"Fang's Agenda"

Yes he is obtuse, yes he speaks his mind, yes he can be an A%$hole, but he is the landowner's $%#&^*$.

He speaks for us.

I have followed Fang's post from when he first appeared, who is he, it really doesn't matter to me because he is never personal and he debates obviously with facts and knowledge.  What I know about him from this site is he is an old timer landman from the days of the first clinton wells.  He is a veteran of urban unitization which is the toughest part of the well unit development.  He is very experienced in my book.

 

Now many here question his agenda when they no longer can debate.  Let me tell you what I see as his Agenda, it is the same as mind and the same as landowners and the same as professional people in this trade.  We and Fang are outraged how those who never understood a clinton well royalty check, never managed real estate, those who's knowledge of a lease was an apartment lease............those who jumped up and preached to the masses who owned land that they could represent them in this once in a life time gold rush.   Yes we have an agenda to see justice for fellow landowners and the RETURN of the professionals in the continuation of this energy development.  The banishing of those who unjustly enriched themselves at the expense of the landowner, big or small.

 

Fang's Agenda IMHO is the same as Jack Straw, Marcus, Townsend, Brink, The oil patch man, all of us who post and learn here everyday, just local community folk.

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Replies to This Discussion

Permalink Reply by Mike Knapp on March 15, 2013 at 10:49am
Imagine someone renting a house from you. They pay all 10 years rent up front at a rate you could have never imagined. The check is far more than you paid for the house, and there is a decent shot that no one will ever even move into the house. The renter also rents all the other houses in the area in the same way. He then moves in to one of the houses and builds a $30 million dollar spinning wheel that can take the previously worthless crabgrass on all of the properties and weave it into gold like Rumpelstiltskin. Even tough the crabgrass is worthless without the special spinning wheel, and even though the renter paid top dollar to rent the properties, and paid all of the cost to build the spinning wheel (which is not even guaranteed to work, or at what efficency it will work, and for how long it will continue to work) the renter still pays you, the landlord, a 15-20% cut of the proceeds from the gold he has spun.

Doesn't sound like a particularly unfair shake to me. Just an analogy, obviously will not fit all situations perfectly. Some folks have legit gripes. But food for thought.

And my momma didn't miss any lessons, especially the one about having a little bit of respect for people with differing opinions.

;)
Permalink Reply by Jack Straw on March 15, 2013 at 11:01am

I have a house that I would like to rent.

Where can I find a renter who will pay me a ridiculously high amount of rent?

And exactly who determines what is a ridiculously amount of rent?

Your analogies are "non sequiturs".

Time to analogy rehab.... your's are far stretches from any sort of reality,

 

All IMHO,

                 JS

Permalink Reply by Mike Knapp on March 15, 2013 at 11:12am
As opposed to your car analogy? A car has value to me. I can drive it. I can sell it to anyone else and they can use it, as is. Subterranean gas is a value added product of sorts. Without the gas company and its magic spinning wheel, its worthless.

Not trying to start a pissing match with you here. Think you can do without the snide remarks?
Permalink Reply by wyalusing jim on March 15, 2013 at 11:26am

mikes analogy has merit and some basis in truth.

in one case that i am familiar with, a landowner was paid over 6 times the original purchase price for his bonus, and receives monthly royalty checks approximately equal to that original purchase price.

of course there are other equally valid examples which would discredit his analogy, such as the $10/acre bonus and minimum royalty with deductions leases sometimes signed in haste "on the hood of the truck".

but that was all up to the landowner to decide, and decisions such as these made in haste, without benefit of due diligence on his part, were not very businesslike.

dealing with such a valuable asset in an unbusinesslike manner is unwise to say the least, for in the end, this is all just business. success or failure, as in any other business transaction is up to the parties involved. there will always be those inclined to take advantage of anothers' ignorance of material facts. have we not all bought used cars at some point?

we should also bear in mind that mikes' perspective is from "the other side of the table" too.

naturally, his opinions derive from his own perspective which we may not completely share. but knowing that perspective benefits us all moving forward.

wj

Permalink Reply by Brian Day on March 15, 2013 at 10:12am

I am sure the Pa. government never,ever heard of or were informed of this Rule 86 when they started to consider guidelines.  Texas being such a minor player in the oil and gas business, its obscure laws were never referenced I imagine.

