Replies to This Discussion

Permalink Reply by 0ym9x5ag7ury2 on September 30, 2012 at 5:52pm

IA, 

       Wouldn't it make more sense to join the lawsuit and break the Columbia Gas lease that was never intended to be an oil and gas lease? That would give Columbia Gas 0% overriding interest in your acres as it should be. The courts have been ruling favorably for the landowners for a reason (companies have been trying to take what isnt theirs) and I can't see why they wouldn't rule in favor of the landowners in this case.

After getting Columbia Gas out of the picture you could then deal with a well known company that is sinking wells all over the county. 

"Hilcorp has been very gentlemen-like in their approach to the situation" --- Did you ever notice how nice people treat you when they want something? That usually changes after you sign their contract.

         "Money Brings Out The Worst In People".   

Permalink Reply by Inchworm antenna on October 1, 2012 at 12:25am

What makes you think joining a lawsuit automatically ='s breaking the lease?

Right now many of those older leases reportedly indicate the royalty on gas is just $200 per year.  15% plus a better lease seems like a huge improvement.   That's the royalty many people have leased at, and are having wells drilled.  I like to think, "in the end cooler heads prevail." 

How would you like to possibly lose in a lawsuit like this and then might have to come back and beg for mercy?

 

 

 

 

Permalink Reply by jschurm on October 1, 2012 at 1:03pm

Inchworm, 

Where does it say in those leases that they would be capped at $200 per year for royalty on Gas? Everyone that I have read has said a 1/8 royalty or 12.5% of production. I believe that the $200 was referring to whether you had a storage well drilled on your property and the $200 was in lieu of free gas. I could be wrong, but just curious where the differing language was. 

Also, Before you go and pat Nisource and Columbia gas on the back for being "good neighbors" you may want to be aware of the current bills and legislation looking to pass. Here is an excerpt from the Youngstown Newspaper regarding the Brinker Storage field : 

"State Rep. Mark D. Okey of Carrollton, D-61st, introduced a bill that would require a minimum-royalty payment of 15 percent of gross revenue on all wells drilled at or below the depth of the Marcellus Shale, which would include all Utica Shale wells."

Although I am not sure whether or not this has passed, I would be very weary to negotiate anything with Columbia Gas. When Columbia Gas "offers" to ratify there leases you may also want to look at the other provisions that they are ratifying, such as the unit size.  I would assume that within that ratification of "landowner friendly addendum's"  they are also going to ratify the lease to make it marketable to Hilcorp or whoever they wish to assign it too.

At the end of the day Columbia/Nisource/Hilcorp are all going to do what is in their best intention. Settling for what may become a state minimum is in the producers best interest NOT the landowners. Get legal representation, offering this to only non litigating parties is a scare tactic that landowners have been warned against ever since the land men came into the area. Same approach different land man. 

Permalink Reply by dr j on October 1, 2012 at 2:36pm

It is a 1/8th royalty on oil and 200/year on gas - which would include all NGLs.   THere is some believe that the 200 would only be if the well was actually on your land, therefore the assertion was is if you were in the unit, but the well wasn't on your land, you don't even receive the 200. 

HB 493 is probably in limbo until next year at the earliest last I heard. 

And you are so right    - same approach - different landmen.

Permalink Reply by dr j on October 1, 2012 at 2:31pm

A very important point that is not being given enough "attention"  - signing an amendment EMBRACES the old Columbia gas lease.  Columbia Gas has managed to try to assert their control over thousands of acres of mineral rights by merely stating they are storing gas without following many of the other conditions of the old leases.   Signing an amendment extends that lease.... indefinitely.   THERE IS NO TERM  - the control the deep rights for as long as they say so at this point.   The old leases need to be challenged, they were not meant for this "brave new world".   Columbia itself has set the precedent in the last 20 years when every time they needed to update an old lease they released the all strata but the storage strata back to the landowner.

Columbia would not even be dealing with the landowners if there were not legal pressures to do so. They are indeed trying to dissuade landowners from litigating by offering this stop gap measure.  

There are many nuances to this story, one of which is many of the landowners leased with through DPS or Trinity early on and were paid before the storage field came to light.   Those land owners received bonus monies.  The royalties on those leases were not as good as the 15% gross being offered now - so in essence those landowners are actually going to be in better shape than the lease they signed BUT THERE WILL BE NO TERM on their lease.

Because Hilcorp allegedly needs amended leases that require unitizing, landowners do have some power in this situation.  I would not sign an amendment until I had a comparable lease to those being offered in non-storage areas.   

 

 

Permalink Reply by jschurm on October 1, 2012 at 3:22pm

I wouldn't get into a group of landowners battling fortune 500 companies for 2.5% more royalty on an indefinite term either. I would join the attorney (s) that are representing a major portion of the  Brinker Storage field and beat them by numbers. They need to ratify leases, obviously they see that issue by "offering" to ratify leases for more royalty. 

No business gives away potential profits out of the graciousness of their heart. I don't care how old the leases are, there is an issue with these leases, and the landowners that sign this settlement are selling themselves short. 

Permalink Reply by Mud Flaps on October 1, 2012 at 3:57pm

And the name of the company you work for is?  I notice your profile does not indicate you are a landowner so what is your motive and interest with the Brinker to be suggestive about what people should do? 

Permalink Reply by jschurm on October 1, 2012 at 4:24pm

I have no motive or interest in anyones decision just giving my two cents, that is what this blog is for. 

Permalink Reply by Mud Flaps on October 2, 2012 at 12:14am

I doubt it.  Would you like me to mail you a copy of your business card?

Permalink Reply by jschurm on October 2, 2012 at 11:23am

That would be great. haha. I do not care what you do with your oil and gas rights. I just think it is foolish to start a post saying that it is a huge victory that Columbia and Hilcorp are going to ratify your lease for 15%. I do not know what the incentive could possibly be for me to persuade one way or another, all of the rights are under litigation/leases so there is really nothing anyone can do with them. What is the incentive to hard close every non-litigating party to join with you and use scare tactics like "make your decision wisely" to have them go with you? Are the group leaders getting some sort of compensation? Why the urgency and why so against joining attorneys? 

Permalink Reply by Inchworm antenna on October 2, 2012 at 5:16pm

jschurm,

Um, I started the post. .  This has been issue in motion for a long time now already.  It would be great to have a well and collect on a handsome 15% gross royalty in the near future.  That is a good offer on ALREADY LEASED LAND!!!  I know someone on the outskirts of Columbiana with two acres and CHK offered them a 12.5% net last month.  I saw the lease myself.  Port authority is going to receive a 15% royalty from their recent deal.  I'll take my bird in the hand.  You never know how long this good offer stands, and people will have to make informed choices.  I say bring on the wells, and let's prosper. 

 

Permalink Reply by jschurm on October 2, 2012 at 8:04pm

I am not passing judgement on anyone's decision, you have to do what is right for you. I also agree with the idea of a bird in hand is better than two in the bush. In my opinion, now that you know they need to talk to the landowners, this would be the time to get rid of that production word on an old storage lease. That way in 5-10 years, if you don't get produced, you can have the ball back in your court. Not stuck at 15%, which is why the landowners are in the current dilemma that they are in now. Nisource/Columbia or who ever owns it is always going to get there piece, indefinitely, wether it is produced in 10 months or 10 years with that word in those old leases. 

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