Replies to This Discussion

Permalink Reply by Bryan D. Huwar on November 19, 2010 at 6:29am

Send me an email through this site.

Permalink Reply by Veronica English on November 22, 2010 at 3:13pm

Peter,
I am interested in what you are doing. Can you please contact me bmcfarm@gmail.com
Thank you
Veronica English

Permalink Reply by Terry Merritts on December 7, 2010 at 3:15pm

We have 62 acres in Morris Township. We are 1/2 mile below Graham Township and border Boggs.
We live in a Altoona which is a drawback, but would be interested if any thing comes up.
Signed with Rice energy as a member of a loosely affiliated group earlier this year, but Rice didn't pick up the option, Little Pine saaid they were taking over the Rice lease, but they haven;t made an offer, probably because I told them I wanted depth severence, spud fee and seperate ROW agreement.
To whom have you been talking ?

Permalink Reply by Joe Scipione on February 15, 2011 at 10:40am

Hi,  

Landowner and attorney in Philipsburg, I've been looking to get together for a coalition as well.   Let me know if anyone is still interested.  

Permalink Reply by Dave Fleck on March 20, 2011 at 5:01am

Hello.  Any landowner's groups in the Goshen township area?  Very interested in landowner coalition and other info--Thanks

Flecvet@Hotmail.com

Permalink Reply by Jerry on July 26, 2011 at 4:56am

I'm looking for activity in Union Township, Clearfield County, near Rockton.

If there is any group activity in this area, please let me know.

Permalink Reply by Dimitra S. on August 1, 2011 at 2:49am

We are putting together a group in rockton ( rockton landowners group )

you can email me @ info@rocktonlandownersgroup.com

thank you

Permalink Reply by Keith on August 9, 2011 at 5:23am

Wait, Wait, Wait.  No matter what happens, just wait.  It may be hard to do so, but it is the thing to do.  Prices will always go up the the long run and leases will get better and better for the landowner.  The gas has been there for millions of years, it isn't going any place.  Groups are nice, but don't give anybody in the group a finders fee or percentage of your royalties.  Do as much research as you can and then just ask people what they think.   Attorney's are robbing people blind and most of them don't even know what that are talking about.  Do the research before you sign ANYTHING!!!  Once you sign, the deal is done and the boat has sailed.  It is like a magic trick, once you konw how the trick is done, it becomes useless.  Once you sign a lease, you are useless to the gas companies.

Permalink Reply by Seth Narehood on August 9, 2011 at 12:43pm

BE WARNED-This is a somewhat long but informative post based on my background as a professional geoscientist in Central PA and over 6 years personal experience in dealing with gas lease offers and active negotiations with gas companies.  SO-if you have the time, this might be a good read for you.  With that said:

 

My family owns 200+ acres in Lawrence Twp., Clearfield County, PA.  We have been approached numerous times from several gas comapnies over the past 6+ years..Each time the lease offer was more, the royalties a little better, BUT most of the landmen were wild-catters looking for a quick lease so they could get a commission and then turn around and flip the lease(s) to the highest bidder...All games at the expense of the landowner. 

 

My communications with various gas companies have revealed that most are only moderately interested, at best, during this stage of the game primarily due to the lack of infrastructure (pipelines, compression stations, etc.) in central PA.  I actually had one gas company pull out of negotiations for that very reason, but I was told to be patient because the infrastructure is slowly getting installed and it is just a matter of time before our area becomes more desireable.  So,  please listen to Kieth and BE PATIENT, and WAIT.

 

On a side note, we recently were approached by a representative of an effort to spearhead a land group that was looking to put together a block of land between 40,000 and 60,000 acres that would be marketed to natural gas companies under our (the landowners') behalf.  Initially we werre interested, but ultimately reeejected the offer because of the following reasons:

 

1.  Effort was being spearheaded by a local attorney (not crazy about that).  However, the Group must be represented by a single person that has the LEGAL" right to represent you and your Property in a land group situation.  Therefore, each landowner gives him a "Limited Power of Attorney" or LPOA to represent you and the other land owners.  Furthermore, that person has full power to negotiate a lease on the landowners' behalf- WE DIDN'T LIKE THAT (Supposedly the LPOA terminates immediately after a) a lease is executed, or b) the land group is dissolved)

With that said, our representative had a "boiler plate" lease that was to be the instrument to begin negoitations. It was very landowner friendly and, frankly, a pipe dream of a lease-- Realistically, Far too restrictive for any gas company to operate under. BUT, you have to start somewhere and one hopes that the personconducting the  negotiatins is looking out for your best interest and that you get as much as you can in your favor. So, that brings us to my next point.

