Sixteen years ago, I was introduced to royalties from Clinton well companies, albeit insignificant checks throughout the years.  When my company was investing in inner city rentals, some properties came with royalty checks.  I always wondered how was a small time parcel owner to know if the amount was correct or not, the royalty was not enough to make an issue of it.  Many smaller Clinton O&G companies have specialized in urban wells and have been very successful with them for decades.  These 40 acre units are assemblies of hundreds of residential lots, but I recently discovered that apprx. 30% of the unit consist of the roads.

 

Recently, I was tasked to look into hundreds of inner city vacant lots that my company just acquired and after looking at aerials of parcel after parcel, I noticed two lots that were between a Clinton well and the road.  Upon further scrutiny, I also noticed that the gravel road to the well and even the gate to the well was on my company's two parcels!  So I began to dig further, I visited the well and got the name and number of the well and contacted the well company.  After talking down to me and telling me that I had to do title and lease searches, I finally got mad and said "look bonehead, let me make it easy for you, I do not need to do all your jumping through hoops, I'll just padlock the gate and put a no trespassing sign up!"  He immediately changed his tone and said "what? are you saying our road and gate is on your company's property?"   "yes, that is what I have been trying to tell you."

 

In any event, the former owners of the two lots were long deceased and this O&G company deliberately unitized their property and did not pay royalties for fifteen years.  And here is the kicker, these two lots are just the tip of the iceberg, most of the inner city 40 acre units consist of these type of lots and what I am finding out is royalties have not been excrowed.  I am talking about cities like Akron, Youngstown, Canton, etc., etc., all of this property adds up and I wonder if the big oil companies will discover this and demand they be cleaned up as they negotiate with the independents? 

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There are two flaws that I know of. One is that these old leases only allow for units of 40 acres.  I have seen some that allow for 160 acres.  Both are too small for this type of drilling where the companies actually want several hundred or more.

The other potential flaw is that some leases specifiy what layers they can access or to what depth they can drill. A couple I know of state "down to and including the Medina layer" which is above the Utica, thus leaving the Utica unleased.

 

People that have these leases on their property need to be aware that this gives them the opportunity to negotiate a better lease.

Anyone with an existing lease needs to analyze it or have it analyzed to see what if anything can be done to enable the development of the shale beneath them. Many of these old leases specify smaller unit sizes than are needed by the deep horizontal wells. If your lease indicates this, now is a good time to talk to the lessee about renegotiating the lease for the deep rights. I spoke with an attorney last night who has successfully done this many times. If your lease specifies only certain shallower layers, then you are in the driver's seat to reap the benefits of the shale activity.

Bottom line - know exactly what is in your old lease

Update:

Something is up, the independent oil companies have ceased all communications with my company.  I just hope that some here who are affiliated with the major oil companies have read this post and forwarded the info. to their companies to show the flaws in the old 40 acre Clinton units.

 

Is this study surfacing today as smaller pieces are beginning to be surrounded?

This seems to be the topic today and I wrote about it almost a year ago.  Some here have saber rattled that shallow minerals were only bargained for, I believe the negating facts are that the old Clinton well units maybe void because of the failure to escrow abandoned properties royalty payments.  "You didn't escrow the rent for years so the lease is out!"

2013 update:

Well after researching this problem for a year, I believe we are ready to sick the "bulldog" on the Giant.  First I have to thank our in house landman for hitting the pavement for a year now to uncover more unpaid landowners.

We will be filing against several energy companies and most likely open a big can of worms.  As always being a landowner foremost we want our fellow landowners here to be able to follow this injustice inorder that this never happens again to countless inocents.

Once again, we value and respect the energy companies, it is some of the old independents that ran amok when 40 acre units were the norm.

To be fair it IS up to the landowners to notify a company if they recently bought property with existing royalty.  Your original case is obviously different and the circumstances are muddier, but every O&G company cannot be expected to know who's dead, who moved, etc.  

This problem has now grown to 12 Clinton wells that my associates have land and the minerals in the Units.  These wells account for over 400 acres surrounding Mill Creek Park in Mahoning County with over 4000 acres, most of it HBP.  With the 15 year old files of these wells now online, the information detailing the force pooling of these wells are extremely educating. 

The ODNR was forwarded what we uncovered and has provided additional info.  The next step is to demand escrow and records from the local independents. 

Keep us updated. This is interesting.

This is exactly what happened with us. We found out after we signed with shell that Columbia now owned by Chesapeake...ugh! Unitized us with a shallow well in 1982 and is holding 400 acres hostage. Myself, nor my grandfather or father ever received any royalties off of this well. We dont want the royalties we just want released. Now suing Chesapeake which is like David suing Goliath!

Gas heir,

Refreshing to read about another salt of the earth who is fighting the big fight for what is right, no matter how long it takes, keep up the attack and stay the course!

You'll be surprized how in regards to this tale, there is an ex Landman who basically is a failure in life at everything he did.  He had the chance to work at this unique project and push it through like what you are doing.  The loser quit, like everything he did in life, I believe his wife supports him;  and now this tale is getting closer to reaching the light at the end of the tunnel and he is no loger a part of this windfall.  What a real loser.  I'm impressed you are fighting for your family name. 

So much for not insulting people.  Jeez.

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