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Permalink Reply by Bruce Rickert on December 23, 2010 at 8:31am

CHIEF OIL & GAS ANNOUNCES AGREEMENT TO SELL A PORTION OF ITS MARCELLUS SHALE ASSETS

 

DALLAS (December 21, 2010) – Chief Oil & Gas LLC (“Chief”) and Radler 2000 Limited Partnership (“Radler”) today announced they have entered into an asset purchase and sale agreement to sell certain natural gas properties in the Marcellus Shale to EXCO Holding PA, a subsidiary of EXCO Resources, Inc., for approximately $459 million. The sale assets include 15 producing wells, 11 wells waiting on completion and approximately 50,000 net acres located primarily in Lycoming, Sullivan and Columbia counties in Pennsylvania.

“We are pleased to enter into this transaction with EXCO, which previously joined with BG Group, plc in a joint venture to develop its Marcellus holdings,” said Chief’s President and CEO, Trevor Rees-Jones. “After the sale of these properties, Chief and Radler will continue to own over 287,000 net acres of Marcellus leasehold in a gross position covering approximately 500,000 acres, and we are enthusiastic about continuing to drill and develop our acreage in this world-class shale play. We believe this position holds substantial natural gas reserves, which can only grow in desirability as our nation turns to readily-accessible, abundant and clean-burning natural gas as the primary fuel of the future to grow our economy and support our nation’s security, employment and standard of living,” said Rees-Jones.

“Chief employees and Chief offices in Wexford and Williamsport, Pennsylvania will not be affected by the sale. Chief’s midstream subsidiary, Chief Gathering, will also not be affected and will continue to develop its planned pipeline infrastructure in Pennsylvania. The proceeds from this sale will allow Chief to expand its development efforts in northeast and southwest Pennsylvania, West Virginia and Maryland,” Rees-Jones continued.

Chief Oil & Gas has drilled 95 wells in the Marcellus Shale in Pennsylvania and West Virginia and will remain one of the largest leaseholders and most active operators in the Marcellus Shale. Chief plans to exit 2010 as operator of 9 rigs drilling in the Marcellus, not counting non-operated interests owned in leases and units being drilled by multiple rigs operated by others.

Mark Deverka / Bank of America Merrill Lynch represented Chief and Radler in this transaction.

About Chief Oil & Gas LLC
Based in Dallas, Texas, Chief Oil & Gas is a privately held, independent oil & gas company engaged in the exploration, development and production of oil and natural gas throughout the continental United States. For more information, visit www.chiefog.com

Permalink Reply by John Yonkin on January 4, 2011 at 1:19pm

I recently had several meetings with Chief.  Chief is not selling leases to CHK in Sullivan County.  Chief and CHK have signed an AMI (Agreement of Mutual Interest) to develop Sullivan County NG assets together.  This agreement is for Sullivan County only. 

The sale of assets to XCO are exactly in line with Chiefs business plan.  I understand that leases in the northern part of the Sullivan may not be included in the deal.  We will need to wait until the deal closes however to see if this is true.

If you do not have a notice of assignment addendum in your lease you will need to check with the courthouse to see if any assignments are made to your lease.  Or you could check online at Landex.com

 

J Yonkin

Permalink Reply by Steve AC on January 10, 2011 at 12:02pm

I've been talking off and on to Chesapeake since 2008. They leased all my neighbors to the east last July. I reached out to Chief last September and they were gung-ho to lease my parcel in Elkland twp (Valley Rd. off Rt.154). I am right in the middle between Chief's McCarty unit (to the west) and Chesapeake's Kriebel unit (to the east). I met with a Chief landman 11/18/09 and haven't gotten a response to any communications with them since. Now Chesapeake is hot 'n heavy to lease. I suspect the lines have been hard-drawn, and the two companies are actively aquiring land leases in their respective drill areas. Go to this map to see which drill site/company is nearest your land. http://www.sullivancounty-pa.us/files/planning/SullCoGas_Web.pdf

Permalink Reply by Thomas Brian Morton on January 10, 2011 at 2:58pm

I'm leased with Chesapeake. My lease runs out this November. I'm located South of all the drilling on the North side of 154. Up on Bear Mt., West of Forksville. There are several locations that they are working to get pad sites. One of which is a property adjoining ours. All that said, should I be talking with Chesapeake and Chief before my lease runs out? Try to negociate a new lease. They may even get a well sunk before my lease is up. Let's just say, 4 years ago they weren't paying much. Any suggestions would be greatly appreciated.

