Replies to This Discussion

Permalink Reply by 015334grltd9m on September 2, 2011 at 2:43pm

Hey Todd,

 

Isn't it Coexprize , also when is shell going to lease Pulaski and eastern townships in Ohio?

 

Permalink Reply by 015334grltd9m on September 2, 2011 at 2:49pm

Todd,

Jim Litwinowitz, who blogs here is with the group you are asking about.  Contact him, he seems to be very helpful and states that thousands of acres in Lawrence county is about to be signed by his investors out of Texas. 

 

Permalink Reply by Todd J. Scott on September 2, 2011 at 3:35pm

Thanks Ron.  I wish I could get them to open up other areas.  I've got acreage goals to hit and it's getting harder now that we've already leased a lot of the larger tracts.   If you've got more than 52 acres up in Pulaski I might be able to get it some attention.  Let me know.

Permalink Reply by Rick on September 3, 2011 at 1:49am

Todd, maybe you should consider matching the offer being made. Nothing wrong with a little competition is there?

Permalink Reply by Todd J. Scott on September 3, 2011 at 7:42am

Rick -- competition is good for the landowners, usually.  Neither you or I know how it's going to work out.  Fate will decide I guess.  As far as matching I don't see any need for Shell to do that.  Once you factor out the 5% take the group reps are taking on the royalty and the up front money, its about even.  However, if you look at the feasability for another operator to come in to Lawrence County to lease enough acres to make it econmonically feasible for them to develop a multi-well program, or the amount of time that this could take it should be a clear decision.  At best by choosing the other company you are grinding the process to a crawl.  I"m not saying drink the kool-aid and sign with Shell.  I"m just saying consider the facts and educate yourself and make a good decision.  A decision you are comfortable with, because once you sign that lease your fate in terms of royalties is in the hands of that company.   LIke I told everyone else.  Good Luck sir!

Permalink Reply by Todd J. Scott on September 3, 2011 at 5:11pm

Farmhouse - You and I are basically sending the same message.  I'm not sure why you're doing all this yelling though.  I too just want people to think. 

 Ok...  in order as they come.  Explain to me why you sent the link for todays O&G prices.  I thought I was going to be reading about some new prospect sale or merger or something that I didn't catch. 

Concerning the statement about fate... when there is competition in a prospect and multiple operators end up with leases, you (the Landowner-Lessor) don't always end up getting into production with the company you originally leased to.   If companies can come to terms there are trades and swaps.   The point is once you lease to any company, your job is done and your success is in their hands. (that's where fate comes in) I'd rather see people wait rather than make a bad decision.

I work as a contractor to a company that contracts the land services from Shell, and have been managing projects for the last 7 years.  I made that statement to clarify that I am not an employee of Shell and I am representing my opinion on these matters and not Shell's.  And yes... I disclosed early on that I am a landman.  I'm fine with that.  I understand the reputation that we have and I also understand why we have this reputation.  We're usually the guy or gal that ends up getting blamed by the general public for anything a landowner is dissatisfied about, and not unlike most professions, there are good ones and bad ones.

Your comments about the percentage points I am not going to touch because you're not being rational. 

 

 I opened with this response, I think we line up in regards to wanting people to think and make thier own decisions, to quote myself "don't drink the Kool-Aid".  I'm not, nor are our landmen telling anyone to take it or leave it, or this is only going to be available until next week, or we're not coming back.  If these initial wells work out Shell will be committed to this region.   They're not giving me any indicators that this is short term.  I personally don't know anything about the Patterson well yet (figured I'd put that in before someone asks)

 

I respect that you have been through the process and it sounds like you did well if you have been in production since 2007, you must have been in one of the very first Marcellus wells, probably with Range?  We didn't even start leasing for Marcellus until the Spring of 2008 for East.  At any rate, I"m trying to give you some credit here for doing your research and educating yourself, but give me a little credit back.  Lease plays come in many different flavors, and I've actually sat at people's tables and told them it was a crapshoot, when it was.  I don't see that happening here and I've seen a few plays come to fruition.  Shell has a good handle on this one.  Are you aware of what the lease picture looks like in Lawrence? 

