Whitacre Well New lease Questions????

Hi all, I have been reading a ton of information on here and I am a little overwhelmed.  So, maybe somebody can help.

I own a little piece of property in Monroe County near Greysville.  It is a hunting camp that we use for the season.  Its around 10 acres.  I recently received a offer for mineral rights.  I believe from what I have read, the property is in conjunction with the Whitacre well (well's).  The company on the letter is HG Energy.

I believe my offer is extremely low and would like to know what you all think.  I do have some questions.

1.  Why would they want my property only being 10 acres?

2.  When I sent them a counter offer, they acted like they were doing me a favor and including me in the leases with others....???

3.  Being such a small portion of property, would it be wise to contact a attorney?  Which they being such "honest" people provided me with a number to one.

4.Why did I receive the letter so late compared to the rest of the landowners?

5.  Why do I need to do all of this??

         1.       We would need you to create an LLC and execute an Oil and Gas Lease with                       the company you created.
          2.       You would need to sign an Affidavit of Non-Production and have it filed of    record.  The reason for this is there is an old Oil and Gas Lease (Vol. 055, Pg. 555) thought to cover your property which was previously held by two wells the F. Bauer #1 and F. Bauer #2. We need verification you are not receiving royalty, shut-in payment, or free gas from this lease and these wells are no longer producing.
         3.       You would then need to execute a Sublease assigning all production rights to HG Energy (covering only those depths below the top of the Clinton formation).  
The offer is this:
1) receive $1,000.00/acre for the sublease
2) receive a 1/8th royalty on any production your property is involved with (701 North Unit)
3) receive a proportionately reduced 1/32 overriding royalty interest in the gross revenue received from any well drilled on the groups 30,000 acres. 

Sounds like a rip off to me. I am definitely not in a rush to sign anything, so let me know what you all think.

Thanks,
Dave
 

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Replies to This Discussion

Permalink Reply by Sam Moore on January 23, 2012 at 11:34am

Tom, I agree with your post 100%.  I just don't 100% trust the state or the O & G guys and would like to make my own choices.  If this thing takes off and there is a lot of money to be made laws may be changed for the benefit of the O & G guys and the states coffers. 

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on January 23, 2012 at 1:05pm

@ Sam Moore ditto, Can't never bet on what these crooked politicians will do to line their own pockets

Permalink Reply by David T. on January 25, 2012 at 4:28am
Well, I contacted a couple attorneys in my area. I will see what they have to say. This whole thing seems very complex but attainable with all the information and resources available. Thanks everyone for your help.

On a side note a letter was sent to me from an attorney from Dover Ohio interested in buying my land for a "homesite". Interesting how its never been up for sale. What a joke. I sent him an email saying, I would sell it without any mineral rights. I bet I never hear back. Lol. From the looks of the letter, it seems like it was a mass mailing. He probably sent it to every property owner in the county. Good luck buddy, a day late and a dollar short.
Permalink Reply by Billy Park Whyde on February 8, 2012 at 7:17am

Sam read this close "3.       You would then need to execute a Sublease assigning all production rights to HG Energy (covering only those depths below the top of the Clinton formation).

 That means from the TOP of which would include the Clinton to China!

 Dave try using the Oil and gas calculator on the home page site on the upper left. 

 Only ten acres my neighbor said I have only three no big deal. I said really?

  You hold out and say get $3,500 an acre = $35,000 now say you get a !8% royalty. They drill and the 640 acre unit you belong to produces say a very low end from what I have seen so far (unless it comes in on gas only) at say $100 a bbl  you get $82,125 the first year!  Wells  will deplete however  but $82,125 would be well worth the time to be very careful about. 

Permalink Reply by David T. on February 8, 2012 at 10:39am
Sounds llike you are right about the clinton down. That would be everthing, all shales included. Intetesting!!!!
Permalink Reply by Sam Moore on February 10, 2012 at 4:21am

I am not an expert but was told that the CLinton is below the Marcellus.  They also have a clause in the lease if you are going to lease the Marcellus to someone else they have the option to match the terms of the lease.

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on February 10, 2012 at 4:50am

Sam there are shale maps on here the Clinton is in the Ohio shale which is the old shallow wells, Marcellus below clinton & Utica below the Marcellus.

Permalink Reply by Billy Park Whyde on February 10, 2012 at 5:08am

You are correct Tom in some areas of Ohio you have a Berea formation that is in the area of 700' more or less the well I bought up had a production of 15 gallons and after a frack of 150lbs of gel it produced 5bbl/day how would you like a well like that to tie your property up? Then you have the Clinton formation on me it was a little over 3200', below that numerous formations not in order but off the top of my head a Marcellus, Utica, Rose run, and a few others.

Permalink Reply by David T. on February 10, 2012 at 5:39am

http://geology.com/articles/utica-shale/

 

 

Take a look at this page.  Half way down on the far right is a graph showing the Clinton Group being below the Marcellus Formation and above the Utica...

 

 

 

Permalink Reply by Sam Moore on February 10, 2012 at 10:26am

Thanks David  I spent way to much time today looking for just such a graph.

Permalink Reply by Billy Park Whyde on February 10, 2012 at 10:46am

David where I live in Ohio that is not true.

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