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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 4:04pm

thanks so much John,

when the situation is that the oil company that wants the addendum signed that has the unit has NO competition in the area near the lessor's property...then it is a difficult decision as to whether to sign the amendment and take a chance of them going around...or to have some productivity to receive royalties.

question is...if the oil company refuses to negotiate some better clauses for that owner (such as even maybe paying another bonus) or meeting then somewhere in the contract for another percent, etc....then they are bullies...and they cannot be trusted.   They are pulling their weight around knowing they are the big kid in the neighborhood and one could only hope a Righteous GOD would show up in their face.  (it is Easter)

now what the landowner (lessor) could do first is see who else is drilling in the area...and see if they would be interested in leasing the land if the primary lease holder is using threats...you see the primary lease holder isn't holding their acreage if they are going to go around them and most likely would be in default of the conditions of their present contract, depending how the unitization and other clauses are worded, and in your example of your neighbor it also would depend on the time left in the primary as to whether that would be worth it or not.

 As the lessee also has responsibility to live up to the contract clauses unless amended and approved by Lessor. (check with an attorney ...I am not an attorney...should have been ...would have loved to go to battle at the senate against these turnips....(as Jack here says his mother did not fall off a turnip truck, I think that is what Jack said)...not used to that saying.    But I do know of a saying, 

"He that is good with the least can be trusted with much "   or you can say "He that

is lousy with just a little will likely not turn out to be whom you should trust in much"

you know if the oil companies would just recognize the owner of the land or royalty owner and seek to be more of understanding....as if they owned land and they had a lease ....(do unto others as you would have them do unto you)...then they would understand that if they change the size of the unit larger then the royalty will definitely be affected...so why not give a little more?

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Permalink Reply by Clinton44 on April 7, 2012 at 11:23am

In one of the units i referenced above the bottom hole locations of two out of the six wells are around 500 feet from our property line and they still pooled 14 of our acres in that unit, I guess some companies are more fair than others when it comes to declaring unit dimensions... 

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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 11:35am

that's most likely cause you have a lease and if the same company doing the well has your lease it behooves them to add some of your land in the unit.  

If the land was not leased then the owner may or may not know about it...thereby it would maybe a case of 'forced pooling' unawares that collection is being made.

Eric,   happy Easter to you and family and others here also.   I am just so disappointed the more I read the lease contract that dad was duped into...that I cannot even see why any oil company would feel merited to ask capital hill for a handout (unless they were a small honest company that did need help)..the larger ones  have the money and then some.  One has to wonder just how much stock or royalty leases that some of our senate and representatives have that have even agreed to giving them more money.

It's almost  as bad as the Egyptians asking for monetary aid from the USA and secretary Clinton planning to give them BILLIONs of U.S. tax payer money...while at the same time some of their new government is killing Christians in their country???   What happened to all the billions of dollars that the Egytian dictator (deceased) had in the bank?   didn't that come from U.S. foreign aid?

http://www.americanconservativedaily.com/2012/04/christians-killed/

no kidding....and these oil companies are meanwhile selling our leases to foreign countries some who would kill Christians...so who will ultimately own the NG and OIL under our U.S.A.?

our U.S. taxes to give to Egypt for many many years went ?

http://www.cbc.ca/news/business/story/2011/02/11/f-mubarak-money.html

I am beginning to think that the lease agents and the leasing arms of the oil companies are not that far from acting as dictators...

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Permalink Reply by Clinton44 on April 7, 2012 at 11:40am

I agree on the fact that they pooled us because they held our lease, but have to sort of admire them for being honest and admitting they were that close.

Happy Easter to all as well!! 

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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 10:59am

thanks Sam,

I think you are correct...and if they put the wells in and no pipelines you can almost guarantee that they did it just to hold the acreage.   Now I did look at what wells from what companies are in an area that has no pipelines.  It was interesting to see that Chesapeake was agressive enough to do several horiz. wells per pad, like ten per pad (indicating to me that as soon as pipelines are in they are ready to produce)....yet I saw that Chief who organized units as large as 1100plus has only one well permitted (a vertical) and a future for horiz (but not installed) and their next unit also of large size is permitted for two horiz. wells (none are producing yet both installed).  So when you see that one company in the same area is installing as many as ten per pad ,.you have to wonder why the other one is only holding a large unit with one vertical (though it could be horiz later) well.  

