Comment

Comment by Finnbear on September 19, 2011 at 8:43pm

Stick together in a group (or be happy with whatever you end up with)!

Comment by Monroe Co Landowner on September 19, 2011 at 7:24pm

Mickgyver

What was your point

Comment by Mickgyver on September 19, 2011 at 5:18pm

A little food for thought on staying together now more than ever .

hello everyone I have been reading a lot of comments from various counties and I commend this site for allowing us this cross information to benefit all of us .One thing that does not seem to be mentioned is the fact that if the people start breaking off of these groups it is a good chance that you lose all chances to have the adendums and special features added that you have agreed on which  over ride a company style lease .Basically if we had been keeping up on what was happening anyone of us could have gotten in contact with our neighbors and did some research to find what the going rates were for various lease clauses .When the companies started to try to lease the property after nobody was even interested for several years we all should have said what is up . I think a lot of us felt oh well it is easy money once the lease is up all is well . This is how the companies got all of the $2-$5 per acre leases back in 2006 when this first began to take shape . It is interesting to see how some of the groups have been run by attorneys and others have started with neighbors and friends .My first thought of joining a group was to find out what the person that started the group did for a living in the last few years . Are they knowledgable enough to pull such a chore off as getting a great deal for everyone from companies that know how to buy cheap and make lots of money .It really isn't hard to start a group but to make the group grow and the amount of time it takes to arrange meeting and keep everyone informed is overwhelming . I have even heard of the time it takes to maintain a group has nearly caused divorce in some cases. That is sad when something we never heard of in our area for years has caused such an affect on all of us involved. Anyone with a normal job would not be able to manage enough time without some extra help with all of the records and required information as well as the time to keep such a group together .This is a big deal for most of us that have never had anything given to us .As  far as just running a group there is a lot of money to be made as you know even if you don't own an acre let alone signing several people with thousands of combined acres. I have spoken to other group leaders as well as  dez before and he seems to be able to portray his knowledge to the crowd and the companies very well , and it is hard to talk to everyone but when you take on a job like this that will make you a small fortune you need to make sure your updates get out to all members. I have heard of several group deals where the group charges basically the cost of the legal advice to 1 and 3/4% then  2 and 3/4% up to7% of the bonus . I have heard some attorney ran groups that charge a percentage plus a percentage of the royalty. These type fees are way too high when you are the one with the actual property . This is an important decision as to how much you will give away but it is worth every penny up to a point since the bargaining power is due to the amount of acres in the group located together.These companies have a lot less expense by doing a large lease signing than by sending a landman to each home , That is why individually you get a lot less money . The only landowners with enough clout for a higher deal would be individuals with enough property to put a drilling unit together 640 to 1280 acres seems the norm...I would really think hard before leaving a group because of the strength you have gained as a unit . It is something to be proud of not just for yourself but for the good of all concerned .Even if the group management team makes decent money just consider where we may have been without them taking the time to advertise and lure the groups together with the assistance of word of mouth also .One thing I do feel it is very important to make a decision by bringing it up in a group meeting that you want to have a board of landowners maybe 8 people or whatever feels good for the group size from all corners of the area you are located in and input your wishes so you are always presented with the most recent offers . This group should be well informed from the leaders of the group that have updates on offers from their company communications and you should be able to take a vote on when to present the offer for a group decision for signing with a certain company. This should be the landowners final choice since you will live with the decisions . At some point the deciding vote should not be just in the hand of the ones that started the group . As far as I am concerned when the money sounds good and Ifeel it is enough to make a good positive change in my life ,I will feel that anytime after that point will be good for me . If the leaders of a group get enough input that you want a vote to be taken then the groups need to be presented with the offers that are being made and take a vote , majority wins .You have to have faith in your leader to inform you when negotiations seem to be tightening up .  if I feel my input is not being taken seriously and I am not getting an opportunity to sign for what I want then I will need to separate from my group and make sure I hire a good attorney to assist me further because I will have to live with my decision for along time . There is no way we will all get everything we want and by joining a group for the strength in numbers we are giving away some of the choices we may want in our specific case but are probably getting a lot more power for other good things in a lease if we keep our numbers together . It appears a lot of the leases that some groups are putting together have a lot of the same clauses that the original ALOV group had in it when we all first began to get information about the leasing in the beginning. It is best to make your own mind up of when you will be happy with the upfront money because as many have said it may be all we get . But truly I believe the oil companies know a lot more about what they are getting into , They dont blow this king of money on a gamble when they have a board of directors to answer to . best wishes for everyone I have been keeping it in mind to be reasonable and courteous to keep from losing any  friends and neighbors that my decisions may affect  because they have the right to their own opinions .Patience gets harder to keep when the temptation dangles in front of us all . I feel the strain but I need the group strength too . Goodluck to everyone

