Replies to This Discussion

Permalink Reply by Nate on October 26, 2010 at 1:18pm

You should look closely at that lease, the cards are stacked pretty well in chk's position.

Permalink Reply by David Mohn on October 26, 2010 at 2:08pm

Well I have looked closely at the lease and you are right about being in favor of chks. The landman seems very understanding to my concerns and has made quite a few suggestions that seem to make the contract more landower friendly. I know bottom line is before I sign I will have a G&O atty look over the lease. I think the more I can find changes the better I will be when I go to the atty. Thanks for the heads up. I was just wondering if there was any other gas companies besides chk's

Permalink Reply by Nate on October 26, 2010 at 5:24pm

Sierra is one player besides them. Right now they are talking mostly to local independent O&G companies trying to figure out where they want to have their block at. Where exactly is your property at David and how many acres? What you should do is reserve the Clinton and everything above. The landman is going to say that isn't possible, which is total BS. If that was the case they wouldn't be talking to me and other producers of the Clinton wanting to farm out our deep rights. So when he acts like that's a no go tell him that its OK you'll just talk with Sierra and you've heard they are letting land owners reserve their Clinton.

Also make sure your royalties are of the gross production, they like to take it on the net, which is according to however much they will charge to operate their well. On another note I'd tell your O&G atty you want him to work on a hourly rate. Otherwise they are tending to take 8-10% of your signing bonus.

Permalink Reply by David Mohn on October 26, 2010 at 11:34pm

Thanks for the advice. I am in Nimishillen twp. Just east of Louisville. I have 60 acres but I have put together a group of landowners and right now we have a little over 500 acres put together.

Permalink Reply by Nate on October 27, 2010 at 1:55am

Can you email me more info on this area Sections etc? I'd like to research your area and possibly talk to you about doing some shallow drilling if you are interested. nlevengood@yahoo.com

Permalink Reply by Campbells Farm on February 15, 2011 at 1:50am

We are in Nimishillen as a small 5+ acre landowner and have just signed with Chesapeake.   Just delivered the paperwork yesterday.  We're pleased with $1K per acre for 5 yr. lease.  Looked it over carefully, understand all the ins/outs.  Much of Nimishillen is already leased from decades ago and most of those have been sold off in 2008 & 2009.  Been researching all transfers at the Recorder's office website on line.  Chesapeake claims they're about done with Stark and will be moving on. 

Permalink Reply by Richard Clark on October 26, 2010 at 11:39pm

Kudo's to you Nate. My advice to landowners is........Let the atty make all the legal decisions and pay them their hourly rate for doing it, let the landowner make all the business decisions and get paid for it. As a landman, I have seen many atty do their best to move from legal counsel to a deal maker for a % of the deal, far too often.
Question for both David and Dave, as long as you get the % of royalty you are happy with on production from any oil or gas produced from a well, why specify depths or particular shales?

Best of luck to the both of you.

Permalink Reply by David Mohn on October 27, 2010 at 12:38am

Richard, question for you. If company A has the oil and gas rights are are going to the Utica Shale formation and company B wanted to just drill a vertical well say to 3000 feet, would company A so no to company B?????? Or would company B be able to buy the rights to drill from Company A??? How would that work? Company A only wants to drill the Utica Shale.

Permalink Reply by Richard Clark on October 27, 2010 at 1:11am

If I understand your question correctly I think this is a good answer but not a legal answer.

If company A has the mineral rights leased without any restrictions as to the depth and they are going to drill for the deepest depth, you would surley think they would want to capture and sell any minerals of value on the way down. My understanding is the Utica is the deepest so, if they go through the Marcellus on the way down and the Marcellus has plenty of sellable gas I'm sure they would capture and sell it.

I guess i'm not sure why company b would want to go to the trouble to work up another lease to drill. My guess is company A would not be interested in making any kind of a deal with company B IF company A has a producing well.

Hope this helps.

Permalink Reply by David Mohn on October 27, 2010 at 1:22am

Thanks again Richard for the update. I guess to further clarify my question is that I was told I would be put into a pool of say 1000 acres. I may or may not have the well site on my property. If company B wanted to come in and drill a well on my property they couldn't if company A had the rights. What I am referring to is that I might be getting royalities from company A horizontal drilling but if company B came in and drilled a vertical well to a lesser depth I would get royalities from this too. I know the royalities is where all the money is not the upfront bonus money. I am not trying to be gready just want to make the best decision for myself and my kids since this can be a VERY long term lease if the pool I am in is producing royalities. I don't want to be penny wise and dollar foolish. Just trying to become informed so I can make the best decision.
I also agree about the atty not becoming the deal maker. From what I can see the landmen are open to discussion and two adults I think can come to an agrement in the partnership. Yes an atty is best to read over what the landman and the landowner put together because we all know the gas company will have their attys look over the lease before they agree to it.

Permalink Reply by Richard Clark on October 27, 2010 at 1:37am

Once you are under lease and in a leased unit (pool), its my understanding no other company can drill within that unit without the permission of the company that holds the lease.
Make sure to ask the landman you are dealing with about the size of the unit you will be in, how many wells they intend to drill within that unit over the next 20/30 years and ask them to due the title work in advance so when you do sign a lease you can put the time frame to get your bonus check within 30 days.
It sounds like you are doing a good job and yes........most of the time a good landman will be more than willing to work with you so everyone is happy. Its amazing to me how the greed factor comes to the surface so fast but you seem to very level headed about understanding you can't win the Lottery if you don't but a ticket.

Permalink Reply by Campbells Farm on February 15, 2011 at 2:04am

Hi.  Chk told me our bonus check could take as long as 90 days to process, but most likely not since our local Recorder has the capability of doing everything electronically (which I know it does) vs. most other counties.  I anticipate it will take approx. 2-3 weeks here in Stark and have double checked my title thru the Recorder's office website to make extra extra sure I owne my rights to begin with.  We got $1K per acre for 5 years and my neighbor got $1500 per acre for 10 year lease.  Was pleased with that.

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