Replies to This Discussion

Permalink Reply by Jim Litwinowicz on July 1, 2011 at 3:07am

I seriously doubt that CHK would sign for more by dealing direct. Small landowners of a hundred acres or less have very little leverage to get a deal. Plus our lease is much better than any I have seen that were negotiated by individuals.

Look at the Fryburg group or the Fortuna lease.  Large groups always get better deals. And more importantly, they get better leases that protect them and the land.

The downside is that it takes much longer and can be very frustrating. Patience is the key. But when tens of thousands of dollars are in play, patience pays off.

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Permalink Reply by mark o on July 1, 2011 at 3:15am

jim,  when co-exprise started this they were telling all my neighbors that they would get 3k an acre.  i said from the start,  they would never get that kind of money,  the offer is lower, most people will accept and co-ex walks away with alot of money.  i still believe if neighbors get together and go directly to chk or range they will do better.  there are some groups out there doing this.  only time will tell.

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Permalink Reply by craig on July 1, 2011 at 4:04am

I agree whole heartedly Mark, just do it informed and knowledgeable.

 

 

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Permalink Reply by Jim Litwinowicz on July 1, 2011 at 4:06am

The way things have developed, one or two companies dominate in any given county. This limits competition and keeps offers lower.  Some people think that this is due to collusion between gas companies but I doubt it.  I think it evolved this way because companies tend to bid on leases where they are already active and proven successful. But I may be naive.

 

The one thing that Co-eXprise brings to the table is their long reach.  They sent data to 180 companies from around the world.  Some companies are familiar with the shale plays here but have no presence. This gave them the opportunity to get involved without having to spend $$$ on land agents or staff local offices. And when they get into the bidding process that forces the dominate players to up their bids.

 

If all this plays out as I describe, it will benefit all landowners, even those that haven't joined the group because it will increase competition and offers. Negotiations are ongoing so $3000 maybe reached yet. There was no guarantee that target would be reached, only a commitment to sign a lease should it reached. And even if it isn't reached, a $1000/acre better is still a huge improvement. And if they made all of us that much more money, I couldn't care less how much they made.

 

You are right, only time will tell.

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Permalink Reply by craig on July 1, 2011 at 5:50am

Personally, the upfront money isn't anywhere as important as the lease itself and the royalty. I agree with what you are saying overall, especially the fact that groups will tend to force the companies' hands some.

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Permalink Reply by mark o on July 1, 2011 at 5:55am

craig, it also gives the others some leverage.  example, half my unit is with co-exprise...the other half is talking direct and has not signed.  i think it puts us in a better position.

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Permalink Reply by craig on July 1, 2011 at 6:18am

I'm sure we are all better off, agreed. Nothing better than playing hardball with the companies that want to play hardball, but you can't take it too far either.

 

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Permalink Reply by mark o on July 1, 2011 at 6:30am

craig,  we are taking the opposite approach.  we want to work with them and we want them to be fair with us.  pretty straight forward.....everybody benefits and everybody wins...its how business is supposed to work

Permalink Reply by craig on July 1, 2011 at 7:23am

I wasn't saying that playing hardball with them is the way to go, however there are times it is what needs done. I'd much rather work with them, as I have in the past...but I have one more parcel to lease and they don't seem to want to work with me, yet. I can't complain about any of my dealings with the companies, so far.....now my brother is another story.

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Permalink Reply by craig on July 1, 2011 at 3:39am

Jim, 

So reading between the lines and the limited info so far posted, I get this:

Chesapeake is only interested in Beaver County...and they offered somewhere in the $2350 with either 15 or 17%. Makes sense since they have a presence here and are started on building out the infrastructure. 

Other companies are interested in Lawrence and Mercer county at somewhat of a higher $/acre. Makes sense if they are active there as well.

A company that flips leases is interested as well.

It sounds like no offers where accepted then, which maybe a good thing in the long run as better terms may follow in the future. I sure hope it all works out for the group.

 

Ohhh, btw, anyone who signs a lousy lease has no one to complain to but themselves. 

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