Who is who on here??

I have land in Southern Mercer Co. and have been looking for some help with trying to understand all of this since nobody drills near my township. I have been reading the posts here for a while. It seems that some people sharing genuine and thoughtful input are "land group organizers who may or may not be fee-based lawyers who might or could be contractors? But definately, and not actually a landman, or could be just concerned advocates, helping get everyone together so that everyone sees the most from all of this.

Has anyone else found this to be the case? It's Confusing.

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Permalink Reply by Todd Charles on November 9, 2011 at 6:29am

Schnoozie, I was contacted by XTO's landman (from Bryson Kuba) in April, 2010 with their initial offer.  I was aware of the Marcellus Shale Play under my farm and had been approached by 2 other companies, several months prior - which had led me to research the entire horizontal drilling process in the O&G industry, the environmental effects, as well as the money being paid and the costs of bringing in a solidly producing well. 

In my research, I traveled to many active well sites in NY & PA - as well as some former "failed" sites (in PA) - talking to landowners and people in all the communities, seeking their personal experiences and opinions, on Marcellus Shale drilling.  I feel I saw the "good, bad & ugly" and was able to form some firm opinions of my own about the process - and what I would or could accept -  literally "in my own back yard".

I signed with XTO because, unlike the other companies who had approached me, they openly discussed my concerns, worked with me and my attorney to address all of my environmental, conservative issues (I live on my 30 acre horse farm) and met the figures I asked for. They plan on being in this area for the next 75 to 100 years - they want to establish a solid foundation in their relationship with the community - and those things were important to me.

I signed with them in June, 2010 - received my bonus signing check within 2 weeks - and they began their well pad preparation October 10, 2011 (after having to wait for my road to be paved) 1 year and 4 months after I had signed my lease.

I paid my lawyer $55 per hour - and beyond that, there are no other costs, fees, or deductions coming from my well money.

...and XTO is already actively laying out their second and third production units abutting this one.

I have frequently seen speculating companies "tie up" large units of land - and some drilling companies have paid such extravagant figures to lease mineral rights from these large parcels of land, that they no longer have the capital it takes to develope and drill.  Then they have to "flip" their leases to someone who can drill.  That is how China and other foreign interests are obtaining our (American) mineral rights/fuel/energy - by buying out the companies who speculated, paid such high lease figures - and then cannot drill...

I believe it is relatively safe to say that my production unit will be producing within 2 years of me having signed my lease.  We will see how long it takes for Mr. Litwinowicz to realize income from his signing - after his having spent 3 1/2 years of effort to get the terms he wanted. 

...and my royalty checks will not be coming from China.

 

 

Permalink Reply by Schnoozie on November 9, 2011 at 6:41am

The agreement I have here on my computer says Mt. Jackson group Wave-2, I guess thats what you mean by "new group" and it says 8% of the bonus and 5% of the royalty. not like you state above.

Do groups within groups have different arrangements?

Also do you have some sort of proof that gas companies deduct as much as 3% of the Royalty?? I think everyone would like to see that documentation especially if its a company operating in our area.

Why would Co-Exprise offer a reduced take of the bonus? And did Co-Exprise make the adjustment for the first Mt. Jackson group who lost 8% of their bonus, meaning reduce their percentage also? to make it fair.  More confusion.

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 7:22am

There have been a lot of comments discussing the fees a group should pay. Most seem to believe that paying the least fees and putting all the money received into the landowner's checking accounts.  That is a good idea if all other things are equal.  No use paying more to get the same thing. But not all things are equal.

What people need to consider is what value the various options bring to the landowner.  If a company can get you $500/acre more and a better lease for your rights, it really doesn't matter if they make $200/acre.  They have brought you more value and earned that fee. And if they bring you $1000/acre more that is even better.


I was part of the Mt Jackson group. When we contracted with Co-eXprise we were told by Shell their best and final offer was $1500/15%. They said they had so much land in Lawrence Co that no other company would come here  and wouldn't budge any for over six months. Co-eXprise compiled the data of the landowners, used a proprietary software system to generate interactive shape files and a GIS mapping system and sent it ti 180 companies. This allowed companies from all over the globe to overlay this with geologic and seismic data and make a decision on whether to bid or not.  24 companies responded, 10 began negotiations. After a several months, we had several offers, some from companies that worked in the Marcellus and a couple that had never done business here. The price went to $3000/17% and a very good lease....much better than the $1500/15% that Shell offered.  Even if Co-eXprise charged $500/acre...which they didn't.... it would still have brought us more value than they charged.

