Replies to This Discussion

Permalink Reply by Linda A on August 26, 2012 at 12:21pm

Vernon Twp.

Permalink Reply by Douglas W on August 26, 2012 at 12:26pm

I couldn't easily find anything on this company, not even a website. However, You sound protected in terms of not having to assign your property before your paid. That's what I was inferring with the "upfront money" comment from before. At least you don't have to worry about someone putting a cloud on your deed because they didn't pay. Thanks for writing back.

Permalink Reply by Craig on August 26, 2012 at 12:14pm

It's easy to find out.  Texas railroad commission - look them up on their website to determine if they are an operator in Texas, then check PA DEP website and see if they are an operator here.

 

If they are not, I would suggest they are going to tie up your land, and do not intend to pay every lease they take, if any.  They might be able to sell one or two of them, if some real operator needs it for a block, but otherwise.....

It's somewhat of a game with many people - they come in to an area, offer more than anyone else, have the "perfect" lease form, but with odd payment terms, and hope they can screw up an operator's block of drillable acreage, and make them pay for the leases at some later time to make it drillable.  Oftentimes the people taking the leases for them, do not know the intention, and mat be good people, but did not do their homework on the people backing the play. 

Likely the payment will read something like " payment will be made when a clean title opinion is received on the property".  There is no date certain, nor any time frame for ordering the title opinion, nor, who is responsible for paying for the title opinion. 

 

If anyone is saying they will pay you any later than 90 business days - be suspect.  The courthouses just are not that busy.  Some of the curative does take longer, but if there are problems with the title, the companies usually come to you earlier and let you know.  If there are problems, they cannot pay you direct, but, if they still intend to pay, they should escrow the funds for your benefit, thereby paying you on time.  Just like buying a piece of real estate that has title issues.

 

Also, if you decide to lease on the Patton form, have them add a few things.  Payment made in 90 days, or it is null and void, and, if they do not pay you for any reason other than you not owning the Oil, Gas, and Mineral rights, or those rights being Held By Production, or under lease by someone else, then they owe you liquidated damages of $500/ac.  If they don't bite, and say no way, then I would say they are not legite, and never intended, nor can they pay without selling the leases first, if they are able to sell the leases.  But, based on what I have heard, all the legitimate operators in PA are offering much lower numbers for acreage in Crawford than what Patton and Northeast Appalachian Land Services are and this makes me suspect of them.  Addititonally, none of the legitimate operators are willing to take a stright five year lease, they all want the extension in the back end, at least of some kind.

 

If it sounds too good to be true.....

 

Permalink Reply by Linda A on August 26, 2012 at 12:34pm

thanks for the info Craig - it appeared to me to be just an offer to tie up the land/lease...

will follow your suggestion...

Permalink Reply by Douglas W on August 26, 2012 at 12:47pm

Yes, great advice Craig.

Permalink Reply by fredric burnisky on August 28, 2012 at 7:16pm

There must be a local attorney in Meadville that could help with this? My grandfather always went to Gorman, but he can't still be alive.

Permalink Reply by fredric burnisky on September 1, 2012 at 7:49pm

I talked to an attorney that specializes in gas and oil leases. I sent her a copy of the contract from Wishguard for her to look over. She said she has some good contacts in the industry and can find out if this is a real offer or just a fishing expedition. She said it is best to negotiate with a drilling company rather than the speculators and she also said that we should have legal representation before we sign a lease, not surprising.

Permalink Reply by Craig on September 2, 2012 at 12:12pm

The Wishgard deal is just what it is. They are not an operator, they are nothing more than a marketer. They pitch themselves somewhat as a land services company, but they are not that either.

They offer what they call a lease. It is a pseudo-lease/marketing agreement. They promise to pay an amount higher than any real operator in the area is offering, it is a lease, but the time line for paying works out to 6 months, and then, if you read the order for payment, that can be extended for 90 more days, and if you read the lease (which in their pitch meeting they tel you not to do, only read the addendums) it tells you that you are agreeing that the lease, including the order for payment, cannot be a subject of a court suit, only mediation and arbitration, and if they respond, they get sixty more days, even if it is just saying they disagree.

What this does is gives them a no-risk option on a lease for your property. They can say that they own a lease on your property, and for six to nine months minimum they do not have to pay you, but you think you are getting paid for those leases. They have no intention of paying the leases UNLESS they can get them sold. They have no use for them otherwise. Now, this is not necessarily a bad thing, for they can put some projects together and get companies in where they may not have otherwise been coming to, for now a pseudo project is put together for it he company.

But, stand alone, wishgard, I do not believe capable, nor determined to pay the leases they take, except and unless they can get a buyer interested. And since they have 6-9 months to get that buyer, with no cash outlay to the landowner, it is a great strategy for them, and, if they eventually get you more money than you otherwise would have received, then I guess it is good for both of you.

But, I received a Wishgard invite and I went to their meeting. In eir meeting they say that EVERY person that has EVER signed with Wishgard has been paid.

When someone in this business says that, they are automatically lying. Any attorney that tells you they are 100% successful at getting their landowners a better deal is also lying. It is just the nature of the business and the facts - no one is perfect.

