Replies to This Discussion

Permalink Reply by Nelson Roe on September 21, 2011 at 6:29am

Sounds to me like you are only stuck in this instance, if you go back & sign with the same company that the association signs with.  If you go with a totally different company, then it sounds like you are not obligated.

Permalink Reply by Red Skelton on September 21, 2011 at 7:20am

I think you'll also find in their sign up agreement that you are locked in for 1 full yr. whether you are leased or not. Don't like that idea at all.

Permalink Reply by Shower Bath on September 21, 2011 at 7:11am

For our friends in Noble Co, something interesting to read.

http://seekingalpha.com/article/294710-mark-papa-on-eog-s-eagle-for...

Randy

Permalink Reply by Christiane Marshall on September 21, 2011 at 7:27am

Randy, Can you translate that? LOL!  Christiane

Permalink Reply by Shower Bath on September 21, 2011 at 7:51am

If I were to try to make it a short version it would probably be that the stock in these companies is presently undervalued by the wall street analysts and the stock represents a buying oppertunity. The companies' leased acreage and underlying oil/gas is worth far more than people realize. Notice the comment about Marathon paying $21,000 per acre for Eagle Ford leases and the EOG ceo stating that his leased acreage is worth more. Note also tha he says that EOG acquired alot of their leases early in the Play for $450 per acre from landowners. Also keep in mind that the Chesapeake CEO stated that the Ohio Utica Play was similar to/or better than the Eagle Ford. Hope that helps. Articles like this help landowners better understand the value of their mineral rights and how this whole business works.

Randy

Permalink Reply by Christiane Marshall on September 21, 2011 at 8:16am

Thanks for the explanation!

Permalink Reply by Private KeepOut on September 21, 2011 at 9:24am

Randy, the eagle ford happens to be a proven shale play. One of these days we might see those number here, but when is a big ????

Permalink Reply by Shower Bath on September 21, 2011 at 10:05am

I don't think anyone can predict what the value leased acreage will be two or three years from now. I think we all have seen the leases here more than triple in value in less than one year. We have also seen this play go from only junior companies leasing at this time last year, to having virtually all of the major companies involved today. The resource may not yet be proven by extensive drilling, but it will be within three to five years. The Eagle Ford Play is very similar to the Utica, but has a three or four year headstart on development. It also has the advantage of the infrastucture in place from previous oil booms.

Randy

 

 

Permalink Reply by Judy Woodard on September 23, 2011 at 2:41pm

Good enough. Our group was told that the negotiations are in progress now in Pittsburgh. At  the last meeting, the highest offer anyone had heard or been offered was, if I recall exactly, $5000/ac-don't remember the royalty %, if it was mentioned. As the figures have climbed, the president of Homeland (who does the presentations and Q&A afterward has said to let him know of offers because that is where our negotiators will start. Homeland has 6 partners-lawyer, former oil drilling owner, geologist, computer expert, etc. Their experience from the Marcellus play is HUGE. Homeland has spent big bucks developing their own geological mapping (developed their own software to do it) whic is their intellectual property and they do not share it with other companies. It shows no Marcellus Shale in Guernsey/Noble counties. He has said repeatedly that Guernsey Co and northern Noble Co are the prime development location. Harrison Co and Holmes Co each have drilled a well. The one in Holmes (don't know the acreage) but the landowner is now receiving $60,000/DAY royalty. That's how rich the Utica play is.  He advised us on so many aspects of leasing that what came to me as most important is the balance neded between royalty % over bonus (he got 20% royalties for his Marcellus groups in PA) and land protections. Some leasing groups get more bonus, less royalty and vice/versa. Re land protections, easements for running pipes across your land are more valuable to the landowner than restoration dollars because they are not taxable; rebeautification dollars are. Access to water on the drilled acreage is to be paid for and can be limited, requiring the drilling company to seek all the water or additional water elsewhere. The drilling will go on 24/7 unless restricted in the lease-this is very important if the wellhead is close to your home or perhaps where your cattle graze. It is VERY noise and high traffic. Rebeautification has many details for each landowner: replacement & grading of removed soil, grading & reseeding access roads with agreement on how much is needed to access the producing well, grading/reseeding/tree planting/fencing/shrubbery, etc. Also, restriction from drilling on your land if you do not want the disturbance, noise, etc. on your ground. There will be a "continuous exploration" clause which requires the drilling of the next well in a Section (640 acres) within a specific number of days after any productive well is drilled. This way they can't pull off that Section and drill here and there leaving additional income for landowners in a section in limbo. If productive wells are drilled in your Section, regardless of how much or how little land you have in that Section, you receive your % of royalties of ANY and ALL wells drilled in that Section. Homeland monitors each well to infinity (we all gottta go someday) at the wellhead to make sure we are paid for exactly what comes out of the ground (how much oil is being removed, what gasses are being brought up (wet gas contains many salable gasses and is valuable, too-which is what most of Noble Co has). The bonus & royalty specified in your lease will be paid by whatever oil  company drills in your section whether or not you are signed with the same company/group as all your neighbors, it doesn't matter. They must honor the terms of YOUR lease to include your land with the rest of those they own. The oil companies simply barter with each other for leases to make their blocks of land usable for drilling. It takes 5 ac for the equipment, trucks, storage, etc, to drill. Payments on bonuses can be a lump sum at signing, spread out in chunks over a specified period, or delayed pas the first of the year. These specifics are up to the individual company that we actually sign with. Some have certain bookkeeping flexibility that others don't.  I know the figures were laughed at, but he assured us that he has had $35,000 as the reimbursement to the landowner for drilling on his land. Each well costs $6 million to drill. Our part of what they are spending is, by comparison, small, but they all have their own budget of what they will spend to get the job done. Our neighbors, unfortunately, are getting virtually nothing. There is a block of acreage in the Cumberland area that he will be able to shop, since blocks of land make the drillers salivate. My land is nearby in the edge of Noble, so it's a good place for us to be. I still, however, can't be at all sure we will get an offer-the oil company can take as much or as little of the land as they want and they can offer one amount for one area and something else for another. I'm just keeping my fingers crossed. If you have any other questions, ask me. I have pages of notes. If I don't know, I'll call and find out for you. I have copies of agreements for representation by Homeland. As I said before, I got extra copies and have made more copies so that no more of my friends and neighbors will be cheated if I can help them. Some have not joined this group, but that's fine. I just have to do this for the sake of my conscience.

Permalink Reply by George Smolinski on September 27, 2011 at 2:06pm

Hey Judy,

My property is in Elk and Jefferson Townships. I would like to see a contract if you have one that would be pertinent for my area of Noble County. I may very well join the group you are in if that is possible.

Permalink Reply by Shower Bath on September 22, 2011 at 2:31am

Another article from Yahoo Finance featuring Chesapeake CEO McClendon speaking in Columbus yesterday. Again he explains the value of your unleased minerals and how important this Play is to the state of Ohio.

http://finance.yahoo.com/news/McClendon-Values-Utica-Shale-bw-32388...

Randy

Permalink Reply by Christiane Marshall on September 22, 2011 at 5:21am

I have a friend who is a geologist who used to work for an O&G company. She was puzzled when I told her that leases are being written with a specific shale (marcellus or utica). She thought they were by level, so that if someone leases Utica they get everything above it.

 

She also said she doesn't understand why the ODNR map shows no marcellus under Noble County. She said it shows up on a US map (maybe USDA? I'll ask again tonight).

So maybe we should all check offered leases and make sure that we aren't giving away the marcellus with the utica!

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