Replies to This Discussion

Permalink Reply by Mickgyver on October 15, 2011 at 6:04am

That sounds like solid suggestions James about staying the route they are going . In my area in Belmont County Wishgard took it by storm,posting ads in the stores and the local paper , telling the people that they were leasing strictly for Gulfport ,

In addition they told everyone  that their lease was so much better than the company leases , which I guess in some places was a little better but not much, they told the people at the meetings that the companies will not come back to get the 50 and 60 acre parcels , basically if you don't sign now you miss the boat , This was an $1850 offer at 15% with costs taken from this 15% and also an out right lie ,shortly after they hit the area the first local attorney run group signed for $2400 and 17.5% then I think another went to $2700 and 17.5%. 

They lied to many just trying to make people be afraid of missing the boat, The ploy here everywhere is that the economy is so bad they try to make everyone think this leasing fast is the best way to go also . As this gets more involved the real value of our properties will come out .

I don't know if it will get as good as the Texas EagleFord with $35k and 27.5 % for just the single shale play of the other Barnett Texas shale with the $30k and 25%  in addition to the fact that thes prices only were 3 year lease .

But the sad thing is that because some companies were able to sneak in early before people realized what was here and they acquired a lot of acres cheap . But as you know when the supply gets smaller the price goes up .

With each group in our area that held out longer the bar got higher .With the last here so far at $4950 and 19%  .

But some companies are offering individual landowners that are not holding in a group for some reason an offer of $5000 and 20% just a little above the last group deal but they won.t make many changes in their company leases.

It will also depend on how good the area is Im sure, but with a little research you can certainly find some good basic information on your area. The local colleges are a great source of information.

I posted on here a basic figure that shows the dollar amount that it appears to figure out as by going with the production of the Harrison County Buell well , and I was told it was not at full production because of blow out problems that could occur .

Any way if you figure the following information which is the same I posted on another blog the basic liquids only production from that Buell well is in the amount of  1400 barrels of liquid a day x 30 days per month =42,000 barrels x $$60 per barrel minimum=$,2520,000then x a 4 month period =$10,080,000 (just a mere 10 million 80 thousand ) even with the average well cost at 8 million and the related transportation and related cost.

It leaves a couple measly million left in only 4 months after the well is paid for . I realize this is rather simplified , but after 4 months the money really rolls in .

I have hoped some of those in the oil business would be able to post the actual rates and costs exactly as they are and to correct me if I am wrong or at least post the actual sales versus cost versus profits to landowner and company but it has  not occurred yet . 

The large profits are great as long as the landowner is able to get a fair deal for their land .

This can be very good for both parties even when the landowners get a lot better deal than most have gotten so far . I just hope with the royalties it is able to offset the initially low leases that were signed because the landowners were not fully informed of what is here .

I firmly believe a little patience can't hurt ,not many businesses just walk away if they are forced into paying a fair price for the land they need to make any money at all . Good luck groups . Best of wishes to all

Permalink Reply by Mickgyver on October 15, 2011 at 6:30am

James I forget the one part I wanted to mention on wishguard because you new about their gulfport deal . I was told later that they were not representing Gulfport as they had told us ,but they ended up selling their leases to gulfport anyway Later they had a meeting at old washington and they said to one group  they were just leasing and intended to sell their leases to whoever they could according to my neighbor who attended a meeting there . They seem to be good at only telling half truths .But I was not at the meeting so I can only go by the neighbor on that part .

Permalink Reply by James Kerns on October 15, 2011 at 6:36am

Mickqyver, Thanks for your insights on this for sure, i just wish we could get more input from other landowners who read but dont join in and less from O&G reps. who misrepresent.

Permalink Reply by Mickgyver on October 15, 2011 at 3:31pm

Yes the more information that is passed on to each other will help a lot for sure . I will try to do my best to pass on all that appears to be true

I don,t like to cause confusion, I am certain there is enough of that being implied on here by the shills that are concerned that a better lease and larger bonus would affect their bottom line so they will cause disagreements on here on purpose

Iam a firm believer in the group concept and I hope there is some way the group leaders could get together to pass on the various information they acquire so they can do their best with the direct negotiations that are required to get a good deal established for the groups .

Our group is a non profit one with the 40,000 plus acre count in Belmont County and I stick up for them with all that I have . I feel if any other group is started in the same area it will take away some of our clout to have the best negotiating power .

Also I feel it is the fact that we have such large numbers ,that there are those that only wish to get involved because of the quick profit they can make .

