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 William Ladd on July 22, 2010 at 9:21am
So Ann it looks as if maybe these O&G companies are playing with us in hopes they can lock us up with miniscule $$ amounts like dominion has done in certain areas. Do you have that "take" on it too?

With the economy the way it is, (folks out of work, high gasoline prices, mortgages coming due along with credit card payments.) these O&G outfits might be hoping that these very tight financial burdens might be enough to force some of these landowners to accept any kind of a lease that is offered.

Bill L.
aka Bummy
Permalink Reply by Lynn Wigglesworth on July 22, 2010 at 9:52am
It's business...their goal is to make themselves rich, not landowners. I just wish people would realize that what East is offering is a lot less (with a worse lease) than what other companies are paying. Now there's competition even here, in the heart of East Territory.
Permalink Reply by Lynn Wigglesworth on July 22, 2010 at 11:47am
Josie; I think Chesapeake is still in the picture. They are just dragging their feet for some reason.
Permalink Reply by William Ladd on July 22, 2010 at 1:02pm
About a month ago I sent an Email to Chesapeake about several hundred acres here that surround my own acres that were not leased as yet. I received an Email back from them telling me that if they were interested I would hear from them in 30 to 90 days.

The east landman told me that they, (east) has 10 percent holdings in dominion's pipline capacity. If this is true then East can start producing from its wells and paying some royaltys as soon as their laterals are piped into the main line.

What is to prevent these individual O&G outfits from getting together now and doing a little "back room" conversation and all agreeing to hold back making new leases in hopes of forcing desparate landowners to sign a lease at a picayunishly small price? Once the dotted line is signed by the landowner and control has been gained, then the real high stakes trading starts with someone standing in the background.

Bill L.
aka Bummy
Permalink Reply by Ann Ticopa on July 22, 2010 at 3:06pm
Bill,

I don't know if the $$ the companies are offering now are "fair" or not. When East was offering a $200/acre bonus in March, 2008, that clearly was a rip. Otoh, with the price of gas low and likely to stay that way for a while, crazy high bonuses aren't justified either. East/Shell has a lot of drilling to do before they put a serious dent in the land they already have leased, so it's not like they need to lease more land to keep operating.

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