Comment by Finnbear on September 19, 2011 at 3:25pm

It was a signing for an offer XTO made to the Utica Landowners Group which was run by the Sustersic Law Firm.

Comment by Jeremy on September 16, 2011 at 8:10pm

Tom and Jim,

I have stated my position and will reply to your posts and then I'm done with the discussion.  First, Tom, the time value of money won't be changing that much in the next 60 days.   Second, I have never once complained about the royalty and I'm more than happy with that.  Jim, if stating my opinion is demeaning to someone then I don't apologize for it.  I never called any one on here dumb, stupid, ignorant, or any other spiteful term.  I merely stated I disagree with their position and I believe most have not watched this as long as I.  The more information you have the better off you are.  I will agree with you that this whole thing is a bit of a gamble but the better informed you are the less risky certain areas become.  And don't get my wrong $4,000+/acre is a handsome payout for me as well.  However, as mentioned before, there is more to be secured.   For those that need the money so bad, why didn't they sign at the $2,000 and $3,000 offers?  How greedy they must have been to hold out until now, right?  Pretty big gamble on their part, don't you think?  Here's my final thought.  The lease and the royalty are by far the most important part of this entire proposition.  However, the only for sure money is the bonus.  What if they don't drill in the first 5 years?  How much do you make on royalties then?  What if during the next 5 years the political environment in Ohio changes and drilling becomes much more difficult and they decide not to renew your lease and no other company wants it?  Des seems to believe all this acreage in Ohio will be drilled out in the next 5 years.  I wonder how many people thought that in PA and are now coming to the end of their 5 years without a well.  Do some research and you will see it's happening.  Can you imagine how many rigs will have to be drilling in Ohio in order to truly develop these millions of acres in the next 5 years?  Do you realize there are so many more shale plays in the US besides just the Marcellus and Utica?  How many rigs do you think are even available in the US?  A lot to think about and a whole lot more to "gamble" on.  And the flip side of the coin on your idea that if they hit some dry wells how will that impact your signing bonus:  It won't because you will have already signed (in the next 60 days I doubt anything additional will be known about wells in Monroe).  However, you better believe that will affect your royalty.  20% royalty on a dry hole isn't much.  Yet, if you negotiated for all you could on the signing bonus(in a reasonable time frame) you cover that gamble either way.  I will end with this again which I sincerely mean.  I am not faulting any of you for the way you think.  You hopefully have educated yourselves and have decided what's best for you.  I honestly respect the fact that those decisions are your personal decisions to make.  Do I think you are right? No. Do you think I'm right? No.  But that's OK.  I can live with that.  At least I have voiced my opinion and from here I will have to decide the best course for myself to take over the coming weeks.  I truly wish you all the best and wish prosperity for all involved and look forward to the economic benefits to our state and nation.  If I don't respond to additional comments it's because it would just be reiterating what I've already conveyed and there is no sense in getting into an arguement.

Sincerely,

Jeremy

Comment by Monroe Co Landowner on September 16, 2011 at 7:59pm

Jim H
Well said

Comment by Jim H on September 16, 2011 at 7:36pm

Jeremy,  I think most all the folks with "skin in the game" would like to make as much on advance "signing bonus" cash as they can.  They  also may be alittle more risk averse than you.  Everyone sits in a unique position financially both short term and long term.  There are risks for signing too early and risks for waiting too long (I'm sure your extensive research has identified that potential).