With that in mind I don't like to see anyone get ripped off with false hopes . With our group the members can get the opportunity to get a nice lease with protective clauses and only the slight cost based on the sharing of a seasoned attorneys final ok that everything is in order.

There is rarely such an opportunity given to a large group such as this, which is only made possible by the well meaning caring committee members that so graciously donate their time to benefit all of the others in the group.

I was told that I was wrong in trying to stand up for, or even promote the group I am with because it was said I was trying to force my choice on others and they have the right to chose what they want to do .

This was far from the truth I was only trying to make it known that there was a much better option than to get involved with any new group which was starting out based on the need for a large profit at the end of the deal.

I only expressed the fact that any additional group would do more damage than good if it diminishes the size of one group to create a new one in the same area especially if it is there mainly for a good profit and their exists an option that allows a landowner to keep more of the money in their own pockets with a non profit group.

Stressing the fact that regardless of who runs the business a seasoned oil and gas attorney or an attorney with major oil company connections , there will be no bargaining power without the strength in numbers which is only provided by people willing to stick together . My thoughts there were. why should a large profit be taken when you could make no profit at all without a group in the first place .

This is why I feel proud to be in the group that I am in since it is based on doing something good for the benefit of all .with no profit at the end for the leaders .

But truthfully wouldn't this have been nice if it could have been done with no groups at all, if the oil companies would have just approached these new shale oil discoveries with the goal in mind  to truly become a good partner in the deal by creating a marriage of their need for the land as the raw material  and our need of the equipment and knowledge to develop it, rather than maintaining the position of doing whatever it takes to make the most money with the least investment by praying on the fact to control the land before we knew what was really down there and how much could truthfully be made

The leasing could have also been a very easy thing to accomplish, as my friend had suggested to the one landman . Just post an ad in the local paper announcing a good bonus amount and a decent environmental lease with the needed protection to make most landowners happy written in laymen's terms so it is easily understood .

Make it so the actual profit potential is fully disclosed so there is no hidden details in their agenda . Make this deal so it will cover a certain area made available to the public for a certain period of time until they have received the amount of land that they wish to acquire .

Hence not only would the public be more accepting to the overall deal at the start there would be no need to keep the snake oil salesman on the payroll so they could gracefully slither away for the best of all concerned .

This would be too simple ,so it can never be

To help us all to profit , as such we'll never see.

 

Best wishes to all keep on putting up the good stuff .

Permalink Reply by Mickgyver on October 15, 2011 at 4:03pm

Sorry about the last post I must have been day dreaming through the last half of the post (LOL) But seriously let's hear from the other  counties I would like to know if any counties are best for the oil production as well . Keep up the good Posts

Permalink Reply by James Kerns on October 15, 2011 at 7:37pm

Mickgyver, I couldn't agree more, well said.

Permalink Reply by Mickgyver on October 16, 2011 at 6:39am

Sometimes I just can't help to tell it like it is, and hope others can benefit from what I learn and then post for all to see . Have a great day and best of luck to all in Ohio which this will affect .

Permalink Reply by Adam Thomas on October 16, 2011 at 2:47am

Mr. Kerns,

This is Adam Thomas of who you spoke.  I am very pleased to admit that I do represent Wishgard.  I am a former client of theirs and when the development of the technology to commercially produce the Utica shale, I contacted them to come up here.  I own 33 acres of my own in Ashtabula county and I wanted to get my own property involved with wishgard.  I found very quickly that there was NO knowledge at all in the general public on the subject.   I invited Wishgard to come up and educate people on how the industry works and how the leasing industry works.  Before we started spreading the word, there was no ligitamate company offering more than $50 an acre in Ashtabula, Geauga, or northern Trumbull county.  Instead of quietly screwing people over and leasing up acreage for $25-$50 an acre and make millions in a few weeks time, as we could have.  We are offering as much as the market will handle with the information that is available in this area.  By spreading the word and educating people, we are eliminating people from being taken advantage of. 

If this sight operated as it was probably originally intended, it should encourage people to gather information and attend many meetings with many companies and encouirage people to make their own choice for what is right for them not what your personal agenda may or may not be.   

The fact of the matter in all of this is the prices are based off of two things.  First is how sure the oil companies are as to what is beneath us.   If they are right then offers go up crazy on the acreage that is remaining.  Supply and demand is the second part and what inevitabnly wins in all businesses.  If most of the acreage is gone, then they will pay a premium for what is left if they know how good it is and no risk is associated with it.  That is why in some areas it is incredible.  If the whole area was not leased it would be no where near where it is at.

