Eclipse-Oxford leases and extensions in Guernsey County

I am a landowner in Guernsey County with a 4 1/2 year old Oxford lease that is set to expire in about 6 months.  I, and apparently many others, have just received an offer from Eclipse to extend the lease for 3 years for a generous one time payment of $100.00 and the same 12 1/2%  royalty (but no line charges).  The extension provides for the grouping of 640 acres instead of the 160 acres in the old leases.  I had hoped that Eclipse would treat the landowners fairly, in contrast to the Oxford way, but apparently not.  The landman, who called me, reminded (threatened?) me that Oxford (now Eclipse) is still drilling its shallow wells to hold them by production.  According to the DNR records almost all of these shallow wells have only the tiniest of production of oil or gas or sometimes only salt water or nothing.  My neighbors tell me that Oxford comes in, sets up a small rig and drills for a few days and leaves.

 

One leverage the landowners have by not signing the extension is to deny Eclipse the right to put together the necessary 640 acres to drill a deep well.  If enough people do not sign the extension maybe we could get a realistic offer. 

 

Has anyone on here received a similar extension "offer"?  Is anyone actually signing these things?  Does anyone know of any law suits or other methods to stop this bad faith drilling of the shallow wells?  

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Permalink Reply by David Cain on January 13, 2014 at 3:03am

Richard,

 

Did Eclipse state if they were going to drill the wells or were they going to partner with someone else?  And did they show you the proposed laterals?  Just curios as to where they are going to be located and how many they will have.  I may try to get down that way Sunday.  Would you mind if I stopped to say hello?

 

Thanks,

Dave

Permalink Reply by Wesley Moore on January 13, 2014 at 5:05am

David; Unfortunately I wasn't home the day he was here and he spoke with my wife so I never got to ask any questions.My son rode him over the hill on utv so he could do water sample of our well.I am off Sunday and should be around.I will have copy of their map for you.It does not show any laterals only a 640 acre circle and where the well will be placed on Pletcher property.

Permalink Reply by David Cain on January 13, 2014 at 11:53am

Richard,

I attempted to send you a "Friend - Invite" so that we can email back and forth.  If I did it properly you should see something in the top right hand corner of this web site stating that you have a message waiting.  If I didn't get it right, would you mind sending me an email with your phone number to davecain222@gmail.com ?    I would like to talk to you a little bit about your news.  I looked at the names that you gave and they are leased by a lot of different O&G companies.  There is Rex, Chesapeake, Anterro, Gulfport and Eclipse.  I wonder if Eclipse is really just planning to drill a well on Mr. Pletcher's  property and the map you saw was for the water well testing that has to occur for a 1 mile radius around the well.

Thanks,

Dave

Permalink Reply by W Moore on January 13, 2014 at 4:20pm

Hope I didnt jump the gun but sounds like something Eclipse may do.Recieved a call last week from Guy in Pittsburg wanting to buy my Royalties for 10,000 and acre and was thinking about it but still think if their offering that amount you would think they know somethings here.I sent you pic of map my wife took picture of you probably know more about it than me. tell me what you think. green dot shows where there putting well pad.

Permalink Reply by David Cain on January 14, 2014 at 3:04am

Richard,

 

Thanks for the map.  I talked to someone south of us late last night.  He said that there have been negotiations with Eclipse for a while now.  The laterals are going to head south from the Pletcher pad. So we aren't in the unit.  They are expected to be drilled sometime this year.  Who knows though.  If the wells hit, maybe they will turn things around and head our way.    They are getting really close!  I still hope to be in the area on Sunday.  If I do I'll try to stop and introduce myself.  I appreciate the discussion.  Landowners sharing information is the best thing about this site. 

 

Thanks,

Dave

Permalink Reply by catt on February 21, 2014 at 3:22pm

Richard Moore.......do you have a map of Pletcher well plat? Or do you know where one can be viewed.....can't find on the ODNR site. Can't even find the permit!

Permalink Reply by David Cain on February 21, 2014 at 4:08pm

Catt,

Richard showed me a copy of what I interpreted as the water well testing map.  It showed a perfect circle with the center dot in the north central area of the Pletcher plot.  I am assuming this is where the well pad is being planned.  I had talked to someone directly south of the Pletcher property and they confirmed that they were supposed to be in the unit.  I don't have any further detail.  Hope this helps.  

Permalink Reply by J. Kinney LandRights on January 13, 2014 at 4:02pm

Eclipse appears to be serious to drill expiring leases.  My guess is that they got a bum deal from Oxford.  Oxford, like a lot of other shallow producers, had a lot of "grey" leases.  Some expiring, some not, some hbp'd, some that had a lot of title flaws, etc.   Everything I read about Eclipse in regards to new leases has been very positive from the landowner.  Dealing with these expiring leases seems to be difficult but I've worked with a few landowners with different stages of Oxford leases and theres options out there. Best of luck to each that unfortunately had to deal with the Oxford leases..

Permalink Reply by Dodge Charger on January 14, 2014 at 5:55am

LandRights,

In your discussions with land owners dealing now with Eclipse (that had Oxford leases), have you happened to talk to any that have had Eclipse request a change to the Oxford lease because the old lease said "cannot be unitized"?  If so, I am really curious if anyone in this situation has been able to negotiate from the 12.5% royalty to 20%.

My parents are in this exact sitution, with the exception they have sold half their mineral rights; the company that bought them is doing the 'talking' to Eclipse.  They are in Londonderry Township, for what it's worth.

Permalink Reply by J. Kinney LandRights on January 14, 2014 at 7:50am

DodgeCharger,

   Your parents definitely have a leg to stand on.  In PA if a lease specifically states that it can NOT be unitized then the gas company would need an entire new lease (or i guess they could just do an amendment/ratification). Regardless they would have to renegotiate and I feel its similar in Ohio for your parents. 

  As far as trying to increase the royalty percentage.  It's obvious that all producers don't want to give high royalties.  Production is where they make their money and they want every percentage point they can get.  I personally have been able to negotiate higher royalties in similar situations as your parents but each situation is very different.  I would hate to speculate as to your parents options but I feel they are in a good position. 

Permalink Reply by Dodge Charger on January 15, 2014 at 2:35am

Thanks LandRights for the reply.  For what it's worth, I talked with the Eclipse rep (out of Zanesville) last night, and in my opinion, the guy was very nice and talking out of both sides of his face.  Let me explain:

I was requesting a map of the proposed unit and the location of the well pad.  After all, he told my parents the unit was going to be 500 acres and have eight laterals (four ea. going NW and SE).  He initially told me it was just preliminary and too soon to have a map.  He hemmed & hawed around, looking at a spreadsheet, etc and lo and behold after a few minutes it was now down to only two parcels keeping them from unitizing and drilling: one they didn't know who owned the mineral rights and the other was talking with a company to possibly sell their rights.

He then proceeded to ask if anyone had contacted us about having the pad on our property, and was saying they're "very close" to getting it all done and start drilling.  He did slip up and mentioned right in the middle of conversation the lease was expiring 03/2015.  That to me said it all: they aren't close to drilling and are likely saying ANYTHING to get out of the Oxford lease to tie up my parents property.

But, this is just my opinion!

Permalink Reply by evan on January 14, 2014 at 8:10am
I know someone who was in this exact situation almost. He ended up getting a big settlement to be able to unitized him but they never would come up on he royalty percentage

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