After seeing what Co-eXprise did for us, I became a Channel Partner with them and are now doing the same thing with other landowners. Do yourself a favor and at least look at what Co-eXprise has to offer and give them serious consideration.

Companies throughout the US and all ovr the world are reading and studying the new Utica reports.  They are looking for areas to establish a foothold here. Don't sell yourself short by failing to reach out to these companies.

 

BTW, Shell quickly went to $3000/acre after we got our offer and are now at $3250/18%   It was bringing in new, outside competition that won better value for all landowners in Lawrence Co, not just Mt Jackson group members.

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 7:50am

Nope CoX is a For Profit company.  The profit motive made them much more aggressive, incentivised them to invest in proprietary software, allowed them to work full time.... not in their spare time.... and brought much more profit to the landowner...see math below.

Permalink Reply by Schnoozie on November 9, 2011 at 7:36am

Jim, of the 10 companies that were interested in negotiating, who did Co-Exprise finally sell your lease too? and did everyone in your group get the same lease and dollar amount, or were there individual property considerations?

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 7:47am

CoX didn't sell our lease.  We were presented the three best offers and the group decided to accept the offer they liked best which was the one from Hilcorp. We all signed the same lease as it had all the protections we wanted.

Permalink Reply by Schnoozie on November 9, 2011 at 7:42am

Thanks, the guy I saw has been going oil and gas work in Mercer along with being an Estate Atty. for about 25 years so he seemed comfortable with it.

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 7:39am

Did some math since people keep talking how much CoX made on the deal.

The best offer we had was $1500/15% with deductions. CoX brought in several companies to bid and ended up at $3000/17% no deductions.

If 30,000 acres were signed at a difference of $1500/ acre then the Hilcorp deal brought an additional $45,000,000 to the landowners.   If half paid 8% and half paid 5% (original group members already had a contract with M & P at 5%) then the fee is $5,850,000 which is split between CoX and M&P. So they added $45 million in value for a fee of $5.85 million. And after five years, many will get a second $3000/acre bonus payment where they haven't yet drilled, adding another multi-million dollar payment, depending on how many acres haven't been drilled, to the landowners over the previous best offer.  And that doesn't even figure in the value of the added royalties or the value of a lease that protects the landowner which may double the value of the lease.

Permalink Reply by Schnoozie on November 9, 2011 at 8:01am

That Math is a little confusing and kind of puts me off topic.

What did Hillcorp do with it then? If you look around here on this site people say Hillcorp is a broker, and I think thats ok that they are, if its true, thats their business.

You now have a five year lease with Hillcorp, correct?

Also who or what is an M & P as you said above, meaning the other members of the group had another group they belonged to and you merged groups.

You signed in September? did you get paid yet?

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 8:12am

Hilcorp is a drilling company that had approx 125 wells in the Eagle Ford in Texas...they are not a broker. They have other wells in other plays. They will be drilling here next year.

The lease is a five yr with an option to renew for a second five yrs.

M & P was a law firm that first started the Mt Jackson group 2 years ago and they partnered with CoX to market the rights. All the original members got a reduced fee since they were already under contract. Any one that joined after April 1st paid their normal rate.

The math was to show what value they brought to the landowners. You kept bringing up what their fees are but do not pay enough attention to what value they brought to the landowner. I don't care how much they make as long as they make me even more.

Permalink Reply by Schnoozie on November 9, 2011 at 8:25am

What was the name of the law firm? (M & P) were they local,  who organized the first Mt. Jackson group were they from Ohio or PA?

Thanks I see the five year option part in my Contract. its pretty clear cut. I do have a problem with that and I don't for different reasons.

Permalink Reply by Jim Litwinowicz on November 9, 2011 at 9:05am

M&P is from Washington Pa.  Good O & G attorneys they started the group first.

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