Replies to This Discussion

Permalink Reply by craig on May 25, 2013 at 1:16am

Bonus money of $1000/acre is the best i've heard for sometime now in this immediate area. Last year my one neighbor was offered $200 then $300 to top lease his that was expiring. CHK ended up not top leasing but drilling the McDanel pad to HBP him. Another neighbor has never been leased and has 80+ acres. They made him some low ball offer as well last year. I'll have to give him a call and see where he is with them now.

 Keith, is your property on the West side of Dehaven past the first sharp turn when headed to Bradys run rd? The Schutte property ( The Mansion of a house) West of DeHaven is not signed and to my knowledge he isn't going to sign. There are also plenty of "wacko" fractivists that live on Dehaven which didn't lease so they can't really drill and include much of the N part of Dehaven, or North of the Gordon property.

Since your property isn't leased, you do have a bit more to bargain with. Unfortunately CHK hasn't been doin much bargaining recently, mostly take it or leave it unless they really need you.

I'd be more concerned about getting the royalty rate up to 17-18% or even 15% if you have to... 12.5 is BS. The royalty is where the real money will be at in the future, however long out that may be. Your 5 acres might be large enough that they won't be able to leave you out completely and just drill under you/near you. And for pete's sake don't let them get you for all kinds of deductions and if they won't budge then push for a higher royalty rate to make up for some of the deductions they will force on you.

I don't believe that you will really be able to play hardball with them at this stage of the game. I don't know your financial situation, but IF I was comfortable financially I would seriously consider just waiting them out. A few years down the road, or less, and the infrastructure will be in place, they will come back and fill in the holes and probably give lots better terms. But that is only my opinion.  Sometimes they do just leave small areas not developed as up in Bradford County, in which case you would lose out on any income from gas.

Hopefully you have a lawyer that really does know his stuff with gas leases.

Good luck and make sure of what your are signing, IT COULD LAST FOR A LIFETIME OR TWO.

Permalink Reply by Tim Tarr on May 25, 2013 at 3:22pm

I'll bet they want all formations. I would not even sign a Marcellus only (5yr) lease for less than 2K and 18%. With >5 acres they may doughnut-hole you. Depends on shape and orientation of your land in relation to the pad.

Beaver is wet Marcellus also has Upper Devonian (1 or more black shales and plenty of reservoir rock) and the Utica too.

Permalink Reply by craig on May 25, 2013 at 11:07pm

You are right on all accounts, IMHO.

I am real familiar with the area as my property is in the area. They originally planned for the next well east of the McDanel well to be on the East side of the power lines on the Gordon property, however there is some acreage not leased that produces a problem and I'm not sure how they plan on solving it.

I honestly believe that  they are still in the mode of get what they can at cheaper prices, then drill and  HBP when they can. Heck they will have 4 maybe 5 or more years before the new leases will expire and by then the cracker plant will be built somewhere and  will need lots of natural gas. Rumor has it that a local electric generator has been exploring the feasability of conversion to natural gas as well.

 Just my opinions, fwiw 

Permalink Reply by Frank Nesmith on May 27, 2013 at 4:42pm

I'd wait it out. As gas prices rise, they will come back with a better offer. That offer is too small to even sneeze at, for now.