Replies to This Discussion

Permalink Reply by Philip Brutz on September 10, 2011 at 12:50am

They are probably locked into it. They need to read the lease. This is a good news article about the subject.http://www.mercurynews.com/ci_18536778?nclick_check=1&forced=true Landowners have to remember that when they sign one of these leases it is for life. On the plus if they do drill they may get royalties.

Permalink Reply by landowner on September 10, 2011 at 3:46pm

Unfortunatly, Philip is correct.  Read the lease carefully and then have an attorney look at the lease.  I signed a bad (5 year) lease in 2009 and now wait to see if they drill.  My guess is they will sell my lease, and whoever owns it, will drill a shallow well (with little royalties) to hold my land, bound by this bad lease forever.  This is truly sad for the hardworking American landowner to be taken advantage of like this.  The rich O/G companies lowering themselves to outright lying and cheating to make themselves richer.  A few of my neighbors have signed the same lease at the same time.  Oxford Oil and gas company certainly knew of the Marcellus and possibly the Utica plays at that time.  I do not think this is any different than selling someone a "lemon" used car.  In this case, the used car salesman (aka: Landman) knows it is a lemon, but, fails to tell the person selling the car to.  How is it any different?  They are not welcome anywhere near my land!   

I would recommend contacting a good attorney and contacting nenaturalresources.com.  They are based out of PA and are looking out for the land owners.  Their lawyers will look over the lease free of charge and look for any opportunities to get out of, or renegotiate the lease.  Ufortunatly, they did not find any loopholes in my lease.  They certainly tried!   If they find any loopholes, then,they would ask for a small percentage of the amount that they would negotiate for with the O/G company.

I wish all the best to you and your neighbors.

 

 

Permalink Reply by Elsie Fox on September 10, 2011 at 6:24pm

Thank you both for your time and your information.  It's a real shame that this has happened to so many people. 

Permalink Reply by Philip Brutz on September 11, 2011 at 12:26am

The day after Hess announced that they acquired Marquette Exploration leases for $8,800 an acre; Oxford oil told a landowner outside of Barnesville that they were going to put a gate up on his property. He signed a lease with them 4 years ago for $5 an acre. The gate means that he is “held by production”.

Permalink Reply by Finnbear on September 11, 2011 at 4:50pm

Shame on the landowner for signing a lease that didn't specify a rig set up and a bit in the ground before they could consider it as w well in progress to HBP his land. Any landowner who signs a bad lease has no one but himself to blame. You wouldn't ink any other potentially 6 or 7 figure business deal without knowing exactly what you were getting into so why should an oil and gas lease be any different.  An oil and gas exec recently commented that his company just bought a group of leases from a land agent (flipper) that he would have never personally signed as a landowner/mineral holder because they were so one-sided in favor of the oil and gas co and against the landowner. His company took the block of leases because it was a good profitable business deal for the company but the landowner's who signed the leases with the land agent did so as uninformed participants - shame on them.

Permalink Reply by landowner on September 11, 2011 at 5:36pm

Yes Finnbear.   You are correct, shame on those thousands of bad lease holders who signed a bad lease years ago.  Are you kidding me??  So easy to say now. 

Yes, it is the landowner to blame, but, most of those bad lease holders (who you just put shame on) did so years ago and did so for the free gas to keep their family warm and to help pay the property taxes and put food on the table.  We now know it is potentially a 6 or 7 figure business deal, which, previously was never even thought of in this state.  The lease holders you just put shame on were too trusting and many are farmers who know of nothing else, except farming.  Just a few years ago, these "bad" leases were standard leases.  Shame on you and shame on the oil and gas exec.

I think you are missing to point.  And the point is that many of these lease holders were lied to and misled.  Shame on them for trusting and believing the landmen.

Permalink Reply by Finnbear on September 11, 2011 at 7:09pm

I'm not missing the point at all. The timber industry operated in much the same way. Lots of people in Ohio (and many other states for that matter) sold lots of timber and got paid WAY too little because they didn't do their homework or were too cheap to pay a competent consultant to market it for them. If you sign ANY business deal that you don't fully understand and later find out you got fleeced, then you shouldn't have signed it in the first place. I have a friend whose parents sold 60 acres of beautiful timber on some ground they bought back in the late 1950's. I had hiked and hunted and camped on this property a few times and it was a very nice mature mixed hardwood woodlot. A timber buyer contacted them a few years back, saying "Hey , I'm cutting timber on the property next to yours. I'll give you $6,000 for your timber." They jumped at the offer because it was for more than they had paid for the acreage 50-some years earlier, not having a clue what they were selling. We later did a stump survey and conservatively extimated that they sold about a quarter of a million dollars ($250k) worth of timber for $6k. They also tore up the woods quite a bit and didn't employ BMP's to protect sensitive areas. They didn't restore/repair the skidder routes and it is kind of a mess in some areas now. This is what happens when you sign something you don't understand.

