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Permalink Reply by Jim Litwinowicz on December 2, 2012 at 3:44pm

Looks like you should be in a good area. The only caveat is that is a dry gas area and dry gas is really low right now. I would talk to as many neighbors as possible to see who they are leased with, how long ago, what numbers and terms in the leases, and if they are happy with whom they signed. Then call the companies that have produced the neighboring units. Hope it isn't too late to get into a unit.

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Permalink Reply by Jack Straw on December 2, 2012 at 4:15pm

All information from Jim is (in my opinion) accurate and valuable.

 

I would reinforce the comment that “dry gas is really low right now”; in 2012, a lot of rigs moved west to chase “wet gas” in the Utica.

My hope is that 2013 and 2014 will see better Natural Gas prices … and some rigs will head back to PA, as economics improve. That is my hope, but I dropped and cracked my Crystal Ball and lately it has not been entirely reliable.

 

I would certainly follow Jim’s advice and educate yourself in the manner he described.

If you can be patient, you might benefit from waiting six to eighteen months before you negotiate a lease. The good news is that a delay would give you time to learn the sort of things that go into a good lease (and hopefully, a delay might result in a better upfront bonus and better terms).

 

Good luck to you, (and let us know how things turn out).

 

All IMHO,

                    JS

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Permalink Reply by Gary L. Mills on December 3, 2012 at 2:57pm

thanks for the info i think we will just wait for gas prices to get better and see if any gas com pines would be interested.

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Permalink Reply by Jim Litwinowicz on December 3, 2012 at 4:25pm

Mr Mills; I wouldn't necessarily wait if I were you. You may have already waited too long.

You said the most of the land around was already leased and into production. That could present a problem. If the land is already in production that means the units have all been defined. If you are the last parcel, or even one of the last, then they may not be able to put you into a unit due to size limits in the leases or maybe even length of laterals. Also, once most land is leased and there is a single dominate player controlling an area, they will lower their offers. Waiting too long may leave on the outside looking in.

You said "most" of the land was producing. I would talk to landowners that are not leased or with leases about to expire. Hopefully some of these are adjoining your property. See who they are getting offers from, what the offers are, and/or see what they are looking for in a lease. Then try to get them to work together in negotiating with the operators in the area.

If no neighbors are unleased, or do not want to talk to you, then reach out to all the operators in the area. See if any are leasing and try to get the best deal. Get a lease before all the other land are placed in units.

Again do not wait as you may be totally left out if you wait too long. You can always turn down offers you don't like but be cautious if you are one of the last pieces to lease. Even though prices are currently depressed, these companies plan over five or ten years and will sign leases now for future production. And even if the bonus payments are not high, a low bonus is better than getting nothing by waiting too long. And the royalties are the main thing. Ask for a higher royalty in exchange for lower bonus if you have to.

Good luck!!

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