Replies to This Discussion

Permalink Reply by Tony Yurina on July 19, 2013 at 8:32am

I have read a blank copy of the  SOEC LLC lease document, it was a 20 page pro-landowner lease, one of the best I have read to date.  I wouldn't hesitate to use it.  For landowners that know zero to little about the oil & gas business, this was a very good document.   

The blank lease I saw was to be signed between the landowner "lessor" and the oil company"lessee"  with representation/ties to or by SOEC by another agreement.  I can't see any flip job being possible.  

An acquaintance gave me a copy of the SOEC land group agreement, in year 2012 the fee for SOEC was a fraction of what most landowner groups pay, and no royalty percentage fee was involved for 3 to 5 years like most landowner groups will pay when being represented by a third party.  

One must wonder how much it cost to put this whole deal together time / money / travel and resource wise.... if the landowners didn't get paid, the SOEC obviously didn't get a dime either. 

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Permalink Reply by Samuel J. Orr on July 20, 2013 at 3:47pm

It was DUX that would flip the leases! Surely DUX had to flip the leases as it is a shell company with no substantial assets, no drilling equipment, and  no history of drilling any wells that is discoverable. It touts itself as a "leader in the industry and says that it has done business in 20 states"... it has  no phone number!" I have some land and e-mailed them months ago but got no response.Many on this website have tried to find out something positive about DUX...but nobody has been successful. DUX is apparently a one man corporation whose principal is one Adam Popejoy. If his corporation is a leader in the industry, I am sure he and his company would have made headlines in the Wall Street Journal, Forbes, The Financial Times, or any number of other reputable publications. Given all the work by landowner 1 and others on this site in exposing Attorney John Wells and DUX, why would anyone sign a lease in favor of DUX? If this was the old west Mr. Wells would have long ago been tarred and feathered and run out of town on a rail. Kind of makes me long for the 1850's or 1860's. (I do not wish Mr. Wells any physical harm and am not advocating that he be tarred and feathered since today we are more civilized and have the law courts for our remedies!) Besides, I fear that the art of tarring and feathering is a lost art. Attempts to do it today might result in the tar being too hot and this could cause physical harm. Physical harm is not something to be wished upon Mr. Wells or upon Drill Baby or any other of the principals of SOEC. I do think  landowners who signed leases in favor of DUX should consult  an attorney concerning any legal remedies they may have against Attorney John Wells. Obtaining  cancellations of any outstanding leases with DUX should not be too difficult ! Attorney Wells undoubtedly has malpractice insurance but DUX seems to have no assets of any consequence. At the very least Wells' actions in encouraging, or in allowing landowners, who he was representing to sign leases in favor of DUX might constitute negligent misrepresentation by Wells of the affected landowners. There are probably other legal theories that might be applicable, but I will leave that to the lawyers!  

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Permalink Reply by searcherone on July 20, 2013 at 4:03am

Tom, for some reason there isn't a reply button at the end of your recent message so hope you will see this.  I think that it is admirable that you worked hard for your neighbors to obtain a good lease without pay

Am I to understand that essentially the Garrison lease was the template for the other Monroe leases negotiated after the Riverfront signing?  What are the improvements that the Lusk group made to the template?   I and a relative in Washington Co. have discussed the 5million liability clause does not fit every land owner as some parcels are almost idle raw acreage and others are involved in intense agriculture pursuits.  Or does the lot of a quarter acre in Sardis or Clarington need 5 million?  Needs to be some adjustment there I think.  What are the other variations on the Garrison lease that were incorporated into the subsequent leases?  There remain Monroe County landowners how are yet unsigned and perhaps they need a few pointers.

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Permalink Reply by 0rwgvde65zwg1 on July 20, 2013 at 8:10am

Searcherone no the Garrison lease was not used specifically as a template, but as Bob said all the wish lists are very much the same and template originally from the Alov lease, EMLO created their own wish lease from the ALOV lease originally, as did the Switzerland/Salem group, EMLO Hired Lensman who we fired after over a year of nothing then piggy backing Garrisons Eclipse deal for 3 townships only & a $500 offer from Atlas. Lensman came with their own wish list lease that was almost identical to ALOV, and after we fired them we hired Critchfield & Critchfield who also brought their own wishlist lease which was also very close who  we fired after the phony Hess deal fiasco they brought, as I said I reviewed the EMLO Lease & Garrison lease & they were very close with few exceptions and to be very honest I don't remember exactly what they were considering I have at seen at least 25 different leases all seem to be template from the original ALOV lease, there is two more examples of paid Attorneys that did nothing for the landowner that eventually did for themselves for free.

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Permalink Reply by searcherone on July 20, 2013 at 8:54am

Tom,

IMHO whatever your group finally received after going through all of that mess you deserved every penny.  The Critchfield deal was an incredible disaster.  Think I read in another discussion some Monroe landowners were being approached about using them on some expiring leases.

Perhaps instead of discussing the already in stone leases we should make a wish list of groups we don't want to see doing business in Monroe again or for the first time--a watch list for landowners. 

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Permalink Reply by searcherone on July 20, 2013 at 7:14am

Bob and Donna,

I am just restating and asking from Tom's post where it was stated that Garrison's lease was used as a template that's all.  I personally have no idea as to the veracity of his statement and I have not read the other leases.

 Yes, Donna there are only so many words in the English language that can be used for the constructing of lease language, their are bound to be similarities.  And where there are two people discussing any topic there will always be two viewpoints.