All non-producing and no pipelines yet it is strange that those wells went in well before other wells and pipelines in other counties of same state....and the leases in the unpiped area were flipped almost immediately within the first year....and almost all these leases were on the first run of the area and have some ungodly unreasonable lease hooks.   I guess if you live on those sites then you might have more peace and quiet without all the fracing noise and trucking...yet if you have the lease with Chief you may not like hearing Chesapeake's going back and forth with their production while Chief sits on their units indefinitely.  Oh, you might get $5.00 per acre per year...maybe.

such as (well worth reading):

http://gomarcellusshale.com/forum/topics/extension-of-term-clause

My Easter prayer to GOD and Christ Jesus is that Chief Oil company and Elexco (who duped all these people into these awful contracts) has to forfeit every lease that they wrote that was unfair to the Lessor and have to rewrite them and give the Lessors up to date today's pricing for bonus's and the higher royalty rates that are being offered or the right to exit the contract.   I hope GOD makes them pay.....any one want to add an Amen (meaning so be it) to my prayer?    

these people had to drop the suit against Chief as they didn't have the money to pay the lawyers...i tell you we should get together and make charges these these companies as a group and involve the state...so none have to go alone.

http://www.the-leader.com/news/x1797083298/Lowball-gas-leases-haunt...

now what is interesting is that the Beinlich's went in there with a charge that their lease had expired and here the suit was dropped  because the oil company stated that they were not responsible to go to court without knowing who would pay the court/attorney fees as the contract was expired...which is admitting that the Beinlich's were correct.     Funny that Chief lawyer admits the contract is expired by asking the court to dismiss the charges because no one knew who would pay the court charges!  Maybe they gave a new deal to the Beinlich's outside of court proceedings and maybe they just dropped the lease with them.. cause you have to wonder why Chief would have asked for dismissal based on expiration of the clause of who pays the attorney fees?

http://www.lexisnexis.com/community/emergingissues/blogs/oilgasande...

and the result....which would have been a case for all the counties...wish they had went ahead.

http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20110617...

I want to add that if you are being approached to sign into a larger unit...do your research first, and come to this forum for some help...but definitely get a gas/oil lawyer involved and get their fee negotiated into your signing an amendment if you decide to sign into a larger unit.  I have figured the royalty difference somewhat between 640acre and 1120acre...using the same acreage of about 30 acres in each unit it comes out to half the amount of royalty with the larger unit using the same factors in the estimate and basing it on the same number of wells producing in ea. unit.   AND don't forget to limit the size again...cause you do not know how much further they will expand beyond even 1120acres.

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Permalink Reply by Robin Hood on April 7, 2012 at 12:04pm

I think the law suits are dropped or settled(with confidentiality clauses) by the oil and gas companies if the land owners are persistent, especially if it looks like there is enough vagueness in the lease that may cause the court to side with the landowner. By dropping it before the ruling, every other landowners in a similar situation has to challenge the company on their own and does not have the example of a similar case ruling. There are numerous games being played. The landowners are the pawns. 

Another ploy is the o&g company will not negotiate any lease unless the landowner takes them to court. The hassle, threats, and potential cost of a lawsuit will deter the majority of landowners from proceeding down that road.

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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 12:46pm

I think most do not know what to do....and today there are people who do offer expertise in landgroups or oil/gas attys or both.     It is the people that these oil companies trod on to get their hold on the lands as soon as they knew what they had...from testing done on the lands (geology) by U.S. taxpayer handouts (that's right,...the oil gas lobby at Capital Hill most likely paid the seismic and geological studies).   Then they took more of the taxpayer handout money  and decided to lowball cheat the average taxpaying landowner in these prestigious once endless beautiful green mountains of Pa., and other states as well.   It is the signing of these earlier leases with these large units that the oil companies found a great way to start off with (esp. while the people were yet ignorant and even this site wasn't online).  Obtain a lease for 2.00an acre for five years, sell shares in that lease for over 3kper to 8k an acre to investors in a bulk purchase, and then have lease clauses to extend the lease indefinitely and build as much as you want on the top surface without addtl payments to owner as they knew...they knew.

It is that their interest today with the prices of NG low is to bundle the leases and get the sales made (rather than production yet in some areas there is much production) so when the price of NG goes up they have more money from both sides...a good business practice to make profit...but starting out taking advantage of ignorant people (even the elderly) is dispictable and disgusting.   But they say..'oh, you should have used an attorney'...Is that supposed to be an honorable business answer, saying 'hey, ha, you would have done better with an attorney in dealing with folks  like us"...that is what they are saying.

