Comment

Comment by R. East on November 23, 2011 at 3:54am

How much money are the "Group Leaders" taking from the Landowners? Cant we do this on our own?

Comment by Barbara L Hall on November 22, 2011 at 6:20pm

David, sorry you missed the meeting.  I've had to trade work days to go to the last 2 meetings.  Glad I am able to do that.  The meeting was informative.  If you have given contact information and havn't paid dues yet, you have untill the 19th of Decenber to do so.    If you haven't made contact in any way yet, you have 30 days to pay dues after your initial contact.  We were told things are moving faster than expected.   They hope to start talking to oil companies as early as January.  That is why they need a comitment from people in the group.  The group leaders are looking at leases that other land owner groups have drawn up to use as a template for our lease.  Once they feel they have a satisfactory lease, they will present it to a lawer for review and his/her input.  By doing this, they will have decreased the amt. of time the lawyer will have to spend on it.  They  have not hired a lawyer yet but plan to go with one that charges an hourly rate.  A CPA experienced in dealing with people who  have leased their property for gas and oil and who have had well drilled spoke on the importance of doing estate planning before you consider signing a lease and having an experienced CPA read the lease and have input on the wording of the lease.  There are huge tax ramifications.   Even so, the government has all sorts of one time tax laws and fees and will end up with a large portion of your sign on bonus.  Inexperienced CPA's have been responsible for people paying higher taxes in penalties and even loosing the sign on bonus for their clients.    They showed us a map of the land in Crawford County that is already leased and where there has been interest from people to join the group in Crawford County.  Most is in the western part of the county with a smattering of people from the eastern part.  They stressed the importance of  talking to your neighbor and letting them know about the group so they don't get taken advantage of and lease for much less than their property is worth.  It is also in out best interest to have a larger group representing

a large number of acres.  I think that about covers the highlights.  I hope I didn't leave out anything that was important to you.   I did forget to mention that they are hopeful that once they have a lease reviewed and

edited by the lawyer, they hope to have the lawyer review it with the group.   Barb

Comment by Dave on November 21, 2011 at 2:08pm

Anything good come out of the meeting last saturday. Wasn't able to make it due to my work schedule.

Comment by Kim Conaway on November 17, 2011 at 12:29pm

Randy, Don't know if I can make the meeting, as I don't have anyone to watch my young kids.

 

Comment by Kim Conaway on November 17, 2011 at 3:49am

Curious to see if there are other people in Eastern crawford county closer to Venango County that are joining this group.  Not sure if I want to spend the money to join the group if everyone is in western crawford and the eastern side of the county is left out of the potential leases due to lack of acreage.

 

Comment by Jim Litwinowicz on November 10, 2011 at 7:01am

You are right, if people would work together and demand better offers, the gas companies would be forced to comply. Maybe not the same as the high offers there but much better than what the current offers here are.

Comment by Sam Douglass on November 10, 2011 at 5:45am

If you do a little reading you find that when the price of gas dropped the Barnett producers reduced their royalty offers from 25% to 20%.

The main reason that more is not paid in PA & WV is the landowners do not require it.

Producers are saying their average cost to bring gas out of the ground to the wellhead including land cost are $1 or less.  So that is likely to still allow a little profit by the time the gas is sold at $4.

The Utica and Marcellus may not be "proven" in the engineering sense, but its hard to find any dry holes and a high likelyhood that $8,000,000 worth of gas or somthing else will come out of the hole within two years after the drill bit starts to turn. 

Comment by Jim Litwinowicz on November 9, 2011 at 3:07pm

Yes the offers are still going up for now. The companies will continue to up their offers until they hit some dry holes. At some point they will find the limit of the wet gas zone and stop there. Some will drill the dry gas areas but these have their limits also. And some spots in the middle of the play will have disappointing results which will cause a drop in local offers. There are always some dead zones in a play.

The big question is when to jump. When is the offer sufficient to make it not worth the risk of waiting longer. Thats a decision that each landowner has to make.

As for matching offers in the Barnett. Much of that is time dependent. A large percentage of the leases in the Barnett and the Hainesville were signed earlier when gas prices were much higher. At one point nat gas was selling for $13/MCF instead of the less than $4/MCF now. And both of those plays are much smaller in sq mileage which caused a bidding frenzy on a lot fewer acres. The Marcellus hadn't been proven yet which changed everything including total estimated reserves.

A few other considerations was they had better infrastructure in place, they are closer to refineries,  and some of the highest offers were for the final leases in a area.

It would be great to get offers like the ones they had but I don't expect that to happen any time in the foreseeable future.

Comment by Sam Douglass on November 8, 2011 at 4:48am

You are right about the increasing offers.  I recently heard from friends in Ohio where many leases were taken from many in the $3000 bonus and 17% range - now the offers are $5000 or more and 20% or more.  And that hapens in Pa as well.

Landmen come in waves with increasing offers over time.  What is the maximum?  I don't know.  I look for guidance in what I can find out about the Barnett Shale in Texas - a shale that is not as valuable if only because it is so far from the Eastern markets.  And In Pa the producers are leasing multiple shale formations - not just one as in the case of the Barnett.

Was $3000/acre and 18% the right figure to settle on?  Certainly if you need the money now, it is better not to take a chance ???

Comment by Jim Litwinowicz on November 7, 2011 at 10:42am

There have been a lot of comments discussing the fees a group should pay. Most seem to believe that paying the least fees and putting all the money received into the landowner's checking accounts.  That is a good idea if all other things are equal.  No use paying more to get the same thing. But not all things are equal.

What people need to consider is what value the various options bring to the landowner.  If a company can get you $500/acre more and a better lease for your rights, it really doesn't matter if they make $200/acre.  They have brought you more value and earned that fee. And if they bring you $1000/acre more that is even better.

I was part of the Mt Jackson group. When we contracted with Co-eXprise we were told by Shell their best and final offer was $1500/15%. They said they had so much land in Lawrence Co that no other company would come here  and wouldn't budge for over six months. Co-eXprise compiled the data of the landowners, used a proprietary software system to generate interactive shape files and a GIS mapping system and sent it ti 180 companies. This allowed companies from all over the globe to overlay this with geologic and seismic data and make a decision on whether to bid or not.  24 companies responded, 10 began negotiations. After a several months, we had several offers, some from companies that worked in the Marcellus and a couple that had never done business here. The price went to $3000/17% and a very good lease....much better than the $1500/15% that Shell offered.  Even if Co-eXprise charged $500/acre...which they didn't.... it would still have brought us more value than they charged.

After seeing what Co-eXprise did for us, I became a Channel Partner with them and are now doing the same thing with other landowners. Do yourself a favor and at least look at what Co-eXprise has to offer and give them serious consideration.

Companies throughout the US and all ovr the world are reading and studying the new Utica reports.  They are looking for areas to establish a foothold here. Don't sell yourself short by failing to reach out to these companies.

 

BTW, Shell quickly went to $3000/acre after we got our offer and are now at $3250/18%   It was bringing in new, outside competition that won better value for all landowners in Lawrence Co, not just Mt Jackson group members.

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