My only two purposes in this discussion are:  I am satisfied with my lease through the Riverfront group and for my future leasing purposes is there some wording/clauses that I should include.

Bob, there is one other statement about Eclipse that gives me pause to wonder about them, why did they file one of those friend statements on behalf of Beck Energy in the court case Hupp vs. Beck Energy.  I thought as a mid level E&P they could have stayed out of it for their public image.

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Permalink Reply by 0i7okn54zwbdo on July 20, 2013 at 4:34pm

Here's the ORC that covers real estate transactions and brokers.  http://codes.ohio.gov/orc/4735

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Permalink Reply by Landowner1 on July 21, 2013 at 3:38am

It is important for landowners to understand that unless they are careful with how the group is structured there can be an inherent conflict of interests between the attorneys negotiating the leases and the landowners.

In a typical attorney lead landowner group it is in the attorneys’ interest to sign up as many acres as possible and lock the landowners into a commitment with them. This is because the attorneys are only compensated based on a percentage of the bonus paid to the landowners. The attorneys have no interest in negotiating hard to increase the royalty % or to get landowner protective leases – their compensation is not based on that. In fact, negotiating hard for those things makes it harder for them to get a deal and get paid. The attorneys do not care if the company is a flipper or is a legitimate O&G company with the financial, technical and operational ability to drill a lot of horizontal wells – the attorneys get paid the same.

In contrast it is very much in the interest of landowners to get a strong, landowner protective lease (because they will have to live with it for generations), to get a higher bonus % (because the real money is in the royalties) and to sign with a legitimate O&G company (because they only get royalties when wells are drilled).

It is in the attorneys’ interest to get a deal, any deal, as quickly as possible. In many cases this is because the landowners commitment to the group is about to expire or because the attorneys are concerned that landowners will do a deal with a different group. This appears to be the primary motivation of John Wells and SOEC, who faced that situation.

Wells and SOEC were desperate to do a deal, any deal, and chose DUX because DUX was the only company they knew of that would match the deal that a competing group had on the table. They probably figured that if they were lucky DUX would be able to flip the leases and therefore have the money to pay for the leases. If not the landowners would be tied up for 120 days with DUX, therefore Wells and SOEC would have another 120 days to find a real O&G company (which they were looking for anyway for their other Washington County landowners).

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Permalink Reply by Samuel J. Orr on July 21, 2013 at 9:52am

I still think that it is possible that there was a conspiracy between John Wells and DUX whereby Wells would encourage many landowners to sign with DUX. I think it is very possible Wells had a  secret agreement with DUX whereby Wells and DUX would both use their best efforts during the 120 payment period to shop around for real O&G companies to whom the leases could be flipped. Let's hypothetically assume DUX had 20,000 acres (they may have had more or less) and that Wells and DUX convinced Shell to pay $5500 / acre. Should this have occurred the landowners would have been paid $4000 / acre and Wells and Dux could then split $1500 / acre multiplied by the 20,000 acres. The amount to be split would have been $30,000,000. And John Wells would still have been able to earn his 1% from the landowners.... or another $800,000. I of course am not alleging that this is what Wells and DUX did. ...but it is assuredly possible that this was the plan from the very beginning. It would make very good sense if the real goal was to enrich Wells and DUX rather than to get the best lease for the landowners. I would love to see Mr. Wells answer some pertinent questions under oath! 

 

 

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Permalink Reply by Samuel J. Orr on July 21, 2013 at 10:16am

Pardin the math error, Wells' fee from the landowners would only have been $600,000 and not $800,000 as stated above.  In either case it is an insignificant amount compared to the amounts Wells and DUX might have divided under my hypothetical set forth above!!

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Permalink Reply by Seeker on July 22, 2013 at 2:50pm

Landowners need to insist that any company they sign leases with:

1.  Is a legitimate company with verifiable assets, offices, telephone numbers, employees, extensive oil and gas experience and a functioning website.

2.  Has the cash to fund the lease purchases, preferably due to the company’s size and track record or at a minimum guaranteed by a recognized financial institution.

3.  Is financially, technically and operationally capable of funding and drilling horizontal Utica wells.

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Permalink Reply by Big Al on July 22, 2013 at 2:59pm

I think that it is possible that there was a conspiracy between Samuel J. Orr and The Garrison group whereby Orr would encourage many landowners to sign with Garrison. I think it is very possible Orr had a  secret agreement with Garrison whereby Orr and Garrison would both use their best efforts to get the folks in Waterown to switch groups. Let's hypothetically assume Orr got those 20,000 acres to switch and that Orr and Garrison convinced Shell to pay $5500 / acre. Should this have occurred, the landowners would have been paid $4000 / acre and Orr and Garrison could then split $1500 / acre multiplied by the 20,000 acres. The amount to be split would have been $30,000,000. And Garrison Group would still have been able to earn her 4.5% from the landowners.... or another $3,600,000. I of course am not alleging that this is what Orr and Garrison are doing ... but it is assuredly possible that this is the plan from the very beginning. It would make very good sense if the real goal was to enrich Orr and Garrison rather than to get the best lease for the landowners. I would love to see Mr. Orr answer some pertinent questions under oath! 

 

Pardin no math error, Garrison’s fee from the landowners would have been $3,600,000 million compared to 600,000 charged by SOEC.  It is a significant amount compared to the amount SOEC would have charged.

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