There is a meeting at the Tioga County Fairgrounds on the 14th of July, I believe, put on by R & R Consulting to discuss options for leasing at this time.  I live in Wyoming and will not be attending.  I have mentioned on this forum before that I was able to get layers deeper than the Marcellus surrendered under acreage that I own.  I wish to relate the story of that for those of you who might wish to consider this option to free up mineral assets that you have for better leasing at a later date.

   Like many of you, I signed a lease with East back in February of 2006.  it was kind of a boiler-plate lease with some modifications that Jackie Root and others had negotiated with East.  A couple of years later, the Marcellus became a big play and other companies showed large interest in offering more lucrative lease offers, as well as top lease offers.  East also offered a top lease offer, which I did not take.  The lease stated that, at the end of the first five year term, if a land owner wished to have his lease surrendered from East, he or she needed to send a registered letter to East requesting such.  This, I did in late 2010, just before East drilled their "pilot' vertical wells down to the Marcellus to essentially lock the land up with the "held by production" clause.  East drilled two wells on land near my property just before my five- year term expired, but after I had sent them the letter, thus locking my land up in two units with HBP. 

   So nothing much happened with the Marcellus.  Shell bought out East's holdings.  the did 3D seismic, found the Utica, and eventually drilled two wells on one of the units held by the old Marcellus wells.  Shell only claimed and paid for 24 acres of my land to be incorporated into the unit for these two Utica wells.  I am receiving royalties off of these 24 acres.  About 120 acres remain separate from this Utica well unit.

    The ten -year deadline approached on my original lease with East ,now owned by Shell.  With the help of a lawyer at not to great of an expense, I had another certified letter sent to Shell laying out the above history, with copies of the letter and proof of certification and receiving by East from 2010. This letter again asked that all acreage and layers, not held by production from the Marcellus wells nor the Utica wells, be surrendered at the expiration date of the lease.  Shell complied with my request.

    the drawbacks are;  I did not receive my bonus of $60 an acre for the remaining 120 acres.  I did receive $5 an acre for the layers from the Marcellus to the surface.  Shell did make an offer recently to lease the layers beneath the Marcellus for some of the acreage.  It was a pretty wimpy offer.  They said that they were paying $1000 an acre, if I remember correctly, but that they would only pay half per acre to me since they would only be leasing half the layers, being as they already had the top layers locked up.  I declined their offer politely.  Still, had I taken it, $500 and acre is a lot better than $60 an acre.

    I don't know if a person can demand surrender of parts of a lease in the middle of its term.  I doubt it if that person has already accepted the bonus payment on the lease's anniversary.  When a land owner's anniversary comes up again, he or she might wish to consider demanding the surrender of the layers beneath the Marcellus if no further activity has occurred.  just food for thought.

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this post was to go into the Tioga County, Pa. section.

Brian,

    Those who have a Pugh Clause in their leases will be able to pull all acreage not under production. Ask for this on your next lease.

Your lawyer should know what you can and can't do, since he has read your lease. You might want to ask him any questions or present your opinion based on how you interpret your lease. Chesapeake Energy Re-interprets all of their leases and changes the contract without asking the landowners, so there is no reason you can't do the same.

You are probably aware that Tioga County is in the Rome Trough so producers won't want to release this stacked shale play.

Some day when everyone realizes what they have, land owners will be asking for $8,000 and up as a signing bonus. The Range Resources ceo bragged about buying 3 layers for the price of one. Producers in the Rome Trough will be getting as  much as 16 layers for the price of less than one layer, which $500 to $1000 per acre as a lease bonus is. 

Watch out for DPS Penn, they say "The Bonus is nothing and the royalty is everything", when in fact "The Bonus is Everything" when dealing with domestic O&G companies, at least to date.

Rome Trough County Map:  See Page 22a or 23a

http://pubs.usgs.gov/of/2005/1443/2005-1443.pdf

I would think if a person was not younger than 50, not independently wealthy in this economic environment, the bonus money would be almost everything.  I do not believe much will happen gas value wise for the next five years.  Shell won't have the cracker operational and demanding large amounts of stock much before then.  the LNG terminals will slowly come on line and build customers in that time frame.  More electric plants will convert to natural gas.  eventually, even New England will surrender a route for a pipeline or two.  I'll be a lot older in five years, especially in 10.  I'll take a bigger chunk of money as soon as possible to invest as I see fit, plus a decent royalty rate for whenever my acreage is put into production.  at best, I'll be a senile, old man by then, if I am even still above ground.

   i can not see a reason not to have the gas co. drill all of the gas at any depth, in tioga co wells are being drilled into 3-4 layers from the same pad, not a big chance of another co. going for the deeper gas in the future?

No problem, Josie.  I'd like Shell to acknowledge that they do not hold absolutely all of the cards in this game, only 48 or 49 of them.  Probably I am the joker, thrown out of the deck and mostly just fooling myself.  But then I find very little in this world amusing anymore, so I make up my own humor.  It keeps my sanity.

Idk but I'm glad I have the Pugh clause. I'm sure I'll have to put my boxing gloves on b4 it's all over.
I have a Pugh clause and my land is in two units. My lease states what depth that is not drilled in the first 5 years has to be released back to us. With that said ... Can they go in and drill deeper sure they can, my attorney doesn't believe they will. If they drill deeper we get more royalty money, if not they can lease the the land again for the original bonus payment plus 20%.
I hope they don't drill deeper b4 my time is up and when they contact me ... I will tell them "yeah right" see ya.

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