 

The well being drilled by  HG Energy right now in Monroe County has the potential of doing three things a) increasing the value of the lease potential b) decreasing the value of the lease potential c) maintaining the value of the lease potential.  (In it's purest form we call this gambling - some like to gamble (I do) and some don't)

 

 I'm personally not risk averse and don't need the money (although it certainly would be nice (the more the better)) so I'll wait it out with ya.  That being said, there are folks in this county that really could use the money ($4k per acre is going to be huge - the potential of something less is a little overwhelming).  So try to avoid being demeaning to others  because they aren't in the same position to take delayed gamble that we are in a position to take (they are not necessarily uninformed).

 

Ultimately the money is going to be made in royalties (check out a natural gas royalties calculator - put in 0 in the acres within the drilling unit - it doesn't work out very well if you are not leased).  The only way the $500/acre your worried about amounts to anything is if there isn't a well drilled on your block.  I changed my mind, I'm not waiting with you.  :)

Comment by Jeremy on September 16, 2011 at 6:47pm

Charles,

You misread the post.  The $5,000 could probably be obtained in the next 60 days per my conversations with Des.  I never mentioned 2-3 years.  I said 1-2 years is probably what it would take to truly know a top end number ($6,000-$7,000-$8,000 who knows?  if you study other shale plays you will find some areas have been $15,000-$20,000 top end)  and obviously we will never know because it doesn't appear there is a group that would be willing to wait that long (myself included by the way).

 

Shirley,

$5,000 happens to be the number I have felt was reasonable for quite some time now based on research and watching not just this website but others for about 3 years now.  Let me ask you, why is $4,000 or $4,500 the number for you ?  Why not $2,000 or $3,000?  Could it be that you have educated yourself enough to know that you can do better than $2,000 or $3,000?  How do you think the prices got to where they are?  Is it because people (groups) demanded more or is it because the gas companies just like to spend money and help us all out?  And to answer your question HECK, YES!! IT'S WELL WORTH HOLDING OUT ANOTHER 60 DAYS OR SO TO GAIN ANOTHER $500/ACRE!!!!  And as far as practicality - Why wasn't it practical for you to sign at $2,000 earlier this year when the offers were made?  How about last month at $3,000?  And finally, it will all come down to what the group decideds.  If too many are willing to sign at a price that in my opinion is less than what we can get in a reasonable time frame then guess what?  That's all we will get.  I can't go it alone and get the extra per acre because I only have 195 acres to bargain with.  If I had the 38,000 that Des has under him though, I would get real tough at the negotiating table and with my recommendations to the landowners.  United we have great power, divided we probably fall.  I can only give the group my opinion as one that has watched this probably more than most of you on here.  How long have you really been watching the shale plays (PA,WV,OH)?  Go ahead and think about what information has been given and you will have to decide what's right.  But remember again that somebody somewhere over many counties in this play, and through many months and years have decided to have a backbone and push harder at the negotiating table to get the prices where they are now.  I'm sure there have been many men in my position going against the grain of "settle for the easy money" and because of their efforts have pushed the prices to where they are now.  Go back and do your research from years past and you will see how lease prices have grown.  It wasn't because everyone just accepted the deal presented but rather individuals and groups pushed back.  Here's to hoping for the best for all of us but I guess expecting less than desired. 

Comment by Monroe Co Landowner on September 16, 2011 at 5:31pm

Jeremy

Why isn't $4500.00/acre not a good number for you, is it really worth holding out for another $500 and what happens then we reach 5000 and thats not enough and oh we will have to hold out for 5500 and so and so. Not very practical is it. regards Shirley

Comment by charles schmidt on September 16, 2011 at 5:19pm

Jeremy with all do respect. Some of us just cant hold out for 2-3 yrs. Don't get me wrong were all wanting more money,of course but how long is to long for that magic number your looking for?

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