Replies to This Discussion

Permalink Reply by 0l1a6laz7smpf on February 15, 2011 at 5:17pm

Hi Steve...

the pooling clause on our contract is really for the lessee.....as I see more clearly now..

we were so ignorant of these terms and clauses at that time that  unitization clause was not really discussed by the land agent in any detail.   Now being a member of gomarcellusshale I see just how important that clause is and how better defined it should be when negotiating a lease with the lessee.   Don't know if they would change the clause but an addendum clause could help define what you are looking for as your desire to limit the size , etc. is a genuine concern and I hope others read your discussion here and also give some input and grow more in wisdom about these clauses.   My lease is with Chief and though nearby....we haven't heard of any pooling yet and haven't any word of what is happening regarding our property as of yet...though seismic testing has been done.

There is another discussion on the main menu....here is the link...these are Sully people...

and they may know more about what is happening..

http://gomarcellusshale.com/forum/topics/letter-from-chesapeakewhat...

 

one think I do see as concern is their right to change conditions of operations or payment of any unit created.   what do they mean by 'payment'...changes?

Permalink Reply by Steve AC on February 17, 2011 at 5:22pm

VG, The "change " is probably  what the Pugh clause seeks to prevent. That is they can change the unit shape to only use half of a  land parcel, then change your payment to cut your royalties in half. If anyone has a parcel over 50 acres they NEED a Pugh clause to make sure their whole parcel is included in the drill unti.

Update to my original post: The landman says the unit I will belong to is already 800 acres. I just know it will end up to be over 1200 unless another lessor in the unit has a size limit clause and doesn't renegotiate. For those that don't understand my issue the trend is for gas co's to form realtively huge units (The standard used to be 640 acres = 1 square mile), then put in only a single well. Then all lessors in the unit don't get a second round of bonuses, and a 2nd lease term automatically renews by virtue of the lessors being part of an "active" drilling unit. Royalties get diluted bacause production is at minimum capacity. At least with a smaller unit the dillution is less. At some point the unit will get drilled to capacity, but now the Gas co has 10 years to do it, and we sit waiting with little royalty coming in. The best scenario for every lessor is to have them come in and suck every mmcf of gas asap and get out. Especially while there are minimal taxes on production and severance (which won't last much longer).

Permalink Reply by 0l1a6laz7smpf on February 18, 2011 at 7:11am

So if the well is located on your own parcel under the lease then does that landowner get credit for all their acres in that one parcel?  whereas the neighboring parcels that are in the unit only get credit for that part of their parcel located within the unit chosen by the O & G? 

You see these things were not discussed in great detail and a Pugh clause was not put in...and yes a lawyer that knew how to serve the landowner in these leases is a good thing...but to find a lawyer educated in these specifics is also a chore...especially if one does not live in that area of the marcellus and because it is all so very new.   Many and perhaps most of the landowners in Pa at the intitial learning of the marcellus shale exploitation thought they would be able to figure this all out during the five year lease but surely most did not know of these clauses that perhaps could detain them from receiving another bonus and that would restrict or delay or even lessen their royalties.   Most all of us thought it was only  five years.

 

Your input Steve is greatly appreciated.  I am thankful for what we do have yet I think what bothers most of us that are now learning that we really don't have the best contract with maintaining the control and assuming that we would be doing good in a five year lease that we thought could be easily negotiated and again receive bonus money....it all now depends on what the O & G does that we have as our lessee.   Surely the O & G companies were not new at signing as lessee...and certainly knew that most and perhaps all of the farming peoples were not savvy to these things.   It is unfortunate that all couldn't be working together to each make a decent profit and still get the NG to the market for the people who buy it....yet they may party now with having so much gain off a landowner's ignorance but in the end they still have to account to their Maker.   There is an old saying which started with the apostle Paul, "for we brought nothing into this world and it is certain that we cannot carry nothing out".  With understanding that I suppose some might just want to make sure that they are not cheating or overtaking someone for gain in any sense or action.

