Replies to This Discussion

Permalink Reply by Thomas Lilli on September 19, 2016 at 9:58pm

My neighbor and I just signed 5 year 15/15 ($1500/ acre, 15% royalty) leases with three pages of addendums with Talisman.

I don't believe they wanted any more land than their current holdings.

I believe both of us have a three year extension in our leases.

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Permalink Reply by Theresa Kolk on September 19, 2016 at 10:43pm

Thanks, Thomas...had a call yesterday, gentleman said he wanted to talk, but his schedule was full for a week...we'll see what he has to say :)

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Permalink Reply by Gary Keeney on September 20, 2016 at 4:59am

 I received an offer of $2000/acre for 7 years, 14% with deductions and little in the way of good addendums.  I don't think this is good enough with the deductions and little protection.  We have until spring on our old "Root" lease with no deductions and great addendums.  I see no reason to sigh up with a much poorer lease.

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Permalink Reply by Theresa Kolk on September 20, 2016 at 10:27am

Thanks, Gary...May I ask where (which township) in Tioga Co. you are ? I'm in Liberty township as is Thomas, who answered earlier. Which company is making you offers? I am hearing from Southwestern.  Again, thanks for the info... Theresa

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Permalink Reply by Gary Keeney on September 21, 2016 at 1:28am

offer by Shell. We are in Middlebury Twsp.

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Permalink Reply by Theresa Kolk on September 21, 2016 at 10:17am

thanks again, Gary   ..Theresa

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Permalink Reply by Gary Keeney on September 21, 2016 at 5:35am

From any of the neighbors I talk with, Shell's offers are in this range or lower. No one seams interested in the royalties with deductions and the overall lack of protection in these offers. To take a line from one of the lawyer's ads. It seams the land men are just picking the low hanging fruit, anyone that will sign cheap.  If you ask many questions or want a fair price they don't come back.

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Permalink Reply by Jack Young on September 21, 2016 at 8:46am

Just my advice after 35 years of negotiating leases, but Shell is the only game in town in that area. No other company could possibly assemble the acreage needed to drill economically in Middlebury Township. If you hold out too long, they will drill around you. And that will hurt you and your neighbors for a long time. I missed the boat several times early in my career, and those wells still haven't been drilled. But I learned my lesson.

If Shell told me they were about to drill in a unit where I had acreage I wouldn't care if they paid me a penny up front - I'd do everything I could to get them in there. I can tell you from experience - Shell can't be backed into doing things they don't want to do. They are too big, and your lease/proposed well are rounding error to them. You take a big risk when you gamble a well on the exact terms of your lease and ask for more than anyone else has gotten in recent times. There won't be any more leases signed like those old Jackie Root leases - you need to move on and accept that 2016 is a different era.

Good luck with it. I just hope you don't overplay your hand.

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Permalink Reply by Gary Keeney on September 21, 2016 at 9:06am

Where do you feel  the line is between too little and too much.  With so many companies taking close to one half in deductions I feel quite strongly on no deductions or at least a cap on the deductions.  If we are lucky enough to have house bill 1231 pass that may help.

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Permalink Reply by Theresa Kolk on September 21, 2016 at 10:21am

that's what I worry about, if we get a decent offer, the deductions. I'm not trying to be a millionaire, but I also don't want to give everything back to the gas companies....

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Permalink Reply by Jack Young on September 21, 2016 at 2:00pm

Shell has traditionally been better with royalty deductions than most companies. Unless the legislature gives landowners additional legal protection, only higher prices will make much of a difference to those signed with the worst offenders. I just don't put Shell in that category no matter what their lease says. Personally I'd rather have 2/3rds of a well than all of no well. And no bonus either if I don't lease.

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Permalink Reply by Thomas Lilli on September 21, 2016 at 10:02pm

Do you have any experience with Talisman Jack? Our impression is that they have a small play tied up around us there in Liberty. I am aware that they have turned down calls adjacent to our property. Could they be assembling holding to sell to a larger company?

Our new lease has as tight a no deduction clause as my attorney could write but he cautions that deductions are hard to insulate from. Our attorney has lots of gas experience. And this is all he does.

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