Replies to This Discussion

Permalink Reply by Jim Litwinowicz on September 3, 2012 at 1:29am

Many gas companies deal direct with landowners.  They send out landmen that go door to door to sign up landowners. But since they are paid by gas companies, their job depends on them getting the best deal possible for the gas companies, not the landowner. And they will not advise landowners on what terms they should add as addendum.

The problem with this is that few landowners have the experience or knowledge to negotiate with well trained,  professional gas people. Nor do they have the time to research all the issues involved. This site is a great tool for people to learn but even as busy as it is, it reaches just a small portion of all landowners in the area.

Cx does the best job because they represent the landowner, not the gas companies. And the business model, a commission based system, is such that getting the landowner the best deal possible also maximizes our profit.(Yes I work with Cx)

Working together as a group gives the individual landowner more leverage. Even a knowledgeable landowner with 200 acres doesn't have the same negotiating power of a group with 20,000 acres. Its like a steel worker with good skills asking for a raise. He/she will have less chance of being successful than 2000 steelworkers in a union negotiating together.

Permalink Reply by Janice L. Hancharick on September 3, 2012 at 3:36am

Good explanaton Jim.  Right on.  However I understand the "wish" that James has.  It's like "Let's return to simpler times when many folks could tend to their own needs quite adequately ... adjust crazy pictures on the TV, tinker their vehicles back into running shape, change out the burner elements on the stove."  Now we have HD TV's, cable, dishes, and often picture glitches can be fixed over the phone by some faraway "tech".  Our ceramic-top stoves and microwaves ... well who wants to mess with them? 

This blessing of  natural gas and oil on a scale most were unaware of decades ago, plus the technological advances making it available for production, caught the everyday man by surprise.  It was/is difficult for many to fathom that our region has something that has caught the attention and financial investment of energy companies around the globe.

We hit the Big Time ... or is it hitting us?  If we actually attempted to negotiate with the Exxon's, Marathon's, Royal Dutch Shell's, etc. of the world as individuals or even small groups we would get clobbered.  That's an unprofessional term but it totally describes the landowners' situation.  The power and strength these firms wield across the world is unimagineable. Their footprint, their influence is that big.  They and over 2 dozen foreign countries have companies already invested in the USA's unconventional shale plays.  You may think you'd like to deal with all this on your own, but you wisely just put it on your "wish" list ... a wish for simpler times.

Counting on a firm that's already established a major footprint in the energy realm ...like CX-Energy, to market and negotiate for you will set you up for success faster than the mailman (who delivers leasing opportuniess that compare to breath-taking offers like those from Publisher's Clearing House) or the door-knocker land agent who may declare his offer is from a local drilling entity instead of an EXxon or Shell ( and wouldn't you like to give the little guy a chance?)  Don't fret. That lease still does more for the company than it does for you, and besides it will be flipped to the Big Guys who have the millions it takes to set up, drill, produce and market gas/oil.

Like you James, my faith and that of other 4-County Leasing Group members has been put into the hands of CX.  The firm has a great track record.  As we get closer to leasing time the membership has begun to experience pressure from other companies/land agents.  We were told to expect that.  A goodly portion of any group's negotiating strength is its numbers ... its solidarity.  We have great determination. 

As you stated people ARE AWARE of leasing details much more than they were in the past.  If "keeping up" with new laws, regulations, changes in market conditions, and growing technology that affects this industry was an easy task a few might try to go it on their own ... no professionals.  However I don't believe for a minute  that's what the BIG GUNS are doing.  If any of them are using the uncle of someone's wife twice removed, whose been in real estate for years and KNOWS the difference between Lessor and Lessee, then as the old saying goes "I'll eat my hat!"

 

Permalink Reply by Jim Litwinowicz on September 4, 2012 at 2:29am

Jesse; part of the problem is that a large number of landowners in our area are older farmers that do not use the internet for much more than emailing all their kids that left the area. They will not be able to learn all they need to understand all issues. Add in the large number of Amish that are also at a disadvantage. And to really complicate things, a lot of land is owned by out-of-town people, often children that inherited land after their parents passed away. These people don't have any idea what is going on here and cannot go to meetings to learn. I know several that were taken advantage of by landmen and/or flippers.

Penn State held some seminars early on that were very helpful. But they could only give a basic understanding in a two hour seminar and they reached just a portion of the population. The Farm Bureau also helped educate farmers a couple of years ago. But how many are members of the FB?

Being in a large group is a great way to learn.  Go to as many meetings as possible, preferably to several different groups as each will have a different perspective. Ask questions and stay during all the questions. I always learned a lot because people ask questions that I never thought of.