Comment

Comment by Robin Fehrenbach Scala on April 12, 2010 at 8:14am

Hunter777 made an excellent point in the last post.
When many of the leases now being drilled were signed, there had been no gas activity in the area ever. The landowners were blindsided because no one ever heard of marcellus shale or the boom to come...
Those of us who started getting offers after the end of 2007 had Ron Stamets web site where we could find others and start the learning process.

Comment by daniel cohen on April 12, 2010 at 6:08am

Dear CJK,
Good cautions, and good advice.
Dan

Comment by daniel cohen on April 12, 2010 at 6:06am

Dear Hunter and rfs,
Gentlemen, you are both well researched and careful about what you do and sign. Sadly, most of us aren't, and we're paying the price. With that in mind, no finger pointing is intended, no blame or breast beating- we are where we are. Now to try to do the best we can for ourselves, our neighbors and the environment. Your contributions, although sometimes heated, are most appreciated and solid.
Thanks again, and please continue to contribute.
Dan

Comment by daniel cohen on April 12, 2010 at 5:39am

Dear rfs,
A most interesting site. Many thanks for the reference. Pulling from that site, here are a few of the goodies-more to follow:

Natural Gas Leasing - Understand what you are signing!
By: Ron Stamets | Jan 19, 2009

So... The landman has plopped down a natural gas lease agreement on the table and is offering you more money per acre than you paid for the farm itself! What to do? Start acquiring infomation about what it is that he/she is asking of you.

Be aware of these important facts.

1. Whatever you sign is a LEGAL CONTRACT and you will be bound by it's terms.
2. Whatever you are told by the landman, have it in writing. What is orally told to you may change before the end of the day.
3. You are negotiating a potential $million deal. Not buying a refrigerator. Treat your research as such. Or you will discover, as many have already, that the $25 an acre bonus you accepted before fully investigating your deal, was worth $2000 an acre. Many have cashed checks for $2500 thinking this was good "pin money" later to discover, had they done their due dilligence, the check would have been $200,000.00, for the bonus alone.
4. The lease the landman gives you to sign tips the scales completely to the benefit of the drilling company. It is your responsibility to understand completely what benefits the company is giving themselves, or in a best case scenario, you might have a drill rig pull up to punch a hole through your driveway, or front yard.
5. Hiring a general attorney who has not acquired extra education to deal with gas and oil leasing, will provide a limited benefit. The companies are banking on the fact that although a general attorney may be highly skilled in law, a limited working knowledge of Natural Gas Law handicaps his/her ability to tip the balance of control more towards the landowner.
* Consult a general attorney for your normal legal issues.
* Consult a criminal attorney if you get in trouble with the law.
* Consult a gas/oil attorney to negotiate the terms of your lease.
6. Either join or form a landowners group the benefits are unbeatable.
* A Larger contiguous block of land area commands a stronger position to negotiate terms of the lease.
* The "two heads are better than one" addage is no more true than in considering leasing land for natural gas and oil exploration.
* Retaining a qualified gas lease attorney is expensive. $350 an hour is not unusual for the top lease attorneys. Unless you have megabucks yourself, a landowner group can share the expenses. One group with over 500 members is negotiating with not just one, but two of the most highly regarded (and expensive)gas attorney firms in the country.... for about $25 per property owner.

I am not against the gas drilling companies. As a matter of fact, I am thrilled to see such a valuable opportunity happen to so many people. I would just like to see the opportunity be slanted a little more towards the owner of the natural resource.... You, the landowner. Then, we will have achieved a balance of winning for both the landowner AND the company.

Dan

Comment by hunter777 on April 12, 2010 at 5:33am

(quoting)"Certainly that lease in place would have eliminated the disaster that hit Dimock and protected the individuals there."

What most people who are "new" to the leasing process don't realize is that when most of the leases were signed in the Dimock area it was late in 2006, and it was not a case of being uninformed - there was literally no information on the internet-none.

Many of you will know this, but some of the younger residents have never heard that years ago the landmen made their rounds leasing the big farms for $1 or $5 per acre. Obviously nothing ever came about on these leases, it was just some help to pay the taxes. So for those being offered $25 back in 2006, it was just a repeat of what had happened before. The Teel #1 changed all that - it was the first well Marcellus drilled in northeastern PA. The rest as they say is history!

Also, there was no altering the boiler plate leases! Cabot simply wasn't accepting any addendums. So to fault the Dimock landowners for not doing their homework at the time is somewhat unfair.

Just a little history lesson....

Comment by CJK on April 12, 2010 at 5:26am

Once again for those that have already signed leases that do not give them full protection, when and if anyone comes around to ask you to sign additional agreements (pipeline, surface use right of way, pooling and unitization agreements) you have the right and power to negogiate the terms of these agreements to further enhance protection of your rights. Do not sign these agreements, even if the landman says, "If you don't sign we can do it without your approval" if that was so thye wouldn't be asking you to sign in the first place.

Comment by Robin Fehrenbach Scala on April 12, 2010 at 3:55am

No need to reinvent the wheel.

Most everything that keeps being argued about here has already been covered by good lease language written over the past two years.
If you have concerns about leasing, getting it covered legally by the lease contract is the way to deal with it.
Simple as that.

Comment by daniel cohen on April 12, 2010 at 3:46am

Dear CJK,
Of course you're most welcome to comment and present information. This is an informative seminar and folks should have the opportunity to attend if they wish. To my way of thinking, this all comes under the heading of 'solutions' that we're trying to get a handle on. Read Hunter's great contribution to this.
All good thoughts,
Dan

Comment by Robin Fehrenbach Scala on April 12, 2010 at 3:45am

As the lease states, it was with Fortuna Energy, and YES, a large group of landowners belonging to the Friendsville Group signed this lease. Done.

Comment by daniel cohen on April 12, 2010 at 3:42am

Dear Hunter,
You've done us all proud! That lease reference (
http://www.thefriendsvillegroup.org/lease.pdf) should cover the vast majority of the issues that could come back to haunt us, and could serve as a model for those looking to lease. Certainly that lease in place would have eliminated the disaster that hit Dimock and protected the individuals there.

3 questions for your consideration:
a) Was there a 'date certain' that operations could be considered complete?
b) Are there any specifications as to the level/area underground to be accessed? (Basically the 'split horizons' concept limiting drilling to the marcellus shale layer only)
c) Has this lease been accepted by any company yet?

Super good stuff Hunter-thanks for the effort.
Dan

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