  My father-in-law, on the other hand, sold some very average timber from a scrubby 8 acre woodlot at the back of his farm for over $30,000 dollars around the same time. He used a consultant who marketed his timber to numerous buyers and he got top dollar for what he sold. They did not tear up his woods, and today it is in great shape and will be a candidate for another sale in the future. This is what happens when you go into a business deal armed with knowledge and an expert who helps to guide you through the process.

  As far as trusting and believing landmen, think about WHO they work for and how they get paid. Their job is to lease as much land as they can for as little money as possible in the least amount of time possible and they do ALL this for the oil and gas company (lessee), NOT the landowner/mineral rights holder (lessor). Their paycheck is provided by the oil and gas company and that is who they are working for.  They are basically sharks and high pressure salesmen whose job it is to close lots of deals fast. They will tell landowners/mineral rights holders anything they have to to seal the deal.

Permalink Reply by Finnbear on September 11, 2011 at 7:12pm

If they signed leases for the free gas and enough money to pay the taxes maybe put some food on the table and were happy with that, why bitch about it now? They got what they bargained for.

Permalink Reply by Buckeye on September 11, 2011 at 1:01am

It is a shame Elsie, I was in Marquette's office last week and told them the same thing. One of their land guys stood their saying no one knew where this was going and it just worked out that way. It's nauseating the flat out lies and lack of business ethic. Check your lease for proper  notarization. Some of the older leases weren't signed in front of a notary, as well pay attention to the size of the unit. Some were originally 160 acres, that went to 640 and now 1280 acres. If you were unitized into something larger than agreed upon at the signing may be something an attorney could renegotiate. What a shame.  

Permalink Reply by landowner on September 11, 2011 at 3:07am

I am not sure if Parole Evidence would hold up in court.  Probably not.  Maybe a class action lawsuit? Even this would be a stretch to prove anything.  I have not seen any information on this subject, so, maybe the lawyer's would NOT want to touch it since it would be very difficult to prove in a court of law.  Oxford Oil and Gas Company knowingly lied to me and told me as little as possible.  This is outright deception at the least and criminal intent at the worst.  Those on the inside of the oil and gas companies knew exactly what potential lay ahead.  They knew exactly what they were doing.  This is their business.  I would never have signed any lease, if I had known about Marcellus shale.  I should have did my homework and seen what was happening in PA at the time.  Unfortunatly, there are thousands of lease holders with this same situation.  MAny are too embarassed to come out or they already know that nothing can be done with today's laws.  We need some new laws to protect the landowner from this deception.  I believe it is that simple. 

Rumor has it, in Texas, there are laws protecting the landowner from this same scenario.  Does anyone know if this is true?  I need to research this.

 

If they put a gate on my property and claim held by prodution, then, I will tear it down.  We will surely be in court if this happens.  Some say that at least I could get Royalties.  Not true.  They can drill a well and place a choke on it.  With natural gas prices below 4 USD now, due to the flooded market of NG, the O/G companies will just break even when they drill a well at 4 USD.  They will choke the well and wait for the prices to go up.  A large percentage of the drilling from now on will be done just to hold the landowner to HBP and bind them in the lease forever.  We will almost surely be in court for years to come.  At least until I run out of money to pay the lawyers.   

Permalink Reply by Finnbear on September 11, 2011 at 7:27pm

  If the oil and gas company fulfills what the lease terms define as HBP then you are HBP if you signed that lease. No amount of legal fees will get you around that. Oil and gas companies have some of the best contract law attorneys on the face of the earth in their employ and your pockets probably are not deep enough to win a pissing match with them unless they have done something blatantly illegal.

  You are exactly right that most of the drilling for the next 5 years will be done just to HBP what the oil and gas companies have paid for. They are just  protecting their investment just as landowners should do before they sign away anything. In places where people signed bad leases without knowing exactly what they were signing, the oil and gas companies won't have to do as much to HBP those leases. In places where the landowners did their due diligence and obtained favorable leases, the oil and gas companies will have to work a lot harder to HBP those leases.

  If you signed a bad deal then take your lumps, chalk it up as a (costly) learning experience, and move forward knowing what NOT to do next time.

Permalink Reply by Philip Brutz on September 12, 2011 at 4:54am

This is a good site to join if you are stuck in a bad lease or don’t own your gas rights at all:

http://www.wvsoro.org/oil_and_gas_guide/

You can download a free guide: West Virginia Surface Owners’ Guide To Oil and Gas.

Prepared by: David B. McMahon • Attorney at Law

Legal Aid of West Virginia

Let us stick together and help educate our fellow landowners.  WE SWIM WITH SHARKS!

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