2.    The person that has the LPOA is the representing entity.  That means he/she has the sole right to negotiate all terms of the lease.  In our case, which I presume is similar to most, because of the LPOA , no land owner has input on the lease, was not provided an opportunity to review progress of negotiations and changesto the lease, and no chance to review the final lease UNTIL AFTER IT WAS EXECUTED.   That means if a final lease is negotiated, all parties in the Group are bound by the terms and conditions of the lease, which you don't know UNTIL after the fact itis executed- WE DIDN'T LIKE THAT.

 

3. If a block of land is leased, the gas company will divide the block into Production Units-typically about 640-acre tracts which is an optimum unit size. Your wellhead royalty (assuming they drill a well in your unit) is based on the amount of acreage you have leased in the unit. Here's the kicker- The gas company can draw the lines of a unit wherever they want. They don't have to follow parcel boundaries. So, say you own 500 acres, but they draw the unit boundaries so that only 3 acres of your ground are in the unit? Well, that's what your royalty is based on..UNLESS it is negotiated in the lease that your royalty is based on all acreage and not a fraction thereof.  Since we cannot be a part of negotiations how do we know that would be taken into account?- WE DIDN'T LIKE THAT.

 

4.  For my family, we have some personal concerns about the upkeep and access to our ground, appropriate compensation for the installation of infrastructure (pipelines, compressor stations, etc. in addition to or in lieu of a well or wells being drilled on our ground), vertical severance clauses, use of our ground for surface storage, etc.  There was no gaurantee that some or any of these issues would be addressed in the lease- WE DIDN'T THAT.

And the biggest point that was a deal breaker for us was two-fold: 

5a: Once you are bound by the lease, the gas company has the right to use your ground for whatever purpose they desire.  They are not required to drill, they can install whatever infrastructure they want without additional compensation, etc.  Your rights to any additional compensation above the initial lease bonus payment are typically null and void.  From research I have done, the landowner is entitled to additional compensation for such activity and land use, including royalties for product that passes through pipelines especially if other gas companies are using the lines in addition to the one you have a lease with.; AND

5b.  There is a condition called Bound By Production (BPP).  That means, for example, say you cash in on a healthy bonus payment for a 5 year lease.  BUT they start drilling way on the other side of the land block that you are now a part of the Group.  The gas company starts producing from one or many wells and then they cease drilling efforts for a year..or two..or 10..or indefinitely.  What happens?  Well...one of three (3) things. 

a)  WORSE CASE: Unless you negotiate terms that specifically place a specific time frame which a gas company has to drill on your ground, then you are BPP because the gas company is producing and they likely will renew the lease to produce gas.  And now your ground is out of play indefinitely.- WE DIDN'T LIKE THAT.  Your alternatives?

b) Negotiate specific terms to avoid this situation.  BUT if you are part of a Group and given the LPOA to a person to represent you, then you have no idea if that has been negotiated until you have buyer's remorse.- WE DIDN'T LIKE THAT.

c)  My family attorney advised us that he has some clients in this same situation and similar ones and a landowner can get out of this situation, sometimes, but it can get costly with legal fees and such.- WE DIDN'T LIKE THAT.

 

So, after this long winded version of my 2 cents, it is my opinion that a land group has it's advantages because it will drive up lease values and likely well head roylaty compensation.  And, if you are a person looking to make a quick buck in the short term, are not overly concerned about the possibility of long term royalty earnings (which could exceed several millions of dollars from a single well over the course of 20 years vs. a single lease payment), and want to take a hand-off approach to leasing your ground-then a Land Group is your answer.

 

BUT, if you want as much control and involvement in terms and compensation for your ground and gas, then a Land Group is not for you.  Be patient...not to be cliche but: Good things come to those who wait.

I hope this helps and provides some insight.

 

Regards and Good Luck-

Seth Narehood