Holdouts and Squabbles

Why is it almost always the landowner who is portrayed as the greedy party (and/or an eco-wacko) ... and expected to defer to the OG company?   All squabbles, by definition, have at least two sides.   Why not instead criticize the OG companies for insisting on lease terms that aren't necessary to drill in a timely manner?

Who's being the holdout when an OG company insists on a lease that also gives them the right to extract water and inject/store brine indefinitely?   Or won't consider a Pugh Clause that would limit the amount of time they can hold an entire property by including a fraction of it in a drilling unit?   And who is greedy when an OG company won't offer a true non-surface lease, but will accept that restriction if they can extract the gas with out paying a bonus and with the imposition of a 400% non-consent penalty?

My experience when asking for a modification(s) to the standard lease is that the landman's first reaction is a dire warning that I wouldn't want it because the money would be less.  As "negotiations" go on, the OG company may may agree to a few lease tweaks, but the landman mostly incrementally offers more money.  Then ... I don't hear back from them.







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Replies to This Discussion

Permalink Reply by Lynn Wigglesworth on July 17, 2010 at 1:08am
My dealings have been mostly with East, and they don't give an inch. They really wanted me in their unit, but not enough to negotiate money or lease. The ironic thing is, a year ago, I would have signed their lease for what they are offering now, but they told me they'd 'never go that high' with the bonus. Now I've gotten better offers, and East is still way behind
Permalink Reply by Lynn Wigglesworth on July 17, 2010 at 3:43am
O&G companies have been leasing land in Tioga Co. for a long time...my property was leased in 1940. People signed, got a few dollars, and nothing happened until the lease expired and they signed again. Easy money, and it went on for many years. Suddenly something IS happening and people are upset that they signed so cheaply. No one forced them to sign. Signing any contract without considering all the consequences comes down to the fault of the signer. I think there is already too much government in our lives. Now, if the forced pooling goes through, holding out for the best offer (or not wanting to lease, period) won't be an option anymore....government mandated theft by the O&G companies.
Permalink Reply by Brian Day on July 17, 2010 at 3:30am
There were lots of people who reccomended not signing the East Rescources upgrade two and a half years ago. There were lots of people saying "tear up your lease" after the economic collaps and that option was available. The majority did not want o hear this. As for the local politicians, leases are private afairs that they couldn't touch. The statewide political and legislative direction will hopefully change after the elections in November. The difficult thing about Pennsylvania is that a rural, generally conservative, often neglected, area and population in the North now holds a potential wealth and bounty that the urban southern parts of the state must come to terms with. With wealth and bounty comes influence and the southern cities do not want to loose to that influence politically. The state government is used to taking from the north and taking it for granted. This will have to change.
Permalink Reply by Ann Ticopa on July 17, 2010 at 10:33am
Brian, I'm going to play devil's advocate on this. Historically, Repulicans have been considered at least as OG-friendly as Democrats. So, we should not reasonably expect a Republican administration or legislature to be more landowner-friendly than the current one. (One exception might be forced pooling, which would not sit well with a few traditional conservatives.)

Nor do I expect any substantial shift in political/economic power to the Northern Tier. Drilling the Marcellus Shale is not a solely rural activity. East moved their headquarters to greater Pittsburg, not Tioga County PA. . And Schlumberger is building a $30M facility in Chemung County NY. It's disappointing that I-99 hasn't helped us more, but I'm guessing that's outweighed by our lack of a major East-West highway or suitable airport.
Permalink Reply by William Ladd on July 18, 2010 at 3:17am
One thing that really bugs me is this.

In the early fifties there were hundreds of small family farms. Each family had a few cows and for the most eked out a fair living. Houses and outbuildings were kept in reasonable repair. Families grew up and the older folks were no longer able to keep going when their offspring left the nest. Little by little the formerly productive farms deteriorated or the elderly parents died off. Now the property often was more or less abandoned.

Then along come a very well- to- do person who has contaminated his own nest in one of the industrial centers. He was able to become quite well off there but look what he left behind. He is looking for a pristine area where he can retire or at least turn into a hunting preserve. and now his new neighbors are no longer allowed to hunt on his property or even hike thru them.

Two or three times a year this new owner comes and brings his buddies and their guns for the weekend. And then all you hear is BANG! BANG! BANG! as they fire their high powered weapons almost the entire weekend. Little or no thought is given to their neighbors as the noise echos back and forth between the hills.

