Replies to This Discussion

Permalink Reply by Sam Douglass on July 1, 2012 at 3:14am

I agree.  If the contract is legal and enforceable and you made a deal, live with it.  My point is that landowners should not be in a rush to make a deal -hopefully to avoid being disappointed later.  

As the landman in the article infers: Don't be so greedy that you do not get a good deal.

There is certainly no reason to be in a rush in Counties like Erie and Crawford where, if you can find unconventional wells, you can count them on one hand.

Landowners will not get the best deals until the drilling gets serious - and they get some gathering lines and ....

Permalink Reply by Linda A on July 1, 2012 at 3:54am

could be talking years down the road and some may choose to take their money today and utilize it today.  After that, no one should be concerned if the next or the next after that make money too as they will have their money invested or tied up, and their time has value as well.

There is a time and place for everything, and while people wait, the value of the dollar will continue to drop which may make the offer seem 'better' but in actuality, tomorrow's money will NEVER have the value of today's money.  Fed Reserve continues printing money...

So, a fair offer is a fair offer, and if people wait for dreams-ville, they MAY exchange quality of life today for what MAY be available tomorrow. 

SO many things to look at, consider, and think about

Permalink Reply by Jim Litwinowicz on July 1, 2012 at 4:22am

Landowners will not get the best deals until the drilling gets serious - and they get some gathering lines and ....

Not necessarily. If a few wells come up dry or poor producers, all the offers will drop precipitously, if not disappear altogether. If the oil that is thought to be there is thick and doesn't flow without manipulation, offers may drop. New shale plays in other areas may draw away attention and reduce offers....look at how the Marcellus dry areas have dropped when the Utica became a major play.

Also, it is competition that drives prices. If one company becomes the dominate player and the others leave, prices may drop. I hear that prices in Washington Co are way down, even in areas of wet gas, because Range is the only player. No use paying more than one has to. The best time to lease may be when there is the most competition for land rights.

And as Linda stated many people either do not want to wait or cannot wait due to age, health, financial status, or more. If you have 50 acres and have an offer between $3000-4000/acre, you are gambling with $150,000-200,000 in the hopes of getting $300,000 or more. Big gamble for people that the $150,000 will be life changing.

Other issues, taxes will go way up if O is re-elected. Inflation will be big time also, as Linda stated. And if you sign a lease now the clock starts ticking and the incentive for them to drill a well before the lease expires is big.

Every one must make their own decision on when is the best  time to sign. And it ain't an easy one to make.

Permalink Reply by Sam Douglass on July 1, 2012 at 5:51am

Hmmmm.

My guess is that the lowest price will be paid when producers know the least about the properties - and the most when they know more about them.  They do their homework before spending $20,000,000 or so on a well pad and wells.   Not too many disappointments.  Generally the news seems to get  better and better.

When a company gets control of an area the others generally stay away.  Then it is a poker game with the landowner.  The producer needs you and you need the producer.  And yes, because the money is so big it's worth playing the game if you have the nerve - even in Washington County.

For people that need to have the money, there is not much they can do.  The company will sense that and take advantage of those people.  It is the landman's job to get property as cheaply as possible.

I would leave the politics out of it.  I believe it is a fact the we have something of a revolution going on in the Appalachia area and if there are good times for anyone, there will be good times for people here.

The only incentive to drill in most cases will be to drill a hole or two before the end of the primary term in as large a unit as possible to hold the lease - millions of acres - long term interests to be served.  Mostly, the companies are leasing/buying long term reserves to keep going for 75-100 years or more.

In the meantime the title to landowner's property will be more than cloudy with the lease on it.

Not a decision to be rushed.  Its a decision that may have to wait until gas priced get back up an artificially low level that has been established by industry to capture a bigger market and make Landowners think less of their lands.

Permalink Reply by Jim Litwinowicz on July 2, 2012 at 6:29am

Sam; are you saying that waiting several years may be the best thing to do? Is that what you are advising the group?

Permalink Reply by Michael P. Davidson on July 2, 2012 at 2:06am

I agree, I have property in Butler County - Muddycreek Township where it was all hot and heavy and now I can't even get an offer at all.

 

Its pretty hard to turn down an offer thats 2 time what I paid for the property.

I signed 14 acres in Crawford but am undecieded with the other 62 acres I still have.  Its all a gamble.

 

Permalink Reply by Sam Douglass on July 2, 2012 at 3:57pm

http://shale.typepad.com/marcellusshale/initial-producti

There are always better and worse wells but this one does not sound too bad.  A present value of $10.6 million for a well 3742 feet long [less than a mile drawing from less than 100 acres, maybe 50 acres] should support a decent bonus.  

500 X 3742 / 43560 =

Initial Production

02/23/2012

Range Resources Designates Portion Of Marcellus Shale As "Super Rich"

Range Resources (RRC) has anointed a portion of the company’s Marcellus Shale properties in southwestern Pennsylvania as “super rich” due to the high BTU content of the production stream. The company estimates that the natural gas stream of wells in this area will have a minimum 1350 Btu.

