Comment

Comment by Sam Douglass on October 7, 2012 at 9:10am

A test well does not make a drilling program.

It may make the leases more salable to someone who might have a drilling program there in the next 75 to 100 years in one or more of the strata that it is leasing.

The time it takes to develop the millions of acres available is understandable.  It is understandable that the companies leasing want to tie up the land for an indefinite period.  It is also understandable the the Landowner would want and advance minimum royalty payment to start, say the seventh year - two years beyond the typical primary term.  If the lessee drills enough to cover it he never has to pay the advance minimum royalty.  But the Advance Minimum Royalty meets a landowner expectation that some income will be coming in as long as the lease is alive. 

Comment by gary smith on October 7, 2012 at 8:51am

rumor has it halcon is drilling vertical test well at wilson shute area near meadville. pad bids were just opened.

Comment by Bob Jenness on October 3, 2012 at 2:23am

If I take it to a lawyer, would he write me a proper and binding clause like this:?

"Seismic tester agrees to furnish one paper copy of any geologic summary  analysis derived from the testing area including landowners tested land.  This paper copy will be marked as to copy number, "original", and other appropriate document security markings, registrations, and signed receipt.  Landowner agrees to hold this document and all information conveyed therein in strictest confidence,  to make no paper, mechanical, nor electronic copy of the document, and to refrain from any sharing of the information conveyed therein with any other individual or entity by any method whatsoever, including verbal discussion."

This would seem to be a fair way for the landowner to receive the valuable information from this testing, which otherwise would accrue as a commercial advantage (imbalance in knowledge of the land lease value) to some future lessee in a lease negotiation.

Comment by Sam Douglass on October 2, 2012 at 4:04pm

Seismic advances the overall "cause"  It does not take long on the Internet to find various drafts of seismic agreements that give you an idea what to look for and compare with whatever form is offered to you.  After doing some research on your own, take it to a lawyer to help you put together what you want.

Comment by the two of us on September 29, 2012 at 9:19am

I figure they can do seismec testing after my land is leased .
I figure it will not benefit me at all. If their is something down their
They will not tell me so I can get a better price for acre and or
Royalty and if their is nothing down their they will not lease at all. Plus
For 5 or even 10 dollars an acre it's not worth the chance of not
Getting leased

Comment by Sam Douglass on September 29, 2012 at 1:52am

Understandably, everyone wants to know what is under his/her property.  Just know that something is there.  And keep things in perspective.

 This thing is likely to be going on for maybe 100 years with producers building factories every mile or so and coming and going with their operations whenever and as often as it suits them to get as much out of different layers underground as they can.  And they will be building and using roads between well pads and clearing 50' pipe line rights of way carving up the landscape.  Its not all going to be pretty - but the dollars might look nice - when you get them -  which could be in someone else's lifetime if you are talking about significant royalties.

Thee are millions and millions and millions of acres to drill not only in Appalachia but in shales all over the world.

You can bet there will be enough drilling to hold the leases beyond the 5 year primary term in the giant 2 square mile units.  Right now, the producers seem to be starting in Ohio to get the oil and liquids and working their way east.  Since Range controls so much in Crawford County and surrounding areas,  The others may just stay away and Range can take its time dealing with property owners - getting the best deals they can one by one.  Stick together as landowners and do not let them pick you off.  The question is not "What the operators might be offering others today?"  The question is "What will you ask for yourself - with the help of others?"

This is not the to take any pride in getting a little more than some neighbor; you will only be cheating yourself.

And remember that it is going to be a little messy when they get around to operating on your property.

You will miscalculate if you are thinking of tomorrow, next week, next month or next year.

But if you need some cash, take a deal, get some cash and do not look back.

Comment by Dave on September 28, 2012 at 9:03am

Earlier in this post someone said they wouldn't let seismic test be done till you have a lease on the property.  Can seismic testing be used against you since you don't get to see the results.  Couldn't they lie to you about what information they got from it to reduce the per acre lease value.

Comment by gary smith on September 26, 2012 at 5:29am

maybe the seismic tests are looking for faults . the drillers need to know where those are  to know where to stop drilling.

Comment by Bob Jenness on September 26, 2012 at 2:00am

Jesse,

Yes, the speculative part is the up-side.  Everybody wants enough geology information to know the high end of the value, but they (at least the drillers and land men) don't want the guys on the other side of the table to have the same knowledge.

I did think that once there were properly drilled horizontal exploratory wells, that seismic testing wouldn't add much, but maybe they need the seismic image to plan the drilling - Is the property in question near the Greenwood-Bradley Road site?  That would be the second RRC well on a line that they might believe is near the sweet spot of the oil-rich Utica in Crawford County.  In Lawrence Cty, they drilled 4 wells in a line before they drilled the first "production" well.  I've heard rumors of at least one more RRC well west of Greenwood, but no confirmation.

I guess the business model in this case is that when they have enough exploratory wells to prove the reserve, then they can demand a higher stock value, even if the infrastructure hasn't been built yet to carry the output to market.  If a horizontal well is "oily", can they get the oil out and into tank trucks without either selling or wasting a bunch of gas?  That would be a way to get some production $$ from the exploratory wells before the can be connected to a pipeline.  Anybody?

On a less speculative side, see earlier posts in this thread for actual market values for both leased and unleased land/rights.  That should define the average market expectation and, in theory should be appraisable.

Comment by Bob Jenness on September 25, 2012 at 1:35pm

I guess that when we overlay new wells, HBP lands, geology, and seismic testing, the already high complexity goes up a notch.  If Range, Atlas, Chevron, etc. have so much land HBP, they could probably get a complete picture by setting charges and receiving echoes all on their own leases, so why might they want to buy approval of intervening non-leased landowners?:

1. They might know or think they'll have potential liability issues if the testing damages your water wells.

2. They might be testing the market to see whether they can build a horizontal drilling unit at low rental rates - if you'd just signed, they might have offered you a lowball lease later.

3.Or they might just be trying to get a more precise picture of what the maximum lease value will be so they don't go over it in the anticipated leasing frenzy.

Anyone want to add theories?

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