Replies to This Discussion

Permalink Reply by Brian V. on September 22, 2011 at 3:51pm

I have recently been told that Talisman would like to negotiate a lease but that their acquisitions budget for 2011 has been hit and that any further leases will be paid in 2012. Basicly like any other company they set a spending limit and stick to it. They have seperate budgets for acquisitions and for drilling, completion and transportation. Sometimes you have to put more money into the drilling so you have something to spend next year for future drilling. My advise would be to sit tight and in the mean time negotiate yourself a good lease.

 

The offer is similar to what our camp was offered. Basically, we were told, (we are also aware of current lease holds around us and Talisman Declatations) that we are in an area that they would like to be in their 2012-2013 drilling schedule. ( we are well aware that that means nothing until a unit is declared. We are comfortable with Talismans track record as far as local drilling and doing what they say) The landman has been very upfront about everything and most helpful in clearing up some title questions we have had. Oh and the offer is by far the best of any company conducting operations over here in Tioga Co. ($4500) My only concern is that by 2012 they may decide they want to lower their offer.

Permalink Reply by milton nelson weir on September 22, 2011 at 11:45pm

Good point about a lower offer.  We have hired an oil and gas attorney and plan on signing the 4500/acre as soon as possible.  I understand about their budget.  The bonus money on 194 acres is substantial so we are moving quickly.  Royalty amounts in the 18-20 range for you as well?

Permalink Reply by Brian V. on September 23, 2011 at 2:11am

18% here. Calculated from the well head. I'm still looking into exactly what that means. There are so many ways these companies have of wording royalty payments. It's a big deal to me so I'm doing my homework. About a year or so ago companies were willing to go to 20% royalty. Here Shell is at 15%, Chesapeake is at 17% and Talisman seems to be sitting tight at 18%. I wonder what has changed.

Permalink Reply by Barbara on September 23, 2011 at 4:58am

you guys of the 'current' going prices are so fortunate......if you had any moments at all of wondering over the last few years, 'why aren't they coming to my place with an offer yet?', you must be seeing now how good that actually was.  and grrrrrrrrrrrrrrrrrrr for some of us here in the earlier offerings.....in 2008 for instance.

 

ANYTHING over 12.5% was a big gift then, and bonus money was all over the board but about $2,500 was considered a lot and great.  AND now there are so many people around with some knowledge of the whole process and options that are open to the landowner.  PLUS there are lawyers today who do know something of the whole business, and some lawyers who know a LOT............................both hard to come by just a few years ago.  You really are now in positions to secure good 'deals' with the gas companies that will protect you better in the long term plus give more benefits to you immediately.  take advantage of all the know how that you can ....you will be glad you did. 

 

One very important thing to remember as you work through all of this...........very very important.................the bonus is important, yes, and the more the merrier, for sure......HOWEVER the biggest areas to be super careful about and to understand every detail of and options that you do have regarding them..............................is the lease wording for what is and isn't allowed on your land; who, why, what is responsible for damages to your own land and others that are nearby; what's allowed above ground, how many pipelines allowed and payment for them, even the restoring of the land once the well is finished, with time frames for each phase.  there is air pollution to be cognizant of, as well as land pollution and noise pollution (thinking of compressor stations).  cover all of your concerns/assets to the absolute optimum which you can.

 

remember, as well, that no matter how 'nice', 'upfront', 'cordial' the landman may be..................he is a SALESMAN and is working for himself and the company, NOT for you.................and no matter what he may say, promise, assure you of verbally, none of it means a thing..........only what you get in writing.  beware the legaleze in the leases....it is put there by batteries of well paid lawyers whose whole job is to keep all to the advantage of the gas companies.

 

i know i sound a harpie on these points, but i cannot warn you enough about each point.  you have no idea how many times i have wanted to commit 'hari kari' after gaining more knowledge of druthers at meetings since i signed in '08. and my experience is not unique.....as you will hear over and over in all the forums/blogs/comments anywhere aside from gas co propaganda on the web, in newspapers, magazines, books on the subject.

 

do your homework, be sure of your lawyer's competence, take your time, do not worry about them 'leaving the area'....there is gold under your feet, and platinum below that.....noone walks away.

 

lock in best royalty, too, with clear understanding of just what they are basing it on.....many exclusions in the wording, for sure, so heads up.

 

good luck to you..........

Permalink Reply by milton nelson weir on September 23, 2011 at 5:40am

Thanks for all your words of caution.  Well founded advice from everything I have heard.  We'll be cautious and as aggressive as possible in our negotiations.

 

Permalink Reply by scott brion on September 28, 2011 at 3:45am

Good that you have found a good attorney, I am trackign Talisman's development in your area and would be happy to share information or help out on any business issues in your lease.  Most lawyers don't focus on the application of business terms to the facts on the ground so happy to help out if its helpful.

Permalink Reply by milton nelson weir on September 28, 2011 at 3:50am

Thanks, Scott.

I appreciate your offer.

Let's see how things progress.

Milt

Permalink Reply by Finnbear on September 28, 2011 at 4:57am

Another thing to consider is that "90 days" (about 13 weeks) may really be 90 business days which is 18 weeks plus whatever holidays fall in that time period. A lease signed in the next couple weeks could be 19 weeks or so before 90 business days are up.

Permalink Reply by milton nelson weir on September 28, 2011 at 4:59am

Good point.  We had that exact discussion last night while trying to plan for the payments.

Thanks for your feedback.

Permalink Reply by Greg Primeau on September 28, 2011 at 5:34am

There is a lawsuit in Michigan where Chesapeake promised payment then relied on the title language to get out.   Please consult an attorney and bring up this issue, the companies are getting clever about getting out of leases.  With that said, 60 days in common, but that would put you to November 30th, doesn't seem right to me.  My guess is there title examiners are running behind, they aren't likely to let a Bradford County lease get away.   I am a landman, remember attorney, attorney, attorney.  Find one familiar with oil and gas, not a general one that does divorce and drunk driving one day, then oil and gas the next.  I don't have a recommendation, but your neighbors might.  Find one that has worked with a group that has signed together.  I have not worked that area so I don't have a name for you.   There are Bradford groups here, try that too.  Best of luck to you, there are so many issues, be careful, remember an oil and gas lease lasts longer than most marriages.    I would also encourage you to go to your recorders office after you find the name of someone who signed with a group and get a copy of it, most of those leases are pretty good.  This is going to require work for you, but it will be worth it in the long run, that's a big chunk of acreage.  Sorry, I don't give very specific advice because I am not an attorney.  

Permalink Reply by Barbara on September 28, 2011 at 6:12am

great to get your advice/input.

Permalink Reply by Robert K. Shumway on October 5, 2011 at 9:53am

Talisman more than likely has purchased considerable acreage over the past two years, with little return on marketing gas.  Most of the gas companies have been drilling at least one verticle drill hole to tie up the lease, therefore the gas company nor the land owner have much if any income.  Good faith payment of bonus money would have to be covered in the lease agreement, which should have the approval of your legal councel.  For me the big question is not only when the bonus money will be paid, but how long going forward before gas is being marketed from your lease.  Your 18% may be several years in the making.  I am presently working with a land owner in Bradford County, who has close to 600 acres, and wants to drill and market his own gas.  Needless to say this approach will take some serious thinking.  Will post more later on this.

R. Keith

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