Permalink Reply by stormangasman on February 23, 2011 at 5:05am

VG  We have land in Elkland Township ,You have some very good points,O&G people knew what they were doing 5 to 6 years ago__,we didn't. I have to live with the fact"we were taken over the coals"We took our lease to a lawyer 5 years ago,we were told ,the lease is a standard O&G lease,He said we should cross out the renewal clause and we could add anything we could think of, but didn't suggest anything.But as we discussed around the table,we decided mom & dad leased the land for 20 years back in the 50's and nothing happened,sooo take the deal!! nothing will happen again.---crossing out the renewal clause do no good,because 4 weeks before lease was up , a few acres of our 200  (without a pugh clause)  was put in a 1200 acre pool __ LOCKED IN FOR LIFE___The O&G people have sold our  $5 lease 4 times or more for maybe 6 to 12m / acre " what a rip off!! __I only hope this site helps some others that have not already signed.

Now to answer your question, If you get a well on your property,will all your land be in that pool?  Not always,I know of wells where ony 1/2 of their acres are in the pool,and neighbors have all their land in the same pool!!

 

 

 

 

 

 

Permalink Reply by megan joe on March 12, 2011 at 11:42am

Thank you for these posts. We own 200 acres in Tioga co and Chesapeake is going to have a unit that takes up to 10 of our acres and locks in our lease (no pugh clause.) Luckily I do have a 640 acre max unit. (I signed this because a neighbor who is a lawyer signed a very similar lease.) 5 years are up in April. I expect to hear from them any day. They called and wanting me to ratify the lease. I wanted to have them pay for something so I had them send me the ratification. They want to pay me $10.00 and allow them to make the unit any size they want. I keep asking the land guy, what's in this for me. He gives me lines about the larger unit will increase production. The last time he called he mentioned a person quite a distance from my land and said if I didn't sign this poor guy would not be able to have most of his land in the unit and there would not be a unit he would have his land in. This is an education in wall street and big business. SAD but true.

Permalink Reply by stormangasman on March 18, 2011 at 2:52am

they'll do or say anything to get you to change to their advanage,be on guard!! I'm sure you are.

Permalink Reply by Penny J McCarl on March 28, 2011 at 8:06am

We had our lease with Range and they did a swap with CHK and after that they wanted to make some changes with the unit size and also the Pugh clause I had with Range. I have a 640 unit max size and they wanted to leave it wide open at first and I said no way then they wanted 1240 acres and the Pugh clause they wanted to add 5 more years to it if they put a well on the unit. All they are really looking to do is lock up large units with one well. As my lease is going to expire in 2012. I told them no because I like what I signed with Range and I do not have to change a thing. He tried to tell me the reason they wanted to do this was because they were getting ready to drill..............that is a bunch of crap

Permalink Reply by melvin t morris on March 30, 2011 at 2:10am

I also was contacted by CHK in for  Cherry Twp lease on 3/29/11 to delete my Pugh for 640 acres. They wanted to split my 30 acres between two units also, one with 873 acres (Yengo north) and one with 300 acres WRW south). Anyone had similar offer?

Permalink Reply by Andrea Richlin on August 2, 2011 at 4:49am

Hi melvin, i see that a permit was filed for a well pad called WRW in cherry township recently and saw that same name for unit in your post. I'm familiar with yengo well area but havent seen any unit filed for there either. do you know where WRW pad will be. also  pads called MPC and CSB and beaver dam are listed as permit approved well pads for cherry township on the DEP site. These are not listed on any maps I can find.  Thanks Andrea

Permalink Reply by 0l1a6laz7smpf on May 17, 2011 at 5:57pm

Well Steve and the others here...

They did it...no pugh clause and they put some of the acres in a unit (a 1/3 of our total amount of acres) and now Chief says that they have the whole entire acreage holding because of the few acres that they unitized...  In fact the woman from Chief felt sorry for me as we had no Pugh clause and she indicated that the contract used was a very old one as there are updated contracts that have the Pugh clause (hmm..now they tell us).