But, if you are going to say it in a meeting, then you better be able to back it up. So I did some research and found numerous releases of Wishgard leases in Ohio. I called the people directly, and spoke to 3 different folks in 3 different counties. And there were lots more releases, I just picked some at random and called the people.

They all responded that they did nor get paid on time, and had to fight to get the release filed. One had a horror story, the others said they had to ask and then get an attorney to get the release, even though they had not been paid, and the full days and extension had passed.

I also know that Wishgard has paid many people that they have signed. But don't be fooled, by the pitch. They are here to make money, same reason you went to hear them, you wanted to make money, at least you think they are offering more an what someone else has offered you, so the drive is the same, MONEY. They will sign you, if they get it sold, they will make more than the $100 per acre they are telling you, and will negotiate for more than the 1/2 - 3/4% royalty over what they are paying you, but, if it is more than what you could get somewhere else, then they did you a service, just know that they are here to make money, and you listen to them for the same reason.

I propose this question though. If you are being offered, say, 2500 from one company, with 17%, and then offered 3900 to 4250 from another company with 17 to 19%. Which one is better? They have comparable addendums.

However, the 2500 company is saying pay in 90 business days, the others have a more ethereal payment "scheme". I can confirm that the 2500 company has paid recent leases in some cases less than 60 days. They y they are working on permits in some of the townships already.

I looked at it, and had to ask this question - if I have fifty acres, and I can get paid in 60 days that is 125,000. If I sign with the other guys, I MIGHT get paid in 6 to 9 months, but I would get, say 200,000. Now, what could I do with 125,000 in nine moths to make up the 75,000 deficit? I think I can get pretty close to making that money up in other ventures, and I was thinking a bird in the hand....

I know people that have been paid recently from the 2500 company, but the new guys coming in, giving themselves six or nine months to pay, are unproven. I know of no one that has been paid them, and I even went into ohio counties, where I had found the principal of the company trying to buy leases on the internet near a year ago, and could not find a single lease recorded in the courthouses in the counties I knew they were actively soliciting leases in. So, I ask again, which do you think is my better deal?

I don't need the money, but I could use it, and in my area, a lot of the neighbors have signed with a marketing attorney, some with the landowners group, and some with the newcomers as well as the 2500 company, so it is well pockmarked in my area. The landowner groups have been moving slow, in my opinion, but at least NWPLOA does not make you commit for an extended time, and I can sign with anyone I want to in the meantime. But if I wait on some of the other leasing consultants, it will take them 3-4 months to get people together, 3-4 months to market, or really, wait on someone to knock on their door, and then if a deal is struck after 6 more weeks, then I have 120 more business days before I have to see my money. Again, a year from now, but with the other company, maybe less money, but paid quick and my life is simplified. Besides, oil and gas companies typically change their direction around the first of the year. The first of the year is coming up, and this last year they have all been in the acquire mode, what if they change, and next year not so much acquire, but fill in and drill? That seems to be the trend with all but CHK, and they are out for a bit.

Think I should go with the safe bet, or wait it out? I am disinclined to sign with a newcomer who is not an operator in PA, or the state from which they supposedly come, especially since I do not know anyone to whom they have made payments, anywhere.

I can confirm payments being made by some of the others, even Wishgard, but not the newcomers offering more than anyone else in the field.

Permalink Reply by Ronald L Wilcox on September 2, 2012 at 4:12pm

If you can make 60% on you money in 270 days,I need your phone number.However,I'm surprised and happy to hear that some real leasing with oil co's is taking place in Crawford Co.I like one members comment that the second mouse gets the cheese.

Permalink Reply by Craig on September 2, 2012 at 4:57pm

I never said it would not take work, or some risk, but no more than I see waiting on unproven companies.

Come on, Ron, most every farmer in Crawford county could likely do the same thing - there are way too many entrepreneurial opportunities available right now that only need cash to capitalize on them.

If you have cash, and 270 days, it can be done, and relatively simply, with minimal risk, or at least with the risk collateralized by some commodity that will be at least as valuable as the amount you started with.

I see these opportunities around me all day, that's why I want the cash.

But I was asking... Bird in a hand, or wait on possibly something better. My daddy always said pigs get fat, hogs go to slaughter.

The money is good, but I see the timing as being more important. I am ok if I get good money now, and my neighbor gets even more later. I can live with that, for, even if I only pay off all my debts, in 270 days, I will have been able to save over 14k, and it leaves me with a deficit in comparison to my neighbor, but nine months of less worry than my neighbor.

Especially if it allows me to be somewhere else in December, January, and February, where I'm not cutting wood or shoveling snow.

Permalink Reply by Jim Litwinowicz on September 2, 2012 at 9:54pm

Mr Wilcox is right; how will you get a 60% return on only 270 days? If you have such a solid entrepreneurial opportunity, perhaps you are looking for investors?

Everyone needs to make the choice that best fits their situation. If you badly need the money take the offer. If not, carefully consider all options, weighing the risks and rewards to decide whats the best path for you and yours.

Permalink Reply by Sam Douglass on September 2, 2012 at 8:25pm

There is a good chance that the folks trying to lease now

already have a deal with a producer to take everything they sign up

for which the producer will pay $5000/acre and a 20% royalty less whatever is due the landowner.

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