Permalink Reply by Steve AC on January 10, 2011 at 7:40pm

VG, Did you get anything in writing from Chesapeake regarding that bonus per acre? It would really help my negotiations.

Permalink Reply by Steve AC on January 10, 2011 at 8:14pm

Tom, Your lease probably states exactly what Chesapeake's options are to keep the lease on your land. The trigger on an automatic 5 year renewal, or right there of by Ches, may be whether you are part of an approved drill permit plan,  if the drill site you may be included in is constructed, or if it is producing before the lease term is up. If you are not part of an approved drill plan, or if it is not producing by November, you may be able to terminate the lease and become a free agent! Depending on your parcel size it might be worth talking to an attorney with the new money at stake (and all the ecological ramifications). The nearest current drill permit to you is Chesapeake Tall Maples ID# 735574. You can check on up-to-date well permits, applications and existing drill plans at

Department of Environmental Protection
208 West Third Street, Suite 101, Williamsport, PA 17701
Phone: (570) 327-0561 | Fax: (570) 327-3420
www.depweb.state.pa.us

I hope you get a chance to start over from scratch!

Permalink Reply by Thomas Brian Morton on January 10, 2011 at 9:33pm

Thank You Steve! For the first couple of years I knew I couldNow that things are heating up in our area I'm digging into this more. Of course when we signed on it was a good price and no one would have thought it would move so fast let alone find anything. I'll check out the website and permits

Permalink Reply by Thomas Brian Morton on January 13, 2011 at 9:02pm

I'm interviewing Attorneys. Any good suggestions? What do you ask of them? I want them to review my existing lease.

Permalink Reply by Steve AC on January 14, 2011 at 12:09am

Awesome checklist VG! If your potential attorney can't succinctly explain any of these terms, then find someone who can. Otherwise you pay for their education (and mistakes).For those of you who don't have attorneys because they "cost too much" consider what it could cost if one of these clauses comes into affect and you aren't covered. I'm not an attorney, but I have one and less than 20 acres. Thanks VG!

Permalink Reply by Bob Brown on February 4, 2011 at 2:16pm

We are in the Coveytown area, and I can tell you this:

A pipeline agent just left my home, we are close to signing a pipeline lease.

Our original gas lease is/was with Chief.

A driveway agent is hot on our trail.

There is a well permitted to begin as soon as they get the driveway built about 500 feet behind my house, by Chesapeake.

Both agents have told me, "They wouldn't be pushing so hard on this particular well if they did not have the rights. Essentially saying (but always not saying) that Chesapeake has either bought or sub-leased our contract.

Looking at a Chesapeake larger map of planned wells, there are a few "black spots" that are a combination of heavily chief leased and "never-going-to-do-it" landowners.

Hope this helps.

 

Permalink Reply by John Yonkin on February 4, 2011 at 2:34pm

Bob, be very careful with any pipeline agreement.  Be sure you understand how many pipes, gas, water ect will be allowed on the right of way.  If you are dealing with AMS regarding the pipeline I would be particularly careful.

 

As I mentioned previously.  CHK and Chief have an agreement to work together to develop Sullivan County.  This does not mean that Chief will not eventually sell their holdings(leases, wells, ect) in the future.  That is clearly their business model.

 

J Yonkin

Permalink Reply by John Yonkin on February 4, 2011 at 2:48pm

One other thing to consider when discussing a pipeline ROW.  Ch 16 did a story a few days ago where they interviewed a land owner who had just signed a ROW with Laser Midstream (Laser also develops gathering lines for CHK and other gas companies)  The landowner was quoted as saying the agreement was for $55 a foot.  The last I knew AMS was offering $6500 a disturbed acre and that equals about $15 a ft.  Remember the ROW company is not interested in making a good deal for you the land owner.

 

J Yonkin

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