Permalink Reply by Keith A Williams on March 15, 2013 at 11:35am

Jack,

Since Ohio has NO present restriction on unit size, you are correct that Texas is better, BUT using your calculations and following the Texas RRC then one lateral from a pad would HBP 1307 acres. A pad with 6 5280' laterals would hold 7643 acres. In both cases they are allowing a lot more acres to be HBP'ed than what can be drained.

The lease I signed allows for 640 acres from one pad with the option to go to 1000 acres IF the company shows how it can effectively drain the entire area. I also have a developmental clause.

Saying a single well can only HBP what it drains does not allow a company to drill the field over time. Something no E&P company would sign on for.

IMHO

Keith

Permalink Reply by Mike Knapp on March 15, 2013 at 12:36pm

You hit the nail on the head Keith. 

Permalink Reply by Brian Day on March 15, 2013 at 2:59pm

Oh I don't know, how about this scenario.  The gas co came in and was honest, saying ."We will need at least ten years to get this ball rolling, so we will ask for a ten year lease for a fair royalty and a fair amount of bonus money.  HBP means gas down the pipe to market for us.  We will drill wells on pads as we can afford to do them and the market will bare.  We wil develop a pipeline infastructure as we go along to insure gas to market, profits for us on a real product and not speculation, and a fair royalty to you the land owner.  If after ten years, we have not touched your property, you have the right to re lease with us or somebody else.  We hope to have enough infastructure and wells in the area to hold our leases.  We hope to have established a solid, trustworthy relationship with you at the end of ten years so that you will be inclined to stay with us."

Oops, there was that honesty word.  I guess you were saying that no E&P company can be expected to be honest in the manner in which they approach a land owner.  Honesty or business etthics are just not part of the general practices what-so-ever of the E&P companies.

Permalink Reply by Keith A Williams on March 15, 2013 at 3:30pm

Brian,

Honesty,

I don't believe that applies here. I have a lease that spells out what I am to do and expect in return. That lease also spells out what the E&P company is to do and what they get in return. I would NEVER leave any of this to chance on a handshake or someone's honesty. With this amount of money at stake nobody should.

IMHO

Keith

Permalink Reply by Jack Straw on March 16, 2013 at 12:45am

RE: "BUT using your calculations and following the Texas RRC then one lateral from a pad would HBP 1307 acres. A pad with 6 5280' laterals would hold 7643 acres."

PLEASE NOTE MY SERIOUS ERRORS IN MY PRIOR POST: I typed: "Using the RRC's formula for a 5280' well:

Production Unit Size = 40 acres + 0.24acres/foot  x 5280' = 1307 acres"

This should have read: Using the RRC's formula for a 5280' well:

Production Unit Size = 40 acres + 0.024acres/foot  x 5280' = 130.7 acres"

By Texas RRC Rule 86, a pad with 6 5280' laterals would hold 784 acres

I apologize for my initial error (an accidental shift of one of those darned decimal points have screwed up a lot of peoples calculations over the years).

JS

Permalink Reply by Jack Straw on March 16, 2013 at 12:36am

PLEASE NOTE  MY SERIOUS ERRORS IN MY PRIOR POST:
I typed: "Using the RRC's formula for a 5280' well:

Production Unit Size = 40 acres + 0.24acres/foot  x 5280' = 1307 acres"

This should have read: Using the RRC's formula for a 5280' well:

Production Unit Size = 40 acres + 0.024acres/foot  x 5280' = 130.7 acres"

 

JS

Permalink Reply by James Brink, Esq. on March 21, 2013 at 6:20am

JK: The concept of unitizing acreage was originally developed as a conservation measure for the purpose of spacing shallow wells apart.  Look at some old pictures of the oil patch where wooden oil derricks are crowded together.  The concept today has no bearing on its original purpose.  Now unitizing leases is a way for the operators to hold acreage by production.  There is no way one well can drain 1280 in my opinion.  Yet that one well will hold that acreage by production for decades.  Unfortunately, the landowners continue to agree to 1280 acre units in their leases.  

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