 

We leased with wishgard in Monroe county at $1840 an acre and WE GOT PAID. Since then,  the area is panning out good so the OFFERS have gone up but most still dont have their money yet.  We got ours months ago.  I am not angry about it in any way.  I understood that could happen.  I made an educated choice and I dont blame someone else for my decisions.  I hold myself accountable.  Many do not.

Please do some research on the leasing boom that took place in Northern Michigan last year and read about all the "alledged" fraud cases that are going on as a result of it. I am not making any accusations or in any way implying that the two are connected, however, holding out is NOT always the best answer.  It doesnt always work. It can work for you or against you.  In Michigan the landowner groups held out and many of them got nothing but lead around by big oil companies until they drilled test holes and when they were dry, they bailed on the leases.  I am just trying to make people realize that not everything is as it appears in this industry.  It is far more complex than most can fathom so DO YOUR HOMEWORK and do what you believe to be the best decision for you and don't look back regardless.  I truly do want to see everybody benefit from this which is why I try to let people know the good, bad and ugly and allow them to make their own decision.

Thanks,

Adam

Permalink Reply by Mickgyver on October 16, 2011 at 6:04am

I will reply to Adam in regards to James concern for his neighbors in the area . 

I personally was at Somerton Ohio when Wishgard had a meeting there , we were told many things that were not fully true.

One question was asked was why are they  getting paid at least twice as much in Pennsylvania for leasing their acres .The answer we were given was that Pa. has both the Marcellus and the Utica and we don't have any Marcellus here in Ohio and they won't make as much money ,so they can't pay as much as was paid over there .

This was not true , in Belmont County there is neraly 90 feet or so of Marcellus and in some areas it is thicker, but the real kicker is, they were Leaving out the entire fact that Belmont and several related counties are located in the  the Wet gas area ,which produces the best paying products , even better than oil by itself in many cases . Hence 55 gallon of Wet Gas liquids =30% propane ,40% ethane, 10% butiane, 10% iso-butane and 10% natural gasoline .With processing these products create quite a good proft ratio.  

Also we were told that these companies already said they are not coming backfor the 50-60 acre plots. Basically implying if you don't lease now you miss out. We were then told about how the modified company lease wishgard has  is so much better than anything else ,although it is better than the old form company leases . they failed to explain the fact that with 15% gross includes taking taxes ,assessments and adjustments on production from the leasehold, which when figured out ,this takes it down to about 12.5 or less percent which is the minimum percentage .

Also this lease does not limit the amount of acres that can be used for the pad that gets a payment of $15,000which  is not much to stop use on 5-7 acres.

Also it is said that the wells that are producing are doing rather well with as I said before with over $10 million gross return in 4 months seems  that the landowner should get a little better cut .

THE REAL NEED like Adam even said ,with no knowledge available to the general public you as friends and neighbors need to get this knowledge collected and work together so you can keep more money in your own pockets and not give it to the groups and businesses that will pop in to make a tremendous profit

The thing here is for landowners to control  the area and make the people get informed .because if you don't somebody else will and then it won't be nearly as beneficial in the end for all concerned . Remember you have to live with the results of what you put in your lease , not all groups have acres in the pot so they will not always do what is best for you .

You need to collect basic information from your group members that commit to stay together in the group, you need the landowners land Parcel Numbers for every chunk of land they will add to the group, this can be located from the tax statement each landowner get for land  tax purposes , but this is also easy to get from the internet if your county Auditor has the people listed there which most do, this allows you to get the Parcel Number ,the address, the name of the actual owner ,

This list allows for you to keep an active list of where the acres are located and who owns them , then you can easily get a large map copy and use a marker to color in all acres in your group, this finished information will be presentable to any company so they know what they may be bidding on when  you get to that point . Also make a book of some type or index cards like a recipe box  to keep names of all your group membership .

Get your neighbors to help with your membership tell them what is going on and tell them you will be a very minimum cost at the end so they will feel more comfortable with deciding to stay together for the benefit of everyone .

Make no mistake , I think it is always better to be sure you have a good well versed attorney who is used to helping landowners with oil and gas leases . I would feel more comfortable with an attorney that can understand everything on the company lease so there is no stone left unturned so to speak. You only get one chance for your lease , so make sure it is proper .

This will be most important when you as a group has decided on what changes and requirements you will need ,. This attorney should then be able to review your final copy of your addendum's and this list will be the controlling document over and above the company lease which you will more than likely still have at the end of your final deal , along with your addendum's .