Permalink Reply by john lamb on September 3, 2011 at 3:08am

Hello all: Our property is 153 acres and within a half mile of the patterson well.  As to the reasons we feel good about accepting an offer that excedes all of the shell/east offers in bonus, royalty, and terms it really comes down our attempts to deal with the landmen independently.  In the last 18 months we have been told.

1. shell won't bid against themselves( which they have then done 3 times)

2.no one will agree to terms that are better than the shell approved list of addendums (not really)

3. the patterson well is just a 4 million dollar exploration and is probably just a dry hole ( I kind of doubt it)

4.they will just go around us and take the gas anyway(???)  PLEASE CONSIDER JOINING A GROUP BEFORE YOU SIGN

Permalink Reply by Todd J. Scott on September 3, 2011 at 7:36am

I want to respond to the 4 bullet points you have listed.

1.  Shell raised the offer in Lawrence because they are also leasing and developing Butler County and there was competition there.  They knew if they didn't raise the offer in Lawrence Co. that would cause issues in acquiring leases on tracts that were in close proximity to Butler.  I am amused by people that can't fathom a gas company taking that into consideration.  They actually were trying to be fair.  I don't know what you mean about doing it three times.  Again if you are referring to starting in 2006 at $10/acre and in 2008 at $500/acre then in 2010 coming in at $1500/acre, Shell considered those to be fair rates for the times.  Would anyone have really leased in 2008 and for a hundred dollars an acre?

 

2.  We do, as landman, have limitations to what we can offer in terms and I would be surprised if Shell or any other company will feel confident drilling on some of the leases that I've seen proposed by various groups.  In all likliehood those leases will be amended before any operator develops.  I've seen this numerous times in other areas.  You think you got the bull by the horns and then no company will develop it due to the unfavorable terms.

 

3.  I agree... not likely the Patterson is a dry hole, but it is an "exploration" well, and until the entire County can be tested the overall success of the project won't be able to be determined.

 

4.  I'm sorry if any landman has ever told you verbatim that we will just take your gas.   For that I apologize on behalf of every good landman out there.  That is a sign of weak negotiating skills.   Pennsylvania, while loosely regulated in terms of how an operator can form units, still has guidelines they have to live by and taking your gas is not possible if you are not included in a unit.

 

Lastly, As I understand it the offer with the group is equal up front money and 2% more royalty.  Once you pay the group fees and take out 5% of the royalty it's almost a draw, and If you are as close to the Patterson well as you say you are it's a big gamble for you to take to lease to someone else.  Have you seen a development map of Shell's leasehold?  A real one?  LIke the one we have in our field office in New Castle?  No other operator is going to be able to establish a production unit anywhere near the Patterson well without working with Shell.  If you lease to that other company you are taking a large gamble that they will be able to strike a deal with Shell.   That's all.  Good luck sir.  I truly mean that.

Permalink Reply by john lamb on September 3, 2011 at 3:35pm

So the prime operator, big gas field developer has drilled one well and completed zero wells in lawrence county, has thousands of acres coming off lease in the next 12 months and yet no one else has a chance of competing in this area.  I am not very experienced in this sort of thing but I can do some basic rithmitic.

Permalink Reply by Todd J. Scott on September 3, 2011 at 5:14pm

John - In most areas of Lawrence County I stand by my statement that noone else has a chance.  We've got it covered soup to nuts.  I think it's arithmetic. 

Permalink Reply by JoKlause on September 3, 2011 at 4:07am

Todd, from my understanding Shell didn't want our area.  They just wanted to pick and choose.  That would have left alot of landowners in the group high and dry.  It was risky, but I am glad we stuck together "ALL FOR ONE AND ONE FOR ALL"  Me myself had alot to lose cuz we have over 300 acres.  But I really think its is going to work out well for everyone.

As for the company Hilcorp thats out of Texas.  Google them, and you will see that they are quite a reputable company.  I am impressed with them.  But that is just my opinion.  would love to hear what others have to say.

Permalink Reply by Todd J. Scott on September 3, 2011 at 7:37am

JRA.  I would love to know where you are located.  Has a landman representing Shell been out to talk to you?  If you have time stop down to our field office across from the Giant Eagle on Rte. 422 and talk to the guys there before you make any decisions.  I just want everyone to make an educated decision.  All my best to you!

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