Scare tactics or fact? Is Eclipse right?

Just received a second call from eclipse. The first call 2 months ago was to notify me that eclipse would be calling me with a new proposal on my existing lease with Oxford/Eclipse. Here is the scenario. 156 acres, Millwood twp., Guernsey co. Signed with Oxford 4 1/2 years ago, for nothing upfront, 12.5 % net.

My call today was threatening to say the least. "We are offering you 12.5% gross, no bonus, and that if we fail to re sign with them, we will not allow our lease to go by the wayside. My boss has paid too much money for this acquisition to let that happen, and we will put a shallow well on your property to lock in your lease  and you will receive nothing." I have to say, we have been anticipating the new tentative lease we signed 2 years ago with Turner Oil, and this call today has not been a mood elevator. Can anyone suggest what we should do now. Our lease will expire in March.

I read from 1 blogger, Tom, that he told them to come back with a different offer, and they did. I know it's just business, but I take affront with this kind of forceful tactic, especially with Oxford doing what they did, (meager 10.00 / acre/yr./ 5 yrs.).  I feel like I am going through the wringer 1 more time.

Any direction guys would be greatly appreciated.

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Permalink Reply by Anastasia on October 11, 2013 at 11:06am

Tom, just not sure I understand your logic.  Is this not a case of cutting off your nose to spite your face?  They can drill a shallow well to permanently hold your lease, and you will continue to refuse to amend the pooling provision to keep them from drilling a horizontal well?  Isn't the goal to get a horizontal well drilled, to get royalties?  If they are holding your property with a shallow well, why do you think some other company can come in and offer you a better deal, when your land is HBP?  Does your lease have a pugh clause?

Permalink Reply by Tom on October 11, 2013 at 5:10pm

Anastasia,

As profitable as these horizontal wells are for these companies, do you really think they would just let a 157 acre tract of land go undeveloped?  If they can amend the lease now, before a well is drilled, then they can most certainly amend the lease after a shallow well is drilled.  And after the well is drilled and they come to you then they are getting desperate for the land and will be more willing to be fair with the landowner.

My case might be a little more touchy because they could indeed allow a small 26 acre chunk of land go undeveloped.  And if they do, Oh well, too bad for me.  I'm not going to be heartbroken over it at all.  I didn't buy my property expecting this activity, and if I only get a shallow well and free gas out of the deal that is more than I had when I bought the place.  You cannot go through life worrying about what might have been and be happy with what has been.

Permalink Reply by Anastasia on October 11, 2013 at 6:42pm

If they got as much acreage as the reports say, yeah, I can see them letting a 157 acre tract of land go undeveloped because there are probably other places they can go drill without having to deal with disagreeable landowners (that's not directed at you personally).  I can't see them being desperate for much - again, if the acreage numbers are correct.  I would think they'd have to let some of it go just because there's so much to drill. 

 

No crystal ball here.  I would rather get in a horizontal unit now than take my chances I can get a better deal later.  To each his own. 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on October 11, 2013 at 11:28am

"Even if they do drill a shallow well, yes it will lock in your current lease, but they still CANNOT use your property for a deep well because of the pooling provision."

Is the pooling provision 160 acres?  Because if so they absolutely can drill a deep well and make the unit exactly 160 acres.  That's still very profitable for them.

Permalink Reply by Tom on October 11, 2013 at 5:12pm

Marcus, you are correct, and at the same time even at 12.5% is would be very profitable for the landowner as well.  It is still way more than the landowner would have gotten with no well at all.  Might the landowner miss out on a few extra % royalties?  Yes,  I guess it is all in what you are wanting to do with your land and how desperate you are for money.

Permalink Reply by Philip Brutz on October 11, 2013 at 10:20am

You should also consider forming a Millwood-Beaver twp. landowners group for people with old Oxford leases.  I would go door to door and talk to your neighbors.  Most of them are not on this forum.  My land is just south of the J.Anderson pad and all of my neighbors have old Oxford leases.

Permalink Reply by Mark Allen on October 12, 2013 at 9:18am

there is a meeting at Salt Fork on Monday the 21st, it may answer a lot of the proposed questions.

Permalink Reply by David Cain on October 12, 2013 at 6:06pm

Mark,

Is Eclipe hosting the meeting at Salt Fork on 10/21?  I hope that landowners are aware of the verdict against Oxford/Eclipse in Belmont county that has been reported here.  It should give the landowner more leverage when dealing with Eclipse.

Permalink Reply by Olive Sue on October 12, 2013 at 9:15pm

That decision against Oxford is probably much like the one in Monroe County against Beck Energy and will take a long time to finalize.  I understand something was decided very recently on that one and may be in favor of Beck.  Does any one know about this?  Sorry I know this is off the original subject. I   think I have become very skeptical that these cases will find in favor of the land owner.

Permalink Reply by searcherone on October 12, 2013 at 10:18pm

Just sayin' Olive Sue,  we haven't been hearing from you much recently.   Expressing your doubt about the challenges against Beck Energy are you.?  In about five or six weeks there may be an Appeals Court decision regarding Beck Energy and their void from the beginning leases.   As for the Oxford leases IMHO it is just the beginning.   So stay on your skeptical side and express those negative ideas to we landowners, Olive Sue, but plenty of southeast Ohio people stand strong when they know they have been wronged.

 

Permalink Reply by Olive Sue on October 13, 2013 at 1:20pm

I did not mean to discourage landowners as we are one that is held by this lease, expiration in the Spring, or we thought expired then.  I have had a hard time seeing why this is a lease in perpetuity when a clause directly addresses renewal.  If they didn't expire there would not be a need for renewal would there?   I do hope there is a favorable outcome for us however I will still have pause to wonder just how it will (and when) be decided.

Permalink Reply by searcherone on October 14, 2013 at 9:33pm

Perhaps Olive Sue you are looking at a lease that does have a renewal.   BUT there are plenty of leases in Ohio  that are forever with no expiration and no renewal.   And the courts of Ohio are taking a long hard look at the language of those leases

Time tells all things and remember always take the high road!

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