Start your group by  posting landowner group meeting's  at a good time in the evenings to start then break the times up to allow for people who work shift work so they can also attend. Put signs in as many places as possible and host meetings in a large enough area to hold a large crowd of people .The more help you get the better more meeting are better anytime .

Have someone do this that has good speaking skills and some good base knowledge of what is truly happening now. This site will get you started because you can go to the various county sites and ask what the offers are doing there and what clauses need tuned up to offer protection.

Then find who are the main compnanies involved so far in you area, but the main thing is to tell the landowners to just hold together for now and you will have more informational meeting real soon to explain everything .

The main thing is to get group started first to limit the loss of a lot of acres before the group gets a good start by being lured away by others. This will keep them from being  lured away by the middle men that will flip your lease to others that give them a decent profit .

Make sure to tell people the oil and gas has been here for as long as it has and a little time to collect information will be well worth the while until more information can be collected before they sign any leases they don;t understand .and get a decent 6-8 person committee put together right at the start from around the surrounding area . Meet with the committee and get a plan of attack and learn learn learn what is truly going on now in the shale play, 

You can speak to several agencies for general questions and such as the ODNR which also has a load of information about the shale plays as well as a place to find where the new drilling permits are being issued and a lot of basic well information from operational wells already installed also , the Ohio Attorney general the local colleges that have geologists or people that know more about the underground formations, learn the laws that will affect you and your neighbors . 

Then when you host your first meetings explain what is happening with some good information about the shale play , the money that this can produce for the oil companies and the landowners figuring a percentage of royalty near 20% to hold your properties together to form large blocks of acres that are connected together and you can even add some acre's from the surrounding areas because they will usually accept the main group of connected acres and the additional acres .

This additional acre count will help with your bargaining power but you need to make sure everyone is included in the final offers so nobody is left out at the end .

 Get some people that can use some time to do extra research about the lease clause's or even go on the internet and you can download many of the leases that have already been accepted this will give you a baseline of what you need to do as far as property protection .

Have plenty of meetings  to make sure you keep the interest of your group to keep them posted as each step progresses .And use the email process to keep people informed , the mass emails make the information highway much easier .

If you decide the people running the group is going to charge a small fee at the end of the deal make sure to be upfront with this information. Or just set up a donation box at the front of where eacjh meeting is help. This will help defray the cost that the committee has to have to run to the meetings with the various companies to negotiate a deal in the end . This also can help with the cost to print the addendum list which is usually handed out to all members after they have decided on what they truly need to have added . 

  Ifa small fee paid  to help  your committee members, it is still well worth the small fee if it gets you a much better deal than you will ever get trying to go it alone . It is absolutely a lot of work keeping everything in order and maintaining contact with your group to keep their attention so they do not leave and sign for a quicker bonus payment in hand .

This quick bonus money will hurt the group more than anything because the economy has forced many to need this money as fast as possible , but by waiting,the end result should be a whole lot better to all concerned .So patience is the key here no matter what .

The main thing to pass on is that with the group  you will gain the benefit of being able to ask for various clause changes to protect your property and this list of required clauses which are called addendum's will be written so they are said to be the controlling document which will be used in case of a problem later on down the road .

Keep committed to stay together , then when you have amassed a few thousand acres ,the more the better, contact the companies you can easily find listed on the internet under the Ohio shale plays with these company names in hand you will them be able to contact the companies and and ttell them where you are located and how many acres you have and proceed to ask for the management in charge of such decisions as property leasing acquisitions .

As said before it is wise to make sure you have a good quality attorney familiar with gas and oil pl in the larger oil and gas plays like this is ,to help review the lease you have decided upon as a group and make the changes you require to have before you present your requirements to the company heads.

It is very important to give the companies the time they need to completely evaluate their needs and costs to be able to come back with a good proposal to the group to lease their acres .They can take some time to evaluate what theyare bidding which will also help the competition to do the same for the best of all concerned .

I hope some of this will be useful to those just getting started with leasing in their area's . I probably forgot something, so those in the know please help me out to pass on some good information for the counties just getting started .