So I am not happy with what I see is a corrupt situation.   These O & G companies know that they offered us contracts that we were ignorant with that business and some didn't even have a good enough attorney to recognize what addendum clauses were needed....why we all saw the upfront bonus money and it was more than we had for years.   Now today that same acreage is almost 3 times the amount signed years ago...and with no pugh clause we may be stuck with an extended lease unless we find a way out or if the royalties paid on the few acres amounts to a worthwhile amount that we could manage on it.

 

but my comments about the O & G companies who didn't bother to even contact us about when they assigned and made money off our lease (i had to research that) , didn't bother to contact us to tell us that they put some of our land in a unit back late last year (I had to call them to find that out), ....and then they tell us so sorry that we don't have a Pugh clause?    as if we should have figured that out on our own with their hired landman?

You know when you think about it....how is purchasing oil from Arab countries when you don't have any contracts with them (just pay at the pump for gas) any worse than having your own American companies cheat you of your own land's value of resources?   this is not good...this is not one nation "under GOD" when the people that head up these oil companies are spending very little on giving the landowner their fair share and then complaining that they do all they can to please the landowner....and then the landowner is also paying them in tax subsidies (a current discussion at the White House) .   Surely with all that money they could have bothered to put together contracts that are easily understood and not just purely for disguising themselves in clauses that would make the landowner not like the lessee cause of the terms.    And of course there is a clause also that covers that if the landowner was lied to then no verbal discussion would they be liable for....as we were lied to about renewal process (not told about how a unit could hold the entire parcel and even restrict any other bonus offers at the end of the primary term of five years.    This is really disgusting when I found out that they made almost 3 times what they paid us per acre already without even seismic testing yet.

I think the GOD that rules over this nation (one nation under GOD) needs to intervene in behalf of the concerned citizens who do respect GOD and do try to treat their fellow neighbor right...cause these oil companies are selling America short to make a quick profit of us landowners.   Even China, India, and others across the world have a hold on some of our leases already...cause of the trading that the O & G companies are doing without any regard to how we feel about this whole situation.

Permalink Reply by stormangasman on May 18, 2011 at 10:20am

VG   I share your frustration, as I said earlier they did the same to us,However I don't understand why you didn't get a letter when they put you in a pool(unit) . We were told who's well we were hooked into.    

Then I went on line to courthouse records and found out there were 1200 acres in the pool,which tied up 56 land owners. Big G & O took advanage of us "plain & simple" but your right not even the lawyers in this area knew any more then we did at the time 5-6 years ago when we signed, no use crying over "spilled milk" but talking it out helps> Only can hope we get royalties to off set the frustation.          Good luck.

Permalink Reply by Steve AC on May 19, 2011 at 3:52am

HI all! It's good to see dialogue going on. Not good to see we are realizing the O&G's took advantage in most cases. It's too bad Sullivan residents never formed a coalition like some other counties. But hindsight is 20/20.

For what it is worth I went 'round and 'round with Ches for months, and decided NOT to accept their take it or leave it lease (the 4rth time in 2 years it was their "last offer"). It was tough walking away from an $80,000 in bonus (again). But the terms frankly sucked offering no tangible accountability. The O&G's know they have Gov Corbett in their pocket. And I have absolutely no confidence "our" state government would intervene in a bad situation.

If anyone wonders why I would turn down big money in the face of the inevitable check out the movie "Gasland" http://www.gaslandthemovie.com/ . I'm all for progress, creating jobs and ending US dependence on foriegn oil. And making money. But I'm not selling my soul at the expense of potentially destroying our natural resources in Pennsylvania. I urge those of you who stand to make a nice windfall with their leases to contribute to organizations like http://www.cleanwateraction.org/pa, and support those legislators who will work to safeguard our future from the risks inherent in the crazy gold rush Corbett and his cronies are perpetuating literally without restraint.

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