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Comment by carol arnold on August 6, 2009 at 4:48pm

Scott
get the best lease you can live with. More than likly your lease could be assigned or traded to another company. Bonus money is just the "bait" the addendums are your only protection at this time. PA doesn't have many regulations on the gas companies. So take your time in deciding what you want in your lease. It also sounds like the landman wants you to do all of his leg work for him. It's best that you and your community work as one. You will have more leverage towards what you can get in your lease plus the bonus& royalty.
Good luck Carol

Comment by scott m on August 6, 2009 at 4:37pm

Thanks for your thoughts as well both Ruby and Wayne. They di tell me if I could get a group of 4-600 acres together, they could do better. They have really targeted this area, but I am no fool when it comes to terms and conditions and money. Thanks again, Scott

Comment by wayne on August 6, 2009 at 2:59pm

Scttt Chesapeak is trying to take advantage of you & those that do not know the value of thier nat gas. In NY state current offers are 3,500.00 per acre + 20% royalty. The gas companies use all kindes of tricks but don't fall for them. Join a landowners group in you area if there are none then start one. You will get a much better price but you need to be patiant & don't worry about intergration it's the best thing that could happen if you know what to do. Good luck Wayne

Comment by Tom Copley on August 6, 2009 at 1:50pm

Link for Atlas Energy

Comment by scott m on August 6, 2009 at 1:48pm

Thanks to both Tom and Carol. It was Dale that contacted me. I have been told Atlas is not leasing at the present time in allegehny county. CNX contacted me a while back and have seemed to dry up, but will try again. I sincerely appreciate your thoughts and let you all know what happens. Scott

Comment by scott m on August 6, 2009 at 1:32pm

Thanks Joe and Rita for your thoughts. My point Joe on a sales tactic is they want it signed by 8-14. I want to talk to other property owners in the area and also have it reviewed by an attorny. My thought is that if other owners have other leases with other companies, that makes this seem like this horizontal may never occur. Yes I know the royality is where it is at, they now offered 15%. I will talk with others, then send out a note. Thanks all for your imput. Scott

Comment by carol arnold on August 6, 2009 at 1:29pm

Scott
get a pugh clause,verticle pugh clause, get a S P U D fee ( this pays you for every time they drill a well on you
( even if it is three wells on one pad),Limit the # of years for a shut-in royalty, no delay rental ( you want your money all up front) no injectionwells, no storage rights,don't sign away your right of ways,try to get in writting that all wells drilled on your prperty is to be production wells. Also make sure that you have it in writting that the lease is not to be extended due to a stake in the ground. Have it so it reads that in order for the lease to extended 1yr. they must have started drilling a well. ( not just putting a pad there etc.) No matter what you do, ypou keep a copy of what you sign. so many times lease don't get recorded as they were signed! Best thing to do is call a lawyer.

Comment by Joe McFerron on August 6, 2009 at 1:24pm

I understand wanting to get a fair deal, everyone wants that, but what I don't understand is when a company wants to pay you free $$ to develope your resource, that you obviously can't, and you call it a "sales tactic". They're not trying to sell you a car. They are trying to enter into a business partnership with you all at their expense and give you a free ride. I say please call Mr. Gas Company, where do I sign!

Comment by Rita McConnell on August 6, 2009 at 1:19pm

Scott -- The $500 per acre in today's market is good. But I would get them to nail down that royalty rate -- if a well is drilled on your property and it comes in, thats where the real money gets made (if thats what your interested in -- most people are). 12.5% is the state required minimum royalty -- most people are getting more than that today in my experience.

Some things to keep in mind when you're talking about the kind of well, etc. Marcellus Shale wells (if that is the formation being targted there) are either vertical or horizontal. Vertical wells are drilled like traditional shallower wells, but they are also hydrofractured to stimulate the shale ito realesing the gas trapped inside. Horizontal drilling exposes more of the well bore to the formation, and is also fractured for the same reason. However, beacuse horiziontal wells are exposed to more of the shale, they normally return a greater a amount of gas. The rule of thumb I've heard is that horizontal wells can return as much as 9 times more gas than a deep vertical in the Marcellus.

However, in Pennsylvania, the amount of acreage needed to drill a long horizontal well is usually not contained in one parcel, or owned by one landowner. As a result companies look to sign leases with landowners whose property abutts another lease holders. Those properties are often "unitized" and each land owner receives royalty based on the terms of their contract for the acerage they contribute to the unit (which is determined by where the company decides to locate the well). On paper, that will sometimes look like the land owners royalty will be smaller -- but remember, its a smaller percentage of what will likely be a larger volume. Also, for efficiency, gas companies often drill multiple horizontal wells from one pad location. The members of the "unit" for that pad would ultimately have a share of each well drilled on that pad based on their lease. Multiple horizontals on a pad offers the landowners in that group the ability for a more conservative investment -- instead of a one shot deal with a vertical well (if its drilled and not productive, the landowner is probably out of luck), each landowner in the unit gets multiple chances based on the number of wells drilled on that pad. Best case scenario -- they all come in strong and royalties are optimized.

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