Guernsey County, OH

An article from the Altoona PA paper regarding the Utica Shale. They begin by discussing the Eastern PA formations, but also add some info on the value of the Ohio wet zones of the play.

http://www.altoonamirror.com/page/content.detail/id/552711.html

Randy

I'm wondering why no one else in Guernsey has been approached by Eclipse. Seems strange.  And I've heard pros and cons about joining a group.  Why should or shouldn't I join a group?

Jill

The group system seems to be able to get a Landowner Friendly Lease. Plus everyone in the group gets the same $$ for their lease. If you have a small amount of acreage (50 acres) like we do, this is a good thing. I do not think I would have the ability to get a lease of this quality with this good a signing bonus without a group.

Now that I've said that, I really have no idea as to what we might get as a signing bonus. I do know the lease terms are very landowner friendly.

What is the benefit of a lease term of 3 or 5 years (to the land owner)?  It seems to me that shorter terms to be renuied would yield more revenue.

Is the Southeastern group for just one gas company?  Do you have to be wanting to sign up with one company only?  We've been approached by Eclipse at 17% royalties and 2500. per acre. Is there a group going on with Eclipse? 

Thanks!

JIll

Dear Jon.....lol

Here are a couple of good sights for info that may be educational for the group.

http://shale.typepad.com/utica_shale/

http://www.eaglefordshale.com/news/

Randy

We own 23 acres in Wheeling twsp. If my neighbors are non-receptive to any lease or drilling, where does that leave me?

Bill Van Horn

News on the Consol/Nobel Energy joint venture announced this AM.

http://phxcorporate-ir.net/phoenix.zhtml?c=66439&p=irol-newsroo...

Randy

http://phx.corporate-ir.net/phoenix.zhtml?c=66439&p=irol-newsro...

Missed a .

Randy

When discussing the JV deal between Consol and Nobel, Consol valued the deal at $9,700 per acre. Nobels' CEO valued the acreage aqt $7,100 per acre.  Most of the acreage involved is held-by-production (85%), and have low royalty rates as they were the old Dominion leases that Consol acquired last year for approx $3,800 per acre. If you have a half hour to spend, listen to the Web Cast presentation from the link below.

Randy

Mike,

Is that what the fault is called that runs through here?  What exactly is a fault line & how could it potentially affect drilling in the areas that it runs through?

We signed today with Eclipse.  $2500. per acre and 16% royalty.  Very clean and easy to understand lease. Extremely helpful people who will go out of their way to answer questions and help you.  When the 5 years is up, and as long as the well is producing, you can re-sign up and get another $2500. per acre and same royalties. Had an attorney look at lease and he said its one of the better ones he's seen. 

We live on Rosedale Rd.  Anyone close? 

Jill

Ken & Jill,

This pretty much goes against everything else I have heard or read.  If after the 5 years, the well is producing you will be receiving royalties (or at least should be) and you will not be entitled to the extension & receiving the signing bonus again.  Once the well is producing, the landowners will receive royalties & their land will be held by production until the well no longer produces in a profitable amount.  You may want to revisit that statement.

Nelson, I specifically asked them, in person, about it. And that is what they said. They also pointed it out to me in the lease.

A young guy repesenting Amarado Oil Company, Ltd. just stopped by to give me some info. I stopped him short because I was not interested, as I'm sighned on with KWGD. 

His business card reads:

Jefferey L. Riggans

Inderpendent Oil & Gas Leasing Agent

114 Southgate Parkway

Cambridge

The Home Office # was a 685 number which is Pleasant City.  Young guy, couldn't have been past his mid 20's.

I will get that wording from the lease and paste it here. 

Jill

Just talked to a neighbor in Oxford township:  Signed up with Chesapeake and no royalties @ 4500. per acre. While the amount per acre is better, the loss in royalties is tremendous.   That's what happens when people don't listen and check out other avenues.

Imagine $750. to $1,000. per month per acre in royalties. That is Eclipse.

Jill

Is it legal to not give royalties? I thought that the state minimum was12%

The more I learn the more I'm really happy that I signed up with KWGD!

Michael, I'm getting my info from conversations with Eclipse field guys and the lease itself.  "THIS Ken and Jill?"  If you want a blank copy of the lease email me.

starghostwriter@gmail.com

Section 18: EXTENSION OF TERM: Lessor hereby grants unto Lessor, its successors and assigns, the exclusive option and right to extend this Lease beyond the Primary Term for on additional term of five years by paying to Lessor at any time before the expiration of the Primary Term, or within 120 days following the expiration of the Primary Term, a payment equal to the Advanced Delay Rental Payment (the amount paid upon signing lease).