Then comes hunting season. Oh sure, they bring money into the area. But they also bring in their booze, their four wheelers and the attitude that they can trespass where ever they please without permission, outside of their own posted property..

The old timers, who love their property and whose ancestors cleared much of the land, are now having to pay much higher taxes and are often unable to work much anymore. are now being asked to practically give their land and very valuable mineral rights away to the O&G companies. And the elected officials are making it easy for them to do it legally.

"LEGAL THEFT!"

You talk about landowners being at fault for signing for very small yearly lease payments! You fault them for not looking in to their leases before signing? Did it ever occur to you that maybe they did not have the wherewithal to do so back then?

To me it is like beating the hell out of someone and destroying him simply because he is not quite as big or strong as you are!

Human beings are suppposed to be above that kind of behavior!

ARE YOU ABOVE THAT MINDSET?

Bill L.
aka Bummy
Permalink Reply by Lynn Wigglesworth on July 18, 2010 at 11:34am
I'm in the position you spoke of, except I'm the 'newcomer' (I've only been here 14 years) who bought the old abandoned farm. I've fixed it up as much as I can (old farms are a money pit, swallowing up all I have). It's my neighbors, the decendents of the original owners of this farm, who shoot off their guns and hunt on my property like it was still their family farm. Believe me, no one is poorer than me; they all drive nicer vehicles than I do, and have nice new homes, but they all signed with the first landman that came by, and are now mad that I'm getting offered twice what they signed for. Just to let you know that there are two sides to everything.
Permalink Reply by William Ladd on July 19, 2010 at 2:48am
I suppose my post seems to be lumping all newcomers in one basket, Actually my hext door neighbor who bought the acreage next to us was a great man, friendly and all. I took care of his property as he lived near Philadelphia. The acreage was a retreat and hunting for him and his friends. He had built a pond and I stocked it several years ago. I paid for some of the fingerlings and he paid for another batch of fingerlings. I made the trips to Zetts fish hatchery two or three times at my own expense to pick these fingerlings up. No problem there. My family and the neighbor kids were allowed to fish and swim in this pond. They were all great folks. But then he died and left it to his son. Now it is a different story. The son also lives downstate. He never had much interest in the place like his father and the the original group did.

Now no one is allowed to fish or even walk on the property.

As an overseer for the father, I mowed around the pond and camping area. The house was rented out and my wife and I took care of this too, collecting rent and seeing to any problems. One renter trashed the place inside. I had to replace drywall where kids smashed big panelings out.

I made hay on the fields and kept the brushy, and heavily stalked weeds like goldenrod from gaining a foothold. But since the son inheirted it and I became older and no longer needed the hay for my cattle, It does gripe me that I cant even fish there anymore!

The son does not come for vacation like his father and father's friends used to do. Son comes only to shoot all weekend long periodically and hunt a few days during deer season.

But I am also talking about hunters who only come to hunt. They rent a room or a house. They drive their 4wheel vehicles on newly seeded ground after being told not to. We allowed one vehicle to park on our yard near the road. Next morning about three more vehicles were parked there. Turns out that they took many deer, legal and unlegal and killed several other deer and just left them lay where they dropped.

I took their license plate numbers and left a note explaining my position. They never came there to park again.

Used to be deer drives by several neighbors getting together in an area. All would share. Then it got where the hunting was done from the road with high powered rifles. It was not safe to walk thru the woods anymore. You might stalk a deer for a few hours. That deer walks out into the open. BANG! Someone driving by in a car kills the deer you have been chasing! NOT NICE!

One so called hunter spots a deer in a pasture with cows. Bang! He kills a high producing cow instead of the deer. Again, not nice!

Ok now... Family farms

My property has been in my family since 1844. And about a mile away stands the house that was built by my grandfather of 5 generations ago nearly 100 years earlier. He was the first permanent settler in the Westfield Area. Many folks do not form any kind of attachment to acreage. But there are many who do! Their great grandparents came into the wilderness to make a home and a living for them selves.

The generations of today do not care or appreciate the struggles these great grandparents went thru to clear the land. They have no idea and care even less why their grandparents busted their butts to cut huge trees with nothing but an axe.

