recent visit from Shell landman

Just talked to the landman from Shell and he said that they are no longer offering the pugh clause. If this is true, what would be the pros and cons of subdividing my 113 acres into 113 one acre lots and lease 113 leases to get around the no pugh clause. Just an idea, tell me what you think.

 

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Permalink Reply by Schnoozie on March 28, 2012 at 4:00pm

This could be one of the tricks they use, did he also have a phony check that was bank draft? They pulled the same thing with the land down in Beaver Co.

You will get alot of feedback here. Go for group protection. Vote for Pedro!

Permalink Reply by mike4t on March 28, 2012 at 4:52pm

I would think the cost of surveying, preparing deeds and recording 113 parcels would be pretty significant. Also, you may have to pay a different tax rate for 1 acre parcels as opposed to a large parcel, and you may run in to a zoning problem as you might have 50 landlocked parcels.....

But, seriously, do you think the landman is telling the truth??? LOL

Permalink Reply by Farmhouse on March 28, 2012 at 7:22pm

Pugh clause is SOP at this point. No Deal.

As a matter of fact make sure you get horizontal and ask for vertical.

Permalink Reply by eric jenson on March 28, 2012 at 7:49pm

If this is Venango county Just say no way!   I have a contact in Ft.Worth Tx.  "This is a hot spot" So they say.  (Venango County)  The offers will Come!  People from China are willing to invest in land here!  Why not SHELL??

Permalink Reply by tomcats58 on March 28, 2012 at 8:12pm

By the way, the cost of a division like that would be extreme and the future tax implications prohibitive.

Permalink Reply by Mike Flor on March 28, 2012 at 9:29pm

A couple of other options come to mind.  You could just lease a certain strata they are after ie Marcellus or utica.  Also you may be able to negotiate the unitization clause has to include  your entire parcel.  This will maximize your potential income on units.  I hate to see your land get locked into a lease when only a portion of your land held by production.  Let us know how it goes.

Permalink Reply by Jim Litwinowicz on March 29, 2012 at 8:49am

I wouldn't subdivide that into 113 acres as that is way to costly.  Maybe divide into 5 similar-sized parcels, depending on shape and location. And then make sure you sign a separate lease for each one. If multiple parcels are listed on one lease, they can all be HBP'd by a single well.

Like Eric Jenson says, Venango is becoming a hot spot so just be patient and wait until a better offer comes along.

Permalink Reply by Jason Bablak on March 29, 2012 at 9:24am

I would be interested to hear more about why people think Venango is becoming a hot spot.  Is there some new data driving this?  Any thoughts would be appreciated. 

Permalink Reply by Jim Litwinowicz on March 29, 2012 at 10:10am

Talking to people in the county, I have heard of several companies that are out there starting to lease. People are getting offers from several different companies.  Also, we are getting feelers from companies asking about land in Mercer and Venango. Last, at the NAPE expo, there was some serious interest in both counties.

Just my  guess, but it seems all the seismic work done last year showed good potential.

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