ADVANCED DELAY RENTAL PAYMENT: to pay the lessor within 120 days of the lease date, as pre-paid delay rentals the of $___________ per net acre.

Jill

Ok, I am not trying to slam this company either, but these guys are right.  One major issue I see with the paragraph you shared below, if it is typed in word for word as it is in the actual lease is the first five words after the initial colon(:) ... "Lessor hereby grants unto Lessor..."  you as the owner are the lessor.  I have not heard of any company out there that is allowing the landowner to have the option of renewal.  But then if you look a few lines later, it says "extend this Lease beyond the Primary Term for on additional term of five years by paying to Lessor...".  So, by the way this is written, you are granting yourself the option to extend the lease & pay yourself the additional advanced Delay Rental Payment? 

Please do not take offense to these comments, but it does sound like this may be a very poorly constructed lease.  I will contact you through inbox to see if you would send me a copy of a blank lease.  I would like to physically see it to see if it is indeed as poorly constructed as it sounds.  I had one of their leases a while back & it went straight to the trash can.  I had heard that they had re-drafted it, but after hearing all this, it really does not sound like the new draft is all that much better.

Here is the lease that Eclipse sent me:

18. EXTENSION OF TERM: Lessor hereby grants unto Lessee, its successors and assigns, the exclusive option and right to extend this Lease beyond the Primary Term for one additional term of five (5) years by paying to Lessor at any time before the expiration of the Primary Term, or within one hundred at 120 days following the expiration of the Primary Term, a payment in an amount equal to the Advanced Delay Rental Payment.

Philip,

That sounds a little bit better.  However with this wording(which seems to be more in line with the standard), it gives the drilling company the option to extend.  I don't believe that there is any company out there that is going to exercise the option to renew if they have already drilled a well & have your land held by production with that well.  Unfortunately, I would have to say that this was an instance of landmen or company reps telling people what they wanted to hear just to get them to sign on that dotted line.

This could also delay the first term:

24. FORCE MAJEURE: When drilling, reworking, fracturing, stimulating, or other operations hereunder, or Lessee’s fulfillment of its obligations hereunder are prevented or delayed by such laws, rules, regulations or orders, or by inability to obtain or delay in obtaining for any reason any and all necessary permits (including, without limitation, an inability to obtain well permits as a result of objections of owners of coal rights), equipment, services, material, water, electricity, fuel, access or easements, or by fire, flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot, strike or labor disputes, or by inability to obtain a satisfactory market for production or failure of purchases or carriers to take or transport such production, or by any other cause not reasonably within Lessee’s control, including any periods of depressed natural gas pricing, this Lease shall not terminate because of such prevention or delay, and, at Lessee’s option, the period of such prevention or delay shall be added to the term hereof. Lessee shall not be liable for breach of any provisions or covenants of this Lease when drilling, production, or other operations are so prevented or delay.

This could delay the first term for the rest of your life.

(C) SHUT-IN ROYALTY: In the event that production of oil, gas, or their constituents is interrupted and not marketed for a period of more than twelve months, or should Lessee elect to shut in a producing well for a period of more than twelve (12) months, and there is no producing well on the Leasehold or lands pooled or unitized therewith, Lessee shall thereafter, as royalty for constructive production, pay to Lessor an annual shut-in royalty equal to Ten Dollars ($10.00) per net mineral acre of the Leasehold (proportionally reduced to Lessor’s percentage of ownership in the Leasehold) until such time as production is re-established or Lessee surrenders the Lease (a “Shut-In Royalty”) and this Lease shall thereafter remain in full force and effect. During such shut-in, Lessee shall have the right to rework, stimulate, or deepen any well on the Leasehold or to drill a new well on the Leasehold in an effort to re-establish production, whether from an original producing formation or from a different formation. In the event that the production from the only producing well on the Leasehold is interrupted for a period of less than twelve months or Lessor elects to shut in a producing well for a period of less than twelve months, this Lease shall remain in full force and effect without payment of delay rental, Royalty or Shut-in Royalty.

Phillip, you are right.  A well constructed lease should have a limit to the number of months that a well can be shut in & still hold the lease in effect.

Ken & Jill, 

The last offer I got from Eclipse was for 2600 and 16% net royalty.....after all post production cost. The lease I have from them is a very producer friendly lease that imo lacks anything that would be beneficial to the landowner.