Lets say that you are that grandparent. You struggle to have a comfortable home for your offspring. You take great pride in any small accomplisment. Fifty years down the road your grandchildren take possession of the house that you so carefully and lovingly built. Hours and hours of your time went into building this house of yours. It is well built and sturdy. and will last easily for two hundred years. Your Kids comes along with a bulldozer. Within two hours time your work lays in a heap of smashed boards, stone brick or whatever!

A few days later along comes a double wide box built of tissue paper thin walls on wheels to replace that sturdy home you worked so hard to build.

Five years later that double wide is sagging badly. The roofing needs major work. A windstorm blew a small limb down from a tree and it punched a hole thru the tissue thin wall.

That kid has no appreciation of your work and the pride that you have of your home.


Lynn! sounds like you are in much the same position that your ancestors were in a couple hundred years ago.

And Josie! The Landmen are in a thankless position too. They are a "GO BETWEEN PERSON" who is trying to paint a beautiful picture for the land owners. But at the same time trying to make brownie points for his employer. A struggle at best for everyone except for the folks who make and enforce their rules.

"Our greedy elected leaders!"


Permalink Reply by Brian Day on July 20, 2010 at 3:52am
Sorry that I have not repied for a few days, Anne. Several issues in my personal affairs had to be dealt with, including some potential changes to my own leasing situation. Anyway, as for Republican North versus Democratic South, I agree that the sheer population difference and industrial infastructure superiority of the southern areas of the state will hold dominence. I also do not feel that Republicans are any less suseptable then Democrates on an individual basis, to influence by big money, whether the influence is justfiable or corrupt. Never-the-less, the traditionally powerful urban areas will have to turn an ear northward and listen more intently than in the past to receive their share of the proceeds without strong resistance. Hopefully that resistance will be more unified than it appeared to be in negotiations with O&G companies so far. If the population of the rural counties does not band together and demand better road mainenence, school funding, etc. the rest of the state will simply tax and legislate away most of the personal profit for the use of the cities.
Permalink Reply by Ann Ticopa on July 20, 2010 at 5:01am
I guess we're just going to have to wait and see how things play out. For example, the positions politicians take on issues like how severance tax revenue should be distributed.
Permalink Reply by William Ladd on July 20, 2010 at 1:35pm
Right at this time one of the East landmen is supposed to be working on the problem of the 2 dollar storage leases that Dominion has saddled many of the westfield township landowners with. As I understand it, my property and several others are in what is called a "BUFFER ZONE". And this buffer zone area seems to be not quite "written in stone" as to where the edges of it are. Where is the cut off point of their buffer zone? About a month ago the east man came to my door as well as other neighbors. He wanted a copy of my dominion lease and a copy of the last annual storage payment check. We had just received our check of which the last day of the lease was the 29th of june, 2010. Of course we did not cash this $2.00 per acre check. Our neighbor said he was not going to cash his check either.

Two weeks went by with no word from that east man. I emailed asking how it was progressing. Another week went by and finally an answer from him: "We should know something later this week."

Two more weeks have gone by with no more information from him.

My property has no well or gas lines running thru it except for a service line to each residence.

I would supposed that now my property would be free and clear of any lease from anyone. Now if East really is serious about wrapping up all properties in westfield township, I would think that landman would hot foot it back to my home and try hammering out a lease.

Oh Yes! The check stub says "FOR STORAGE".

Bill L.
aka Bummy
Permalink Reply by Lynn Wigglesworth on July 20, 2010 at 2:18pm
Things seem to be stalled with other companies, too. I was in negotiations with Chesapeake, then they just stopped communicating. The landman says he doesn't know why it's taking them so long to get back to me. I've heard the same from other people, too. I'm wondering if everyone is waiting to see what happens with the TTLC auction.
Permalink Reply by Ann Ticopa on July 22, 2010 at 5:41am
Josie,
The OG industry also wants a bill (or have language included in another bill) that will limit local governments' ability to regulate drilling. The separate draft pooling bill has been kicking around for a while but I haven't seen where any legislator other other than the two original sponsors has signed on (or publicly opposed it).

In reference to what you had posted before, I had one landman stop by two+ weeks ago and one earlier this week. Both were representing companies I'd "negotiated with" before, but both were "new" landmen. The most irritating thing about it was that neither seemed to be aware of where the previous discussions about terms had stalled. And I wasn't interested in hearing the sales pitch from the begining again.

So, yes, there are landmen out and about in Tioga County. But at least here, it was a 'sign the lease we're offering' thing. (One did offer a 25% higher bonus than a few months ago.)

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