Range Resources has 570,000 net acres located in southwestern Pennsylvania and estimates that 125,000 net acres are in this “super rich” portion of the Marcellus Shale.  One recent well completed in this area had an initial 24 hour production test rate of 6.4 million cubic feet of natural gas and 1,266 barrels of liquids per day.

Range Resources has drilled and completed eight wells into this area and has released an estimated ultimate recovery (EUR) of 305,000 barrels of natural gas liquids, 95,000 barrels of condensate and 3.9 Bcf of natural gas per well.  

Range Resources estimates that once in development mode, the cost to drill and complete a “super rich” well will average $4.7 million. The typical well will have a lateral length of 3,742 feet and fourteen hydraulic fracturing stages. The well is estimated to generate an internalrate of return of 95% using the current strip and a net present value of $10.7 million per well.

Permalink Reply by 2z248p19vqnh9 on December 29, 2013 at 1:44pm

Sam Douglass - Interesting situation,,,signed contract/agreement. SPECIFIC written /inittialled statement  (by both Lessee & G/O Rep. + Rep. was a notary) that Co.'s G/O contract is NOT to be *Transferred -or- *Sold without Lessee's written consent.

This was done *ASSIGNMENT AND BILL OF SALE* - BOTH 'sold (for consideration of $10-?)' -AND- 'transferred' (not once but TWICE by same signing co. to TWO different companies. (???)

One for *Vertical Wells (?) the other *Oil and Gas Leases...strange things afoot....

NOT being 'greedy, just want to be wise ('they' are...for themselves)....

As one light lights another, nor grows less - so nobleness enkindles nobleness. Diligence? Right? Wrong?...

...What to do?...thoughts...*CONTRACTS are (legal?) CONTRACTS & DRILLING is just that - DRILLING.

CONTRACT? Right is Right & Wrong is Wrong. (correct?) crossed lines?

Permalink Reply by 2z248p19vqnh9 on January 22, 2013 at 3:56pm

"Patience is a virtue, possess it if you can. Seldom in a woman, but never in a man." Ha, Ha, HA! - saying my mom said when I was very young - stuck in my head! SO TRUE! - don't you think? Ha-ha!!

*Have an interesting situation: 700+ acres hanging 'in the balance'...not 'too big of a deal', but, OH - IT IS! Dad signed lease with Atlas in 2001 - before 'internet' really had alot of information (like available NOW).... Back then - one needed to read and retain, as well as 'KNOW WHAT YOU KNOW' information (NOT 'computer fed' information...).... My father was such an individual - a TRUE 'renaissance man'. He read WSJ, IBD, Barrrons, Forbes, Scientific American + AND retained everything he read. In 2001 - signed lease with Atlas - mutually agreed upon lease - by BOTH parties. BUT - *he was wise enough to have THIS statement (as follows) written in & AGREED TO - by Atlas:

***"Lessee shall not assign this lease to any other operating company without Lessor's written consent."*** - That's pretty straightforward, right?...well, things got interesting...

1) Dad owns land free & clear of ANY 'lease agreements' with anyone. (2001)

2) Atlas landman comes 'sniffing around'...they come to a MUTUAL AGREEMENT, and lease is signed. (2001)

3) THEN 'wells' get drilled in 2001, BUT there was *ANOTHER thing that he did! - Here is the quote:

***"Lessor retains the right to drill and produce any formations above the depth of 1200 feet from the surface. In addition, Lessor retains the right to drill and produce any formations below the Queenston Shale. However, Lessee has the right to match any valid offer from other companies interested in drilling into said formations."*** Pretty smart daddy, eh?!

--------------------------------daddy passes.

4) Feb.17, 2011: Receive letter from Atlas Resources LLC containing a COPY of dad's lease agreement HIGHLIGHTING that statement about "Lessee shall not..." along with LETTER they are hoping that I will sign with this statement: "Please indicate your consent to this agreement to this Assignment, intending to be legally bound..." *WHAT? - I don't think so!...but I AM WORRIED! -- WHAT DOES/CAN ONE DO against these 'big guns'? SCARRY!!! I do NOT sign. - WHY should I? I have NOTHING TO GAIN - AND EVERYTHING TO LOOSE!

5) July 28, 2011: ANOTHER LETTER - asking the SAME THING, but something with 'VIKING RESOURCES'...this is getting disturbing! Again - I DO NOT 'SIGN'!

----------------------------------I finally call the courthouse to ask what has changed...finally get there in summer 2012...to discover this:

6) X2 'ASSIGNMENT AND BILL OF SALE' agreements on this land, this lease - the one between ***Atlas America, LLC and Atlas Noble, LLC...the other between

                    ***ATLAS RESOURCES, LLC and VIKING RESOURCES, LLC  as well as RESOURCE ENERGY, LLC.

***WHAT is going on here? Here's the real 'kicker' - the 'DATE' on the agreement(s) were BOTH on "Effective Date" shall mean February 16, 2011!!! *WHAT???!

