

Not according to the landman I talked to last night. The offer I received was $1K/acre for 10 years, 12.5%, with deductions, and his stance was "take it or leave it."  We asked him if he would take a counter offer to Shell and his response was, "I could tell I was doing it, I wouldn't really do it because the offer is not going to change."  His point is, at least in our area, Tioga County PA, Shell already has enough land to do all the developing they are likely to want to do, and reluctant signers can pretty much be ignored with no detriment to Shell's bottom line.  They can force pool, in which case the royalty is the same but there is no bonus at all.  The only way to get a shorter lease is to accept a lower royalty. 

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Permalink Reply by Gary Keeney on October 29, 2014 at 4:35am

There is a meeting in lawrenceville this evening that may shed more light on this.  I think 10 years is too long a lease.

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Permalink Reply by Scott T. on October 29, 2014 at 5:47am

Victoria,

Check PA law on the forced pool payment.....there may be no bonus payment but the royalties could be better if forced pooled?  We have been having this discussion on another thread for Ohio mineral owners.

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Permalink Reply by Cicero on October 30, 2014 at 10:41am

I may have been out of touch for a while, but when did Marcellus wells become subject to the PA Oil and Gas Conservation Law that allows forced pooling ? Last I knew, there was no forced pooling of Marcellus wells because the wellbore does not extend below the Onondaga Limestone stratum. Remember, forced pooling can work both ways, too. An owner can force his or her way into a production unit.

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Permalink Reply by Frank Walker on October 31, 2014 at 2:27am

Marcellus wells didn't, Cicero.  And BTW, great to see you posting here!

John (the OP) is in Tioga County where recently Utica shale interest has picked up markedly.  It's a bit akin to 2006 or 2007 Marcellus mania elsewhere.  Nobody really knows what the Utica outcome will be in Tioga County, or nearby to Tioga County.  Many of us are hoping Utica prospectivity will outdistance that of the Marcellus.  But only the extremely early nature of the play here makes possible that kind of wild yearning.  Reality, for better or worse, will assert itself eventually.

Anyway, to your point:  While you are correct about forced pooling as related to Marcellus shale, different rules apply down at Utica shale depths, where forced pooling is allowed beneath PA law.  I doubt there is any Utica shale gas over where you are, so far to the east . . . but keep your eyes open because one never knows!!

Anyway, your mention of forced pooling reciprocity is noteworthy, extremely helpful, and very well taken.  Thanks!! 

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Permalink Reply by Cicero on October 30, 2014 at 11:12am

There cannot be any lower royalty in PA. 1/8 is the lowest allowed by statute.

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Permalink Reply by Alan Bowers on October 30, 2014 at 2:49pm

If Shell wrote a lease that they KNEW or SHOULD HAVE KNOWN violated PA Law that guarantees a minimum of 12.5% Royalty you would think that would be grounds for invalidating a lease.

If you are interested in doing business with Shell try going around the Landman and contact Shell directly.  You should be able to find contact info for landowners/mineral rights owners looking to lease their land to the company on their web site.

You may also want to try contacting Stat Oil (a Norwegian O & G Company). According to a map on their web site showing their area of operations it appears to cover Tioga County PA.

Also, there was a thread on the General Discussions section of GMS several days ago from someone trying to put together a Landowners Group in Tioga County. 

Landowners have had success taking this route.  There was a very successful group in a neighboring county to you in PA and there was also the ALOV group in Ohio.

Speaking from experience I know there were many Landmen that tried unsuccessfully to discourage Landowners from joining ALOV (Associated Landowners of the Ohio Valley) when we started putting the first group together in the fall of 2010.

We discovered that Landmen will promise you the moon and tell you whatever they think you want to hear so you will sign their lease agreement.  Remember, it is not what they say verbally, but what is actually written in the lease agreement that matters.

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Permalink Reply by LERRET on November 1, 2014 at 5:22am

A lease is a contract. If they want to hit me for post-production expenses then I opt to not sign...ever. Contracts are negotiable and Shell DOES sign no post-production expenses. I can show you one that my family signed with them years ago. 

Arkansas also has provisions that if you are force pooled the approved lease does not have post-production fees AND they cannot offer you the lowest price in the unit for your gas if they own 5% of the transportation or production company. They must match what other players are being paid.

Now if you are saying the lease is "renewed" (their option to renew) then no you cannot change the provisions of the lease when they opt in to extend the existing lease.

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