Comment

Comment by Joseph-Ohio on December 15, 2013 at 7:25pm

Buying into what I see as buying a pig in a poke is what I consider to be most foolish.
Haven't found what I would consider to be a a valid reason to change my mind on that score yet.
Don't think I ever will.
But, that's just my personal and most humble opinion and perspective.

Comment by Depolarized Farmer on December 15, 2013 at 6:04pm

I'm thoroughly convinced that Beusa (via Blackridge) would not have come to Ashtabula were it not for the Magyar group.  Magyar created the opportunity that made it possible / easy for Beusa to commit.  Same goes for BP...  they would not have come to Trumbull except that ALOV paved the way by assembling such a large group of landowners who committed to stick together.  Groups are critical, especially when your land is not in a "must-have sweet-spot" like Ashtabula County.  To think you can "go it alone" is foolhearty.  And let me clarify that it's critical for a group to stick together.  A group where members can leave at any point will not get deals done.  It has no firm basis from which to negotiate.  A driller will not negotiate with "maybes".

 

Although the timing may not be ripe yet for Ashtabula County, I believe (in my humble and independent opinion) that our best option remains Buckey Mineral (Bob Rea).  He has one of the best leases that drillers have actually agreed to (Chesapeake, Rex & BP), his group has a large amount of acreage already signed up and willing to wait, he is marketing acreage by the township, and his 2.75% fee is fair.  If we want to "get something going " in this already-drilled-like-swiss-cheese county, our most effective tool is to group up and stay grouped up.

Comment by Siegmund on December 15, 2013 at 2:13pm

We have this to look forward to...
http://pintogtl.com/pinto-energy-announces-ashtabula-gas-to-liquids...

Comment by Mark McGrail on December 15, 2013 at 2:04pm

I can't understand why anyone would join a group.

There is no leasing going on in Ashtabula (for the most part) and no group will bring in an E&P company.

There are certain issues with Ashtabula that need to be addressed and until the economics change there will be few if any companies willing to put much money into leasing.

However, there will come a time when a company or two will be willing to "dip their exploratory toe" into Ashtabula. If you are tied up with a group you could miss out.

As I have always said about Ashtabula; your time will come you need to be patient. You can't force the issue.

Comment by Joseph-Ohio on December 15, 2013 at 11:15am

I think that would be very helpful Jackie.

Comment by Jackie on December 15, 2013 at 11:11am

I had to leave the meeting a little early so I didn't hear everything.  It was mostly a question and answer for the people who came.  F & M said you could back out. They were going to pass out examples of their lease but like I said I had to leave a little early so I didn't get a copy.  I will post here whenever I hear of another meeting so you can get the info first hand. 

Comment by Joseph-Ohio on December 15, 2013 at 9:59am

Back to elliemae82 with a few spelling corrections :

Right now we're not interested in committing our acreage to any group or organization that doesn't have a lease to offer and money to pay us.

Some people may think / know otherwise but none of the groups in the area (as far as we know) have delivered.

We're looking for a serious landowner cognizant / friendly lease offer; and see no value in tying up our land for a long term and for nothing.

EGL as we understand is non-profit which may be noteworthy for those folks interested in signing up and committing to a group.

I've also read elsewhere that if you don't like the deal they come up with you can walk without ramifications.

Right now we're not interested in any of that ourselves.

However, others may be.

Comment by Joseph-Ohio on December 15, 2013 at 9:20am

You know, higher sign on bonus / higher royalty percentages (above 12.5%) have always had me thinking.

That's because no matter what, I haven't found the 'free lunch' anywhere as of yet; and I've been around a few years and a lot of blocks.

Can't prove it but, I'll guess that the higher sign on bonus and / or royalty payout, the more expense gets charged to the landowner / lessor per the terms of the lease.  For instance the lease may pay a handsome sign on bonus and / or a higher royalty payout (15% or 18% or 20% etc.) but, then the landowner (per other terms in the lease) may be stuck for unknown amounts of post production costs and / or market enhancement costs and / or taxes (like the new Severance Tax rules they are discussing in the Ohio House of Representatives currently for instance) and / or something else.

Signing on to a group that doesn't show you what lease they are negotiating has always been a problem with me.  After spending time signed up with a group, the lease they present to you finally may not be all that good and you may decide to decline anyway - then all that's happened is that you've spent time waiting around and now have to worry about breaking away from the agreement.  Maybe all it would take would be a letter to the group but maybe the group's leadership, since there's a deal on the table, will change their mind about the landowner walking away and decide to take it all to court.  Then maybe the landowner has to hire a lawyer to break the agreement.

Also, thinking out loud here a little, if a so-called 'Major' wants a group's acreage, then they'll probably want acreage from the surrounding or isolated independent folks acreage as well; and offer them the same deal the group is getting.  Still have worries then because at such time it will have boiled down to take the offer or get force pooled; which IMHO is a bad deal for the landowner should the landowner choose any of the two force pooling options that exist.  One option being a "participating owner" in the well and the other a "non-participating owner". A "participating owner" (is the worst of the two in my opinion) as the "participating owner" has to pay a share for developing the well (probably acreage pro-rated) but, I don't have any idea how much that would be. The "non-participating owner" option is a better deal in my opinion but still the only good things a force pooled "non-participating owner" gets, as far as I can tell, is non surface disturbance and royalty (but the royalty percentage and all other terms and conditions are subject to whatever the ODNR Chief sees as just and reasonable). 

Seems to me, they've painted the landowner into a corner as things exist now - especially in way of the new force pooling rules.  Seems to me that landowners are taking a severe beating.  We landowners should (at least) petition for abolishment of the force pooling rules as they exist, restoring our rights of ownership and sales pertaining to our privately owned land and minerals if you ask me.

It's truly a case of picking your own poison as things are now the way I see it. 

Comment by Gavin Callaway on December 15, 2013 at 8:16am

I chatted with Blackridge a few months ago, to see if they were going to come further up into Ashtabula (they leased up acreage in the two SW Townships of Ashtabula at $5k Bonus and 20% Royalty).  I was informed that over time that was their intentions, but there were added expenses dealing with the old existing wells.  It is good to band together, but I was turned off by the restrictions of NELA, and was leaning to the EGL.  If I remember right, EGL could bind you to a lease lower than what I felt we could eventually get.  Mr. Dolezal could respond to that.  Anyways....I feel someday Ashtabula will be back in High Cotton, for drilling technologies are changing as we speak, and Ashtabula is sitting on a nice red zone (deep) pool of Oil.  Time will tell.....

Comment by Dan on December 15, 2013 at 7:40am

F/M has been around for a few years . They didn't have much to offer and had a very high take on the signing bonus. 

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