Replies to This Discussion

Permalink Reply by Tim on March 16, 2014 at 5:18am

Greg,

I have been leased since 2006 and hbp until 2013. The shallow operator produced zero nat gas in 2013. What are my options to get released? What happens to the current equipment on the ground? Are they required to remove it? Does a 12 month period of no production allow me to seek a release?

Thx,
Tim

Permalink Reply by G S Gass on March 17, 2014 at 4:23am

Tim,

Good questions - all answers depend on the lease terms.

Most leases have a shut-in royalty clause which requires payment of $x per acre if the well is shut-in (not producing).  Usually a well can be shut-in for up to 12 months before an annual shut-in royalty payment is required.  

However, if the Lessee conducts operations in lieu of paying the shut-in royalty payment, the Lessee gets another 12 months to defer production and payment of royalty - or re-commence operations.

If you need more specific answers to all your questions, send a copy of your lease for further review.

Best,

Greg

Permalink Reply by Janice L. Hancharick on March 17, 2014 at 1:41pm

Tim,

Greg is correct in saying the wording in a lease document is critical to understanding what can be expected by the lease holder ... in this case you.  I have repeatedly encouraged folks within the 4-County region to request a Letter of Surrender as their leases near End of Term.  The purpose of that is twofold ... 1. to provide a paper trail for future generations of your family for knowledge and proof of what is owned/leased     2. to make sure the company you leased to no longer has claim to your OGM's and you're free to lease again.

Understand that while I believe Greg is not an att'y, and I know I'm not,  much of the hassle folks have in our region has been created by a lack of an adequate paper trail in their personal records and in the courthouses to clearly establish what direction to go in next.

This area has been leased off and on for over 100 yrs. and formal records on the courthouse level were not mandatory "back in the day".  Even storage leases can present difficulties.

Check your lease for a clause(s) mentioning "equipment on your property",  the word "intent", a "well in place"  etc..  This is just some of the wording that can be a bugaboo for owners even when no drilling or production is happening.

The people I know who've requested a Letter of Surrender have either 1. had success in short order     2. learned that the company had dropped their lease 2-3 yrs. ago and failed to notify them.    3. learned that company no longer drills but instead has gone midstream (pipelines, etc.)

Penn Virginia has gone midstream and dropped many in our area.

Just from what you've said it sounds as if your lease was an old boiler-plate special, and it's possible that Penn Virginia intends to sell it off .  Have you spoken personally to the company's records office?  or an area lawyer who's willing to send a request on letterhead paper?

Good luck!   jlhanch@nc.rr.com

Permalink Reply by Janice L. Hancharick on March 17, 2014 at 2:22pm

Greg,

I'm glad you brought this up.  Since April I've become aware of more activity in the form of land agents sweeping through again ... throughout the fall and winter and again spring is nearly here. Unfortunately little has changed on the leases they're offering other than the upfront  $$$.  The leases being presented go up to $300 AC which sounds like a great deal when compared to the lease offers from 2000 - 2008, but are truly just a drop in the bucket since Utica has begun to outshine Marcellus.  Of course the demand for and price of natural gas has jumped making our region (Potter and McKean) a prize in companies' eyes.  So of course they want to have owners focus on numbers and NOT the wording that comes after.

Can you believe it?  What these companies don't realize is what fantastic efforts have been put forth by commissioners, landowners group, schools,  universities, etc. to educate the public  about the geology of our region, necessary infrastructure, environmental protections, and strategies needed to make the most of what we have.  

As a landman yourself, how do you choose which companies to do business with and how far can you press them to have clauses equally fair to both sides?  We both know how important it is for all involved to feel they.ve been well-treated. 

Glad our paths have crossed again.  This latest shale rush should prove more fruitful than the first for all counties across the north central region.

Permalink Reply by Ralph cramdon on March 18, 2014 at 2:06pm

Janice are you saying that there are companies now actively leasing in Northern Potter County ?

