Comment

Comment by Berk on August 1, 2012 at 3:00pm

I had a visit today from a Range Landman. Very nice guy had a long conversation. Offer was 500 dollars per ac. 15%. Needless to say I told him no thanks and to give me a call if Range got more in line with there offer.  

Comment by Dave on July 31, 2012 at 1:33pm

Has anyone else received an actual lease from Appalachian landowner services.  I just received one yesterday, but haven't had a chance to see if it's the same one he emailed to me.  If anyone else has received one, what do you think of it?

Comment by warjr on July 29, 2012 at 10:33am

To Bob,   my only concern with all of this is that we all sit and wait and with us all being independent how do we know who is going to benefit from getting their land under lease?  Are we guaranteed that all acres of everyone signed up is going to get the same deal and with whom they negotiate what if they don't want all of the acres and pick and choose?  Where does that leave the others who have sat and waited and then find they cannot get a lease like those who may have been chosen.  Let's say there is a group of landowners as part of our organization that is able to get 400 acres together.   Someone has 15 acres 2 miles away .  Will that person get the same offer?  These are just hypothetical questions

Comment by Bob Jenness on July 29, 2012 at 1:48am

Just one attendee's review and opinions on the meeting, but...

NWPALG appears to have come of age. 

Starting with the venue and related support arrangements - excellent in every way.  Acoustically excellent, courteous greeters. lots of comfortable seating, great Q and A support team, and thorough security/screening of attendees.

All presentations were professional and informative. I'd recommend all members to get some kind of copy of ALL the presentations and (re-)read them a few times.  I know there's information and detail there that I've already lost, and will want to refresh as we consider actual lease offers.  I especially appreciated Dan's and Sam's views and thoughts regarding a start towards value estimates and the lease-unitization-production process (but not to the detriment of any other presentations).  I'm now very optimistic that NWPALG and these astute contributors will do a much better job of bringing me a ("relatively speaking") fair lease at (again, relatively) good terms than I could ever do alone. I unfortunately had to leave before all the questions and breakout sessions were done, so hopefully somebody will post on that. I look forward to continuing work with this organization to secure this once-in-a-lifetime leasing opportunity.  I'd strongly recommend that anyone with leasing ambitions not yet signed up, or with "options" expiring in the near future, take advantage of the power this organization brings us at the lowest possible cost.  We all need NWPALG, and NWPALG needs us and our acres!  I'd even recommend that "competing" organizations or business entities consider making some "joint venture" arrangements with NWPALG to enhance everyone's negotiating power.

Note that notwithstanding the above enthusiasm and loyalty, I'm still an independent individual landowner, signed up, but not otherwise constrained, and so open to all offers (and you can't say that if you're signed up with anyone else:-).

Comment by Dave on July 28, 2012 at 1:21pm

Did any good news come out of the July 21st members meeting.  Wasn't able to make it cause of work, if someone could update me on things.

Comment by Sam Douglass on July 15, 2012 at 2:43pm

All provisions of the lease are negotiable - fancy or not.  But the provision must be workable for both parties.  As producers present leases, they are designed to cover what the producer needs.  If producers need long tern reserves without promising production, the need of the landowner for anticipated income needs to be satisfied in a reasonable manner.  I suggest an advance minimum royalty satisfies the producers need for long term reserves and assures landowner of some income annually over the life of the lease.  As leases are written the landowner has no assurance of income while giving up everything to the producer.  Meanwhile the property will suffer in its marketability and mortgageability with nothing in return.  When landowner wants to sell his/her property what does landowner tell the buyer when asked how will this lease affect the property?  When will the producer build the noisy factory on the property?  Where?  A fair profit is by no means excluded by an advance minimum royalty.

Comment by Bob Jenness on July 15, 2012 at 10:34am

I agree that all $ clauses must be traded off against the total estimated fair value of the mineral assets. We can't force our energy "partner" to take a lease that precludes a fair profit, but we must have a lease that's a lot closer to fair value than they seem to offer to PA - a challenging and very complex negotiation!
On the "long term" issue, I just read some articles that predict that onshore NG may be uneconomical compared to offshore and sub-permafrost methane hydrate production in 20 or so years. I now will analyze my lease for fair return and full production of all viable plays in that timeframe.

Comment by rex roae on July 15, 2012 at 4:59am

It's just my hunch but I get the impression that if we get a little too fancy with the lease details, we'll probably be hurting the upfront figures as well as make our lands a little less desirable to some companies.

Don't get me wrong, I want the best lease available that protects my land and ensures maximum profits.  I just feel that maybe we might end up shooting ourselves in the foot if we go too far.

Comment by Sam Douglass on July 14, 2012 at 5:24pm

You are correct that the actual production from a well extends the lease.  But in many cases where there are extra large units of 1200 acres the pay-outs are minimal from one or two wells and that is frustrating to landowners who have tied up their property indefinitely for modest royalties.  A minimum annual royalty assures that there will be some decent payment over the long term of the lease - maybe 100 years.  To take some of the sting out of it actual production royalties could be credited against future advance royalties.  There could be credits both ways.  Actual production royalties credited against future minimum royalties and minimum royalties credited against future production royalties.  This way the landowner could be assured expected royalties until the producer is ready to seriously drill reserves.  There couple of other wrinkles to be added as well.   It is an attempt to let the producer have needed future reserves with the landowner receiving expected income while the lease is extended indefinitely while the producer plans production from various strata under the land on a time line that suits the producer. 

Comment by Jim Litwinowicz on July 14, 2012 at 8:44am

Sam; I would think that if you have a lease that requires advanced royalty payments after the primary term is passed that the E & P companies would then consider the rights to HBPd. They are paying royalties so the rights are extended indefinitely or until they stop paying royalties.

How could one structure a payment plan that Bob desires without kicking in the HBP clauses? I don't think it can be done.

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