Now and then I see posts asking about any leasing activity or expired leases not renewed. Over the last few weeks there has been an ad in the Troy Pennysaver ( a shopping circular ) seeking people wanting to lease. Its an outfit called Wellspring Energy, includes a web address, www.wellspringenergyco.com if anyone is interested. I know nothing about them, am not associated with them in any way, don't even know the extent of the area they may be interested in, but thought I would pass the information on.

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A note and hope others would comment as well. There is no forced integration in Pennsylvania for strata above the Onondaga, at this point in time.

 

If you lease to a Wellspring or similar non-operating company, your interest can be left out of development.   Your parcel could be within a unit, but not paid any royalty Talisman. Vs  Chesapeake, Southwestern, Chief – operators, will include you and some of those have reciprocal agreements.

The post by Melissa Humphrey, above, is unfortunately inaccurate.  Leasing with Wellspring Energy will not leave the landowner out in the cold.  On the contrary, Wellspring--unlike lease brokerage companies--invests its own money with the operating company in order to help insure that the landowner's property is included in a drilled unit.  Wellspring offers unusually high royalties to a landowner in order to lease well-located parcels, which means land that is likely to be drilled soon.  Wellspring is interested only in such properties.  We do not accumulate leases for purposes of holding in inventory or "flipping" to other companiies.  We do not buy mineral rights, and we do not gamble on land in areas not likely to be drilled in the near future.  In fact, Wellspring makes sure that the landowner's parcel is drilled within 24 months of the operating company's declaration of a relevant unit.  If the land is not drilled in that time, the lease must be assigned directly to the operating company or cancelled and returned to the landowner.  We welcome inquiries from landowners who are not presently leased and who are in locations likely to be drilled in the near future.  Sincerely, Dana Silkiss, President, Wellspring Energy Company LLC.

Being your familiar with Talisman, are they your main source of outlet for your leases? Also what percentage of the "high" royalty does Wellspring retain for these included leases, and are they included in post production costs?

We partner with any of the drillers, where there is a mutual interest. The high royalty offered by Wellspring is the landowners.As stated above, we invest into the well itself, the royalty negotiated with the landowner is all theirs. We do not infringe upon that percentage.

Dana, My apologies, looks like I made incorrect assumptions. Your plans, at least as much as I can discern look interesting for an unleased landowner in a good area.

Expanding the discussion am I right, the main possible advantage for the landowner would be higher royalty rate, which you would hope to negotiate with the operator, though no guarantee I assume? Or do you lease with the landowner and name the royalty level?

Not asking for trade secrets or anything you don’t wish to share but wondering why area operators would be willing to do deals like this. They want all the exposure they can get and don’t need to share a %. Having small working interests in a unit only creates paperwork and risk the partner can’t pay his share of drilling costs. Rare but a 6$ million well cost can balloon to 12 with some problem. Though.  am again assuming, if you have leased parcels in the swath they want in a unit, they have to  deal with you and if the get the idea you will have many others, they would want a good relationship.

States with forced integration see a lot of this type of investment. There are non-operating energy outfits of all sizes who with good local information can indentify high probability parcels and lease at better terms than the operator might give, leasing competition, something we have lost. I think there are  many who would like to “participate” accepting the risk/reward that Wellspring is doing. Risk is still there that an operator won’t include you.

Good luck to Wellspring.

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