 

Good Luck To all

 

Permalink Reply by 09bp5t05myjl3 on October 16, 2011 at 6:28am

Adam/ Wisgard I will make this short & sweet Your a a lying snake landman just like the rest of Wishgard, You say you hold meeting to educate, Then why does everyone have to bring, Deed, tax reciepts and all signers to the meetings? I was at two of your meetings both were identical, 1 person goes thru lease & talks about how good it is for the landowners & how the play is maxed out & need to sign today, then you try to move people to tables to fill out the lease, we even said we don't have our info & was told thats ok just sign we will get it later, then just to get out WE SAID we are already shallow leased & were told sign anyway let the oil company figure it out they might pay u on top? yOU don't warranty title in lease,

   You said you have 33 acres in Ashtabula & wanted to lease with wishgard then later said We leased in Monroe county at $1840 do you own property in both places or did you doublespeak yourself? what are you property addresses in Ashtabula & Monroe County, Finally no one in Monroe signed for $1840 the price was $1600 & 15.5% and I was told by Amanda with wishgard after you had moved on to Guernsey that you closed the books on MONROE & I ASKED WHAT WAS THE BEST PRICE & SHE SAID VERY CLEARLY $1600,

Permalink Reply by Mickgyver on October 16, 2011 at 7:33am

DOWN PAYMENTS another needed thing .  In addition to posting about getting the group together and addressing the area that Adam has pointed out with the additional fact that some companies are not paying for the leases after they have locked the landowners in for 90 days or more to do their due dilligence on the title search.

The companies are willing to work to clear some title problems up so the landowners get their lease completed, but only those with title defects should have their bonus money held back until their titles are corrected .

All others should either get their money in the minimum time frame or cancel the lease option for their property

This is another point I failed to make ,it is in the landowners best interest to take the time to visit the local court house and do your own title search to clarify the mineral gas and oil ownership .Write down all of the various book numbers and lease book numbers which relate to your property. This will help the companies to get the title search completed quicker .

  Then once you have decided on a good lease that your group agrees on ,It would be wise if you would incorporate a minimum 10% down payment based on the agreed to bonus per acre fee in the final lease agreement to be paid to each landowner in a protected escrow fund which will automatically be paid to the landowner.

You need to get some form of payment if the lessee backs out of the deal after holding the landowners property in limbo for  so many days . This will only be fair to all parties if the title of Oil and gas ownership is truly owned by the lessor . If the company backs out with a clear title then they should be required to pay the minimum down payment you have agreed upon .

This delay for the due diligence of the title search by the company could have made the landowner miss an opportunity to lease to another company and maybe even at a higher bonus and royalty offer, and it also gives the lease flippers plenty of time to re-sell the lease to someone else especially if they don't even have a chance to lose the down payment money if none is required .

Without any monetary commitment this just lets anyone hold your property with no loss at the end if they don't full fill their agreement .

Would you promise your car to anyone you don't know  without a down payment? I don't think so in this day and age , there are too many people that don't keep their word anymore and it may make you miss an immediate chance of a better sale offer

Although I certainly believe the same way when I give my word but  business deals are best in written form which limits any chance of confusion of intent .

Even at 10% it is still kind of light with what you could lose, when this play really breaks loose like the EagleFord Shale did in Texas which went for $35k and 27.5% and the Barnett which went for 30K and 25% with only 3 year leases .

Remember the less acres left the more that supply and demand works .

This larger price wave could have happened here also .It could have been helped in some regard when Wishgard  came in and offered what they did . In one point at least it woke people up to be aware of what was starting to happen .

But on the other side of the coin ,what wishgard offered was just enough to lure  lot of people into signing because of the previously low affers 6 years ago they thought they were getting a really high offer for their property . But as we know the true value will be when and if you get a well or are connected in a unit and start receiving the royalty checks . Remember a great royalty out ways the bonus money upfront by many, many times . And you protection clauses are worth their weight in gold .

But I know the oil companies  knew this was here for years but it suddenly became more profitable to do the horizontals here and they pounced on the state in full force .

The sad thing is though, you have to start someplace in order to go up from there, and since we are now in that position of going up from there we need to be careful and stay together fora ll concerned

,So  I guess when you think about it ,not all things are totally bad ,just necessary evils that big business and opportunities offer up.   Best wishes all

Permalink Reply by Finnbear on October 16, 2011 at 9:10am

Mick,

The need for a down payment (earnest money) is eliminated by a properly written lease contract. A good lease contract includes language that requires the lessee to execute the lease if and when the title work checks out as OK. Most oil and gas company written leases do not include this language and this is probably how CHK was able to walk away from those leases in MI that are now the subject of a lawsuit. This is also how they are able to cherry pick leases and get away with it. Yet another case where the lessors did not fully understand exactly what kind of business deal they were getting themselves into and good legal counsel ahead of time would have been worth its weight in gold.

 

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