Permalink Reply by Janice L. Hancharick on March 19, 2014 at 6:30am

I know of one that has been in PA for a few months ... has backing from one that was bought out earlier ... and THAT one is gearing down considerably for over-extending themselves.  Now you can figure the amt. being offered per AC is comparable to the early figures several years ago.  Besides low $$, lease wording is just a shade above the boiler-plate specials of years past. 

Monitoring as many sites as I do ... all this is confirmed.  Individual landowners who feel they've missed the boat earlier or have leases expiring are being stalked.  

The push could also be on due to HB 1684.  Companies aren't sure if that will be passed or not, and it will make a difference in how leases can be worded/interpreted as far as royalty payments are determined.

Those who are in a rush to sign a lease may find themselves getting the "bum's rush".  Oh by the way,  say HI to Ed Norton for me!

Permalink Reply by G S Gass on March 19, 2014 at 3:17am

Janice,

I agree and am very pleased with efforts geared to help all parties make intelligent decisions.

I have found it most effective to work with qualified operators that 1) focus on specific geologic/geographic areas, 2) are willing to negotiate terms that are necessary to get a deal completed and 3) do what they commit to do.

Best,

Greg

Permalink Reply by paleface on March 19, 2014 at 1:19pm

http://www.philly.com/philly/blogs/inq-phillydeals/Soros-presses-Ra...

Permalink Reply by Janice L. Hancharick on March 24, 2014 at 5:15am

I had seen this news on other sites as well.  PVA is progressing since it's backed away from the drilling end of O&G and moved into midstream mode.  It will do well, as do all O&G companies that don't put all their eggs in one basket.

Thanks for the input!

Permalink Reply by G S Gass on October 23, 2014 at 4:45am

Due to leasing activity ramping up in Tioga and Potter Counties, I thought it would be appropriate to refresh this posting.

It is crucial for landowners to request a surrender of any expired leases.  

The original posting contains a generic Surrender Request letter and I encourage you to use it.

Do it now, so your property will appear open and available for leasing.  

Fairchase Associates is representing landowners throughout Tioga and Potter Counties to negotiate best offers on behalf of its landowner clients. 

Should you need guidance or assistance with the surrender request or with seeking best offers, contact me at gsgass@gmail.com

Gregory S. Gass

Certified Professional Landman

Fairchase Associates, LLC

Permalink Reply by Janice L. Hancharick on October 23, 2014 at 8:21am

You're correct in that a Letter of Surrender is a great topic to re-visit now.  Shell is one of the companies having many leases running out Oct. - Dec. in our region.  While lease holders may have received  offers to renew, if they do they are removing themselves from the playing field in an area that's now hot!.  There are other companies making offers ... Shell being only one.

 JKLM  a very knowledgeable company, has signed up many leases "on the cheap" knowing this new action was coming our way, and even it has upped its offers in recent months.  Land agents are once again scouring the hills and valleys, working the courthouses, and  "offering deals to landowners.  It's easier and cheaper for companies to pick off 1,2,or 3 folks  @ a time than deal with whole townships. Townships are often part of larger groups ... a good sign that OGM firms have areas to expand in once a wellpad or two are up and going.

Often spoken of @ 4-County meetings is that our Marcellus is the "Ford" of shales (not a Cadillac), and the Utica will be our cash cow.  The booming O&G production east of us is "well" established now and the industry is back on our doorstep ready to milk the cow!

Knowing what part your resources have played thus far be ready to sign one of the following:

1. Letter of Surrender ... from you to leasing company you signed w/years ago.

2. Pipeline easement agreement ... no pipeline = no product to market

3. Right of way document for O&G related business. YES your timber is valuable!

4. Lease for specific shale layers or rights all the way to China ... your deal, group deal, or their deal.

That's a lot being put on each individual's plate, but if meetings have been attended, webinars been viewed, papers and reports read, and questions asked ... there isn't anything we as a group aren't ready for.

As Greg mentioned, if your lease is about to expire or already has ... your first responsibility is to yourself in the form of a Letter of Surrender.

jlhanch@nc.rr.com

Permalink Reply by larryknpp9 on March 19, 2016 at 3:08pm

I have 160 acres of mineral rights in west pike potter county that is available to be leased. located  on route 6 across from larrys sport cener

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