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Permalink Reply by DKinPA on May 19, 2010 at 7:08am

From the Butler Eagle:

Published: May 15, 2010 Print Save Email

Landowners team up to negotiate gas leases



By Kelly B. Garrett
Eagle Staff Writer

Landowners are working together to get the best price and the best lease they can from companies that want to drill for natural gas found in the Marcellus Shale beneath much of Butler County.
Public entities also are responding to companies soliciting municipalities, school districts and various authorities.
The Butler County Airport Authority in Penn Township recently requested proposals from companies interested in its land.
Seneca Valley and Butler school districts have signed leases, and Butler County Community College, which owns a large amount of land in Butler Township, is close to signing a contract.
Mars School District has been approached to sign a lease, but so far has declined.

Things to think about
Butler County Commissioner Jim Lokhaiser said Thursday the county is considering offers it has received to drill on its Sunnyview and Alameda Park properties.
While the money would be a bonus to the general fund, Lokhaiser said he has concerns about the process.
"I don't think we should do it in Alameda, as the drillers need 5 acres and that would mean a lot of trees would come down," he said. "That place is pristine and taking the trees would be a bad thing to do."
Lokhaiser said that at a meeting of the County Commissioners Association of Pennsylvania earlier this year, he heard from representatives of Tioga County, where Marcellus Shale drilling started several years ago. They warned that before signing contracts and having drilling on a large scale, there are things to consider, such as:
• How to protect roads? "A lot of heavy machinery and big equipment will be going up and down roads that really aren't meant for that kind of traffic. How will a municipality pay for repairs? You have to think about that," Lokhaiser said.
• Where will the water needed to fracture the shale, which in turn releases the natural gas, come from? Where will polluted water from the drilling process go? How will family and farm wells be protected?
• Are residents aware of how the drilling process will affect their lives and homes? Some reports of noise from these operations already have come into the Butler Eagle.
• What about social issues? Well, what about them? Lokhaiser said the Tioga County group said their prison population jumped as drillers from Texas and the Southwest came into the community. The influx of drillers and other well workers filled up Tioga County's hotels, causing a price spike for temporary housing, effecting tourism along the way, he said.
"These are things we have got to look at right now," Lokhaiser said, adding that the Butler Farm Show board is also considering offers to drill on its 102 acres on Route 68 south.
He said the latest offer is $3,000 per acre and 18 percent of the revenues, less start up costs.
These contracts are tricky, so municipalities need to have their solicitors with them throughout this process," Lokhaiser said.

Getting together
Attorneys James Taylor and Tom May have been working with the county and other landowners on drilling leases and contracts.
May said his firm has seen an increase in municipal and other public entities considering drilling.
He also has seen a trend in the landowners' group contracts.
"Its really better for all parties to do this kind of contract," May said. "On the company side, there may be 10 landowners, but they'll only have to talk to one person while negotiating the contract.
"On the landowners side, having groups of properties in one contract has helped to make these contracts more competitive and therefore, owners are getting more money than they did a few years ago."
John Aubrey, owner of Aubrey's Golf Course on Mercer Road, Butler Township, has organized his neighbors and has come up with 2,200-abutting acres for Marcellus Shale drilling.
"We did the hard work, the knocking on doors, but the drilling companies like that," he said.
The group has an attorney, whom Aubrey did not name, and the group has come up with some strict wording for its lease contract, including:
The company has two years to drill, or it will be penalized monetarily;
If any wells are affected, "they will fix it. They're the professionals, so they'll fix it," Aubrey said.
So far the group has received four proposals that it is considering.
"I feel bad for the farmers that were approached years ago and only got $500 for their land. They didn't have anyone to help like we do," Aubrey said.

Permalink Reply by DKinPA on May 24, 2010 at 6:41am

Matt, was this an offer made to you? If you don't mind my asking....what company?

Permalink Reply by DKinPA on May 25, 2010 at 3:11pm

Reminder: We have our first meeting tomorrow, Wed May 26th at 7pm. It will be at the Unionville Fire Hall (corner of Mahood and Route 8) Hope to see you there!

Permalink Reply by DKinPA on May 27, 2010 at 1:12am

We had our first meeting last night and it was great! We had a presentation from an expert in the Marcellus as well as a presentation of how the group is structured and how we will proceed from here to provide the best possible lease for all the members. This is a community group run by community members. Had a good turnout with some good questionsand hopefully everyone walked away more knowledgable.
Planning future meetings over the next 2 weeks in Ridgeville, West Sunbury and N. Washington....we will post those dates and times when we have them set. Thanks to all!

Permalink Reply by Rob on May 28, 2010 at 1:06am

Are you talking about Ridgeville Pa. that is East of Sunbury. I live in Lancaster Pa. and am interested in attending the meeting. If you could send me more info about time and place that would be great.
Thanks
Rob

Permalink Reply by DKinPA on May 28, 2010 at 2:39am

Sorry Rob, this Ridgeville is in Butler County......near West Sunbury.

Permalink Reply by Dale on May 26, 2010 at 2:54am

Would it be beneficial for one to attend this meeting if we have already been approached by a Landman and given an offer. We are from Cherry Twp. and were offered 1500. per acre at 15% royalty. We did hire an attorney to change and make addendums to the lease but don't want to miss out on any potentially better deals if there is that possibility through this collective group lease. Thank you in advance for your response.

Permalink Reply by DKinPA on May 26, 2010 at 2:58am

Christine, I would say you absolutely would want to come to the meeting. My impression is that the offer is too low....especially compared to other areas of Butler County. Come listen, learn and make a decision after you hear what is said tonight. Hope to see you there, Doug

Permalink Reply by ric barr on June 2, 2010 at 1:51am

James, I have 375 acres that I would consider leasing if the terms were right. The property is in Vernango twp.

Thanks, ric

Permalink Reply by James W. Hazi on June 2, 2010 at 2:29am

Ric, Turm Oil Inc. cannot afford to offer the big money amounts that everyone is hearing about. First of all it depends mainly on the area. Northern Townships of Butler are not hot right now like the southern Townships. There are a lot of factors to determine feasibility for big companies to consider drilling. We acquired the acreage that I mentioned 1 to 2 years ago before the big rush. We would like to assign the acreage to a big company so that possibly in the future the landowners can benefit from the development of the Marcellus.

Permalink Reply by Sam Douglass on May 26, 2010 at 3:23pm

Unless you need the cash now for a good reason, wait until the offer gets up to $5000 to $6000/ acre.
More important is the royalty which should be at least 20% with the Chesapeake "Market Enhancement" clause that relieves the landowner from sharing most costs incurred from the well to the point of sale.

Patience is rewarded !!

Permalink Reply by Sam Douglass on May 27, 2010 at 2:51pm

Do not consider an offer of less than
bonus of $5000/acre for 5 years [$1000 for each year]
20% royalty

unless you need the money badly

better offers will come

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