Comment

Comment by Eleanor Blazer on October 14, 2011 at 2:07pm

Tom,

My mom hasn't heard anything.  She's been going to all the meetings.  Might have to call Russ Banks for information.

Comment by Tom Frey on October 14, 2011 at 10:40am

Has anyone from the trumbull county group heard anything from ALOV?

 

Comment by Tanya Gabriele on October 12, 2011 at 2:41pm

Thanks for the revelation Michael.  You're right.  Nobody wants "drilled" nor does anyone want to develop lease agreements that require subsidizing an attorney. Nobody wishes to subsidize lease agents as well. However, So, the relationship you drew between Wishgard and Pleasant demonstrates that there are agencies and attorneys who are determined to "cherry pick."

Comment by Tanya Gabriele on October 10, 2011 at 8:45am

After reading this discussion, I don't think I would encourage my family to sign up with a group--especially when their contractors fail to challenge the points Ed has made.  Good job Mr. Ganelli.  I keep recording the points you and others make for future reference.  My brother-in-law, who is a well tender, says that oil and gas is found in pockets no matter what level of shale you hit.  As such, I am more concerned with the geological results than the market.  The only thing that would break the market is adoption of a new energy source.  Our nation's economy shares a relationship with the O & G industry that is comparable to one shared by a pimp and a whore.  That's hard to break; that's why our nation's people are enslaved; that's why the cost of fuel will continue to rise and the development of a new and possible free energy source will not be made in the near future.

Comment by Ed Ganelli on October 10, 2011 at 8:18am

Actually, when ALOV reaches an agreement with an O & G company and brings the lease before the group members for a vote, the members are told exactly who the lease will be with...nothing ignorant at all about that!  Yes, the lease can then be subsequently flipped, but so too can a lease signed with WishGard.  With WishGard, though, a landowner is signing blind right from the start and will be tied to whatever O & G company acquires the leases from WishGard...

I had to have the entire WishGard lease resent to me (first copy I got only was the basic lease) and you're correct...in the addendums it does have the language making the royalties gross instead of net...

However, I reread the main body of the lease again...it contains both the part I referenced below about there being no "implied covenant" within the lease, and also contains a clause detailing the land delay rentals...checked in the addendums and found nothing there to do away with the "no implied covenants" clause in the lease, so HOW does that benefit a landowner at all?  Violation of the implied covenant of drilling and producing royalties is how most of the undeveloped, leased land is resulting in those old leases being terminated (similar to the Hite ruling in PA), but under the language of the WishGard lease this option is signed away.  There's no way I'd consider signing ANY lease that would give away this very valuable right...

 

I only own a small acreage, but have gone in together with a neighbor - between us, we have 2000 acres more or less.  Lease language can easily make it a requirement that, to accept any, means an O & G company must accept all, a guarantee that can only be accomplished through specific wording of a lease...

Comment by Michael Lawrence on October 10, 2011 at 7:12am

Edward I must make this comment regarding your statement that ALOV and other groups know who they are signing with.. that is absolutely ignorant...No they don’t... one of the reasons of creating a group is to attract a possible drilling group. . you have no idea how many companies out there say they are and truly are NOT!!! if you friend me i will send you my personal email and phone number to assist you in learning more..

Comment by Michael Lawrence on October 10, 2011 at 7:07am

Edward... the first 4 pages of the lease is a standard Ohio based lease.. you need to read the market enhancement clause on the exhibit a page that states that you will not have royalties paid after market enhancement, "without deduction, directly or indirectly, for the cost of producing, gathering etc"... this is the addendums that protect you and your possible extra funds from a drill pad... read pages 5-7 first.. they supersede the first four pages...... is considered a very good land owner lease. Getting your farm, together with others on the map, in front of the drilling company is how you possibly get drilled earlier.. and I do work for actual drilling companies.. yes, we can guarantee some drilling sites based on geology we have already performed...some companies.. until it if formally announced, don’t want you as land owners to call them direct, hence the hiring a specific leasing company.. therefore, they can't disclose. and alov hopes to sell to Chesapeake who already has over 1.5 million acres, and couldnt drill it all in 30yrs..no guarantee and No doubt, I’ve seen it happen many times.. you get into a large group, the buyer will never take all the acreage.. they cherry pick.. what a great way to create feuds with neighbors… keep your groups to no larger than couple thousand acres and everyone gets taken down…

realize that this is an information site.. no reason to argue but knowledge is king...

Comment by Ed Ganelli on October 9, 2011 at 10:02pm

Directly from WishGard lease...that's NOT gross royalties, Michael!!!  And yes, Robert...I know no lease I've ever seen will guarantee drilling...but WishGard is insinuating that signing with them will get drilling done quicker.  It's not true...drilling will get done (if it gets done at all) regardless of which O & G company a landowner signs with...

 

 

(B) ROYALTY: To pay Lessor as Royalty, less all taxes, assessments, and adjustments on production from the Leasehold, as follows:  

1.  OIL:  To deliver to the credit of Lessor, free of cost, a Royalty of the equal  sixteen percent (16%) part of all oil and any constituents thereof produced and marketed from the Leasehold. 

2.  GAS:  To pay Lessor an amount equal to sixteen percent (16%) of the revenue realized by Lessee for all gas and the constituents thereof produced and marketed from the Leasehold, less the cost to transport, treat and process the gas and any losses in volumes to point of measurement that determines the revenue realized by Lessee.  Lessee may withhold Royalty payment until such time as the total withheld exceeds fifty dollars ($50.00). 

 

This also is in the lease...terrible for landowner because it effectively does away from an O & G companies requirement to meet an implied covenant, which when combined with other sections in the lease prevents the landowner from ever terminating the lease:

 

LEASE DEVELOPMENT.  There is no implied covenant to drill, prevent drainage, further develop or market production within the primary term or any extension of term of this Lease.  There shall be no Leasehold forfeiture, termination, expiration or cancellation for failure to comply with said implied covenants.  Provisions herein, including, but not limited to the prescribed payments, constitute full compensation for the privileges herein granted.

Comment by Robert Bond on October 9, 2011 at 9:04pm

Not defending Wishgard, but I don't think any gas company will guarantee to drill a well before they have done their title check.  Also if you go to the county recorders office you will find that often the company you sign with will sell or trade leases to another company.  Some leases have been thru several companies both pre and post drilling.

Comment by Ed Ganelli on October 9, 2011 at 7:32pm

Show me in ANY WishGard lease where it says a well will be drilled any time soon...and also show a clause in the lease that GUARANTEES payment in 120 days, not just allowing the 120 days to lapse and thereby the lease lapsing also...

 

Knowing WHO WishGard is leasing for might help, but they refuse to say.  With ALOV and most other landowner groups, you know before signing the final lease which O & G company you'll be signing with...

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