ATTENTION Landowner Group Members

The IDEA of "strength in numbers (acres)" is quite apparently agreed upon by many members. Let’s not forget that a portion of those "numbers' will not have a chance at the lease being paid.  Because if your "numbers" are not connected/contiguous to other "numbers" the valve of your numbers are not as appreciated by the potential LESSEE. And an outfit, no matter how financially secure, only has so much capital it is willing to spend/risk on a project.

Hypothetical Question: What if a group of 25,000 acres agrees to sign but only 10,000 of those acres are contiguous, what would be the incentive to pay the remaining 15,000 ac scattered all over the area? After-all, 10,000 ac would be quite enough leasehold to form producing units.

Also remember lawyers are paid directly from the amount of time spent "consulting" with the client(s) board leaders and it is very profitable to drag the process along for themselves. Every time a call/letter/email/fax is addressed concerning the process of your group.....cha ching, time is being billed. Another thing to remember, your area is not the
only area.....rather than drag it out, an outfit (especially a proven profit making producer not a flipper) just may pack in it and move to another more open-minded area and spend their money there. Which would leave your area open for another round of negotiations with another outfit and the much anticipated billed time for your friends at the law firm?

Hope you didn’t have plans for the bonus money anytime soon, yet the possibilities of a royalty check. Don’t worry, that new roof on your house/barn can wait (it isn’t leaking "that bad"). You can always wait for next year’s model of the truck/tractor you were planning on buying.  Paying off those loans can also wait...after all you've been paying on them for
years already. College tuitions can be paid for by the loans you were planning on getting anyhow. Your daughter’s/son's wedding will be fine downsized, their so in love it won’t matter. Vegas....you can do just as good at the local casinos that are closer to home and are popping up everywhere, you can’t afford to take that much time off of work anyhow.



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Permalink Reply by Blindsquirell on November 14, 2011 at 3:42am

I assume your are referring to CHK (Chesapeake) not CHPK.  $30-40 million from one 150 ac well unit is quite a high figure.  Especially if only 5% is recoverable, as what Drill Baby Drill, states in the previous post.  What rate are you using to come up with these astronomical dollars?

Permalink Reply by Kay Gregg on November 13, 2011 at 12:23pm

What is a land flipper?  How does that work?  I'm new to this

Permalink Reply by Little Cougar on November 13, 2011 at 1:56pm

a land flipper is a company that comes in and offers to lease your land for so much per acre and negotiates a certain royalty percentage that you will receive once a well is drilled and starts to produce...and then after they lease you, they sell the lease to another bigger company for much more per acre then they paid you and you still get the royalty % negotiated with them.  It is very common and there are many on this site.  Its not illegal...it's how they make their money.  If they are honest, they will not misrepresent themselves. Someone on this site I am sure can give you a more detailed definition. So keep reading everything you can on here...research all you can and you will soon be able to pick them right out.  I'm getting good at it too.  Lot of members are in the industry...some really will answer your questions but notice they will not give you any advice about the lease.  They can't give away the store! Only deal with a representative of the O&G...they may send out representatives who work for them and those reps will immediately let you know who they represent.  But even then, I still called the O&G and had it confirmed by the energy company.  There are others on this site that have discussed this and I think they have wording in their leases that they must be notified if that happens.  I don't know the specifics in this case because my leasing activity has been directly with the O&G that is drilling where I have mineral rights in PA.

Permalink Reply by time will tell on November 12, 2011 at 1:38am

I agree with your points blindsquirell  . I think a lot of people are being lulled into thinking that there acreage will be included in any deal .

It reminds me of the garage sale boxes $5.00 for the whole box no sorting .I think that the o-g companies will go for this but it's going to be the bargin box  .

There are a few groups that stand firm on all or none but there are others that are just looking for a Deal to quite there members down .

Our best chance is to be reasonable on our pricing and firm on our terms !

It's really a shame that we couldn't of combined our land and had a SUPER LAND GROUP .

The down side is that a lot of non-landowning players would have missed the bus on cashin in on us .

 

Permalink Reply by Blindsquirell on November 12, 2011 at 2:13am
A lot of folk think if they say that they are part of a group because they heard about the group through a neighbors uncles son in law, they will get the same terms as the contiguous group. Let me also clarify that I'm referring to PA Landowner Groups. OH owners are just starting to get the attention that folks in PA have been given for a decade. I believe a deal can be made today without the involvement of the consultants that have jumped on the bandwagon to further their own individual interests. Some believe that the lessors land will have numerous compressor station and retention ponds built by just signing a lease. Mutually agreed upon provision will protection any instances like this from happening. Let the replies begin.....
Permalink Reply by time will tell on November 12, 2011 at 2:51am

I'm sure they are on their way , the replies .

Permalink Reply by Schnoozie on November 14, 2011 at 3:04am

Wow, this thread was active over the weeeknd. Thanks to all who were sharing their thoughts.

Alot of good info.

Permalink Reply by Schnoozie on November 14, 2011 at 6:12am

I just read another "Landowner Group" contract over the weekend, and I cant find where they say they will provide an Audit of royalties and production numbers, or some service after the deal is struck. I have heard many people on here associated with the land gathering groups say this is included. Like they will fight for you if you need them to because you were part of a large group.

Any ideas??

Permalink Reply by Finnbear on November 14, 2011 at 9:42am

Generally, you give up a percentage of your royalty income if you want someone else to audit for you. Any landowner group lease contract should allow YOU access to audit  the records. If it does not, then the group has not done its homework and you should approach their deal with caution.

Permalink Reply by craig on November 14, 2011 at 4:26pm

I'd approach any 'deal' that takes from your royalty % with caution as well.

It is all about the money, your possible future money.

 

Permalink Reply by Dave on November 14, 2011 at 10:33am

I negotiated my own lease on my terms no group no middleman

29 addendums that is still within being commercially acceptable (read drillable)

acceptable upfront money with royalty at the wellhead with no deductions

no group to hold-back or holdup   no percentage to a marketer

If the gas company is signing your neighbors and the land is contigious think hard or hope and hold out, the sooner gas companies can get drillable units the sooner the well comes

its a hard to conceptualize its not about the upfront money but the royalty and the addendums.....

 

see you at the bank or the grand caymans good luck 2 you all

 

ohhh and DRILL BABY DRILL keep fracckin around!!

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on November 14, 2011 at 1:20pm

Jim:

You must have an awesome lease! How much is the power company giving you for your gas they buy from your driller? Maybe the pipeline company pays you to transport it too..........?

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