Lensman & Associates is forming a group in Belmont County. Anyone with acreage in Belmont County should contact this firm quickly if they are tired of waiting for an offer. They will submit bid packages October 10th and finalize bids on November 5th. They are negotiating to get the full bonus before December 31st so it applies to 2011 taxes. Taxes are almost guaranteed to increase in 2012 for both federal and state. With the recent announcement from Chesapeake about the production of the well in Harrison County, this offer should be fairly good. The XTO deal a few weeks ago is looking like 19% on the net royalty, not on the gross and $4950/acre bonus. The new deal should be better than what XTO was offering.
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I have never seen anything that would allow a unit to be formed if the acres are not connected , the state of Ohio sets the unit standards for size when a permit is issued. They cannot run the laterals under ground under any property which is not held under a pooled unit, Also all of the 15 different leases I have seen are allowed to be terminated at any time after official start date as long as clean up and reclamation has been completed. It would be bad business to ever terminate a paid up lease even if they don't plan to drill it . They can still throw it in as combined acres to impress the investors and attract operating capital. I am always interested in looking at any additional information so. The sad truth is that even if people are not satisfied with the lease being discussed ,it would not have been that good if an individual would have approached them alone . The group is the best way to be unless you have at least 700-1000acres and even then it is not a sure thing that their company lease would have many alterations because they still have to be able to transport the products from the property and unless there is enough acreage to be worth the deal they like to have a large group together . It is amazing how much information is available on the internet if you take the time to look . It also is very interesting when i can keep up with the area news.
Mickgyver,
My point is, without the pooling clause specifying "contiguous" acres in the drilling unit, they can unitize or pool your acreage with some well they are drilling in Bolivia to hold your land by production. Ohio law would have no jurisdiction on a well drilled outside of Ohio. Furthermore. the XTO lease specifically states in # 26 or #28 (can't remember) of the lease that it may be neccesary to pool smaller tracts of lands to lands elsewhere that are not attached. The addendum does not fix this issue.
Regarding terminating the lease, if the 15 different leases you have seen allow them to terminate after you sign and before paying you the upfront bonus money for any reason other than 1.) you don't own the gas & oil rights and/or 2.) your land is already under lease, you have looked at a lot of bad leases. Those are cherry-pick leases.
Check with early 2007-2008 lease-signers along the northcentral PA counties ... Bradford, Susquehanna, etc.. Way back then the Marcellus prices were $5,000+ per AC ... prime drilling country and it still is. This has brought a wonderful economic boost to these counties, and neighboring ones. The flip side: Deals also went sour in 2008 when our nation's economy went bust. Evidently the gas companies didn't see it coming any more than many of us, because they (and rights holders)signed lease agreements that had both sides salivating. Up front bonus money on a 300 ac farm equaled over a million dollars for cash-strapped farmers. They ordered new tractors, got fences and roofs fixed, saw opportunities for their families to get out of debt... natural gas and possibly oil was their manna from heaven. What was happening on Wall Street was not on their radar. Then the letter came. The gas company they had signed the lease agreement with was rescinding the deal. No money was coming their way. Some were in bigger holes than ever. They could go find some other company. Lease deals are not like marriages. There is no divorce unless you are the gas company.
NO INDIVIDUAL should think that he/she can outsmart a bank of gas/oil company lawyers who author lease deals for a living. Very few Group leaders have long-standing experience at this endeavor either. The pots at the end of most rainbows will only be filled if the representation being used is on equal footing with these companies ... not just willing but experienced and having proven savvy. How full do you want your pot to be? How much control do you want to maintain over your own AC?
4-County Leasing Group Coordinator jlhanch@nc.rr.com
You are absolutely right Finnbear! I wouldn't have gone into such detail except I believe there are some OH folks wanting to jump in feet first who need to know ALL the possibilities before they sign anything. Forewarned is forearmed if we're throwing out cliches. Since late 2007 I've strived to impress upon PA/NY 4-County residents and those in multiple other states ALL aspects of this shale boom, so it can make a positive impact on their lives. It has been a challenge for numerous reasons, the least not being that the rules are constantly changing, as do company strategies, technology, and foreign involvement. Even our own gov'ts. (local, state, and national) can't make up their minds what the rules are or should be.
Penn State has been a huge help to me and many others across the Marcellus/Utica states, as has this site and numerous others. Every time I learn of another Group that has reached its goal of a solid lease that brings no harm, but instead brings many pluses to the signers, the industries involved, and a region's economy I am thankful. Why this seems such an impossiblitity at times is a puzzle.
Please continue to stay involved.
jlhanch@nc.rr.com
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