--THEY broke dad's lease! - of their own accord! SO - where does one go from here? There IS potentially alot 'hanging in the balance'. DAD know about the BLACK RIVER, Marcellus Shale, Utica Shale, Devonian Shale...he 'forgot' MORE than I'LL ever 'know'! My dad was a 'doer'. He knew what he knew...and he did what he did to protect 'TARA' (remember 'Gone with the Wind' - the ending where she is on her knees with her hands in fists FULL of the RICH, DARK EARTH...TARA!). I grew up KNOWING & VALUING 'TARA'. I love our land. It is my one jewel to guard, protect, and love. I am scared, but I know that I can do what is right - by him (being dad). I love my father and what He DID in wisdom...I have that torch to CARRY ON.

----THEN in Nov. 2012 - received a letter from MasonDixon Energy, Inc. concerning the PIPELINE on property...Letter has 'Williams' symbol (Williams Partners L.P.- symbol: WPZ)...in connection with Chevron - who 'bought out' Atlas...SEE how they all 'gel together'? - Do you remember the Grocery stores back in the late 60's? - How the 'checkout girls' were paid MORE $/hour than RN's...because they were UNIONIZED?! Well...the GAS CO.'s work much along the 'same lines'. THEY all 'buy/trade/exchange' everything in 'their universe' much in the same ways - to avoid various regulations, stipulations +++...anyway - it's all a BIG 'dog & pony show'! AND it's MEANT to confuse & bewilder the 'little guy' - the 'property owner'. THEY are the 'big dog'! It's truly really, REALLY SCARY! Anyway - even the 'pipeline' scenario MAY end up being 'unhinged' DUE to 'Atlas's CROSSING lines' of contract that were clearly stated! There is MUCH here to weigh...Dunsinane, Dunsinane! I MUST be able to clearly 'see the woods for the trees' - God be with me.

I know this: Right is Right & WRONG is WRONG. (another 'mom' quote...she was so 'clean & straightforward' WISE!). THANKS, MOM!

It IS - ALL SO VERY clear & straightforward: 1) dad owns land free & clear - NO contracts for/with ANYTHING! 2) agreement with Atlas - MUTUALLY ACCEPTED (before ANY wells are drilled - clean, VIRGIN LAND!) 3) Shallow wells drilled. - fine.

*THEN, contract VOIDED by Atlas themselves! - by their own NEGLIGENCE! (incompetence?) ***I HAVE COPIES - OF THE 'ASSIGNMENT AND BILL OF SALE' ***BY*** ATLAS TO...!!!x2 different contracts -COPIES- from the COURTHOUSE ITSELF!!!...NOW where do I go? ***THEY KNOW that they 'slipped up' - OR ELSE they would NOT have went to the trouble of sending letters such as they did!!!

---------------------------------------------------------------------------------------

One more thing...THIS could be the key to being free to renegotiate EVERYTHING for the 'deeper wells - NOW *finally beginning to be harvested as my father had FORSEEN by his knowledge through insights from his reading. *DAD 'laid the groundwork' - now it's time to continue to PROTECT what HE knew about! 'Nastrodamus' * 'the professor' were his nicknames in high school!!! Could it be, OH - could it be? By God's good grace...please helpme. -GG

God be with me. As one light lights another. not grows less - so nobleness enkindles nobleness. Who is John Gualt? He who stands firm.

Permalink Reply by petej on July 2, 2012 at 5:51am

Yes Linda A. !

You make the best decision you can, with the information you have, at the time you made it ...and then be happy and live with it! Hindsight is 20/20 and you will go nuts regretting everything you have ever done.

Permalink Reply by Linda A on July 2, 2012 at 11:04am

it's rather like gambling, if you plan on holding our for the unknown.  I don't believe in gambling.  I trust knowledge and then deciding and being happy with the decision.

When gamblers (those in the stock market are gambling too) get too greedy, the bottom usually falls out.  But, un-educated financial planners always say 'stay the course' and then show you how 'income averaging' works to your benefit, and so they can steal more money from you. 

Unless you are a professional trader, and watch hrs every day, the market is not for you.  When i USED to gamble in the market, I would watch my company's stock, and it was late in the day, and try to buy quickly - to no avail.  BUT, when the market opened the next a.m., the stock had already gone up.  Those stealing your money are allowed to trade when the market is closed!  Insider information always wins...

Look what happened to Facebooks IPO - someone made a killing within the first few hrs and then the bottom fell out because everyone 'thought' it would be a good deal!  The hype worked, THEY won, the rest lost and lost and lost...

Permalink Reply by Sam Douglass on July 2, 2012 at 3:24pm

There is a certain amount of realism to waiting when they are telling you they cannot offer more because the current price of gas is so low - when low is what the producers want to expand the market.  In this they are being successful.  These guys know how to turnthe spigot on and off and move the price to meet the market.  Industry predictions are that gas prices will rise $4, maybe $6 and MCF by 2015.  By then there will be many more hungry mouths to swallow the gas.  

And they get it out of the ground for less than $1 per mcf inclusive of land costs.  That is not gambling.  Waiting for the to recover could be necessary if the producers do not stop kidding you about the price of gas now.

But if folks want to take the current cheap deals.  Why not?  The offers are not going to increase unless there is some collective backbone.

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