I have in my entire real estate career not come upon such lies in conducting business contracts before...and so professionally they came across, very deceiving.

Now if one is in a unit that produces and makes money and more money to compensate every rude clause in the contract lease...then we get over what the oil company really did to the average landowner....but not all get that marvelous advantage...some do not know whether that unit will ever be in productive mode...at least they won't make much noise that way...but it will be difficult to drive by your neighbors who went with a drilling company that really bought to produce...who now have all that activity that produces wealth for them.  But even if you start making some money from the unit....if you are in a unit.....why think that that oil company that cheated your mom and dad on that contract is respectable and honest as if the production didn't happen they wouldn't have given a damn that you didn't do well.

But my greatest concern should be yours also...where are our leases going in the world?  who ultimately will own the greatest share of that awful lease contract we signed?  will it be Egypt, will it be France, how about Iran or the Taliban?  who?  they don't care...they are making profit and consider that more important than who will ultimately rule over the resources of the USA.

And since this is Sam's discussion...have I given you an idea that you better really think about signing an amendment to expand your unit size....get a listening and doing gas/oil lawyer...and do your own research as well....it may be that you can get rid of some of their "trick you and treat themselves to what you own ' clauses you already have on your existing lease that they want to modify.

here is a good link I just read about the leasing process...and where it is today.

http://www.kiplinger.com/magazine/archives/natural-gas-shale-royalt...

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Permalink Reply by craig on April 7, 2012 at 3:42pm

VG, A good post overall, but I will take one exception. I know for a fact that in Beaver County the early cheap leases were what got the ball rolling. The leases that were signed with O+G were cheap for a reason. No one knew what lay deep below us. No one. O+G, along with Ergon, spent over $10 million drilling two vertical wells to bedrock. They got the core samples and all the data that goes along with it. They found that what was there could not be extracted traditionally. Thus those early leases were sold along with the data, etc to CHK....someone who had experience in horizontal shale plays. Now i will admit once this deal was done, a lot of oil/gas folks took advantage of tons of folks not only in our area, but Ohio folks across the border as well.

IF us early folks had never signed cheap, they would have never drilled what were basically wild cat wells. Now don't think i am standing up for O+G and some of what they did. But quite frankly they moved this area onto the map at least 5 years earlier, if not more. Am I happy with the lease from 2006, overall yes. Fortunately I managed to get a no drill/surface clause in my lease. 

I too  am amazed how such large companies treat supposed partners(landowners) in the production of oil and gas and get away with it.

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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 4:23pm

thanks for your input Craig,

I thought about this tonight...you see most of us people when we speak about 'standard contracts' we expect that if we receive a standard contract from a company that if our neighbors received the same 'standard' contract that all clauses would be the same.   Now I am not speaking of hiring an attorney and reviewing and negotiating clauses....i am saying that if a landman from let's say Elexco goes to ten neighbors with the same Chief lease and refers to the contract as their 'standard' contract then why would any of the neighbors think that some of the clauses though with the same names would be written any different?  This is actually a type of fraud behavior...period.

So when these oil companies came to these landowners they didn't give them money upfront to hire attorneys...some of these people were living on social security and trying to keep their farms.  so the idea of some (who were getting offers lets say of 700 an acre or even 2dollars an acre...why go and hire an attorney if you don't have the money to do so...just talk with the neighbors and see what they think.   (now this is mostly before landgroups were started).   Now I find that if ten neighbors received the same standard gas/oil lease contract from Elexco then when discussing one would say oh..Yes , there is an extension clause, and yes, there is clean & green clause...and everyone would think that this standard contract would have the same wording in the clause as their neighbor....NO.   and it would have been wise for one neighbor to read the clause to the other neighbor at that time and they would have discovered that some words were either left out, added to, or completely rephrased under the same clause name.  Do you know of any company that you would do business with whose standard contract forms were so jumbled up but under the same clause names?

that's what I recently have found out by coming here and letting others know this is my clause, what does your say?   You know if the Pennsylvania Revenue Department gave people the same paperwork with all the same clause names...but hidden in the clauses was many other versions...how long before the people would complain.   Pls look at this clause that on most contracts (i would hope) states for held by production...not this one:

http://gomarcellusshale.com/forum/topics/extension-of-term-clause

this is when I wish I had a law degree...I would use it.  and if I can find a lawyer that understands why I might want to challenge these that take advantage of little old ladies and elderly vet men.....I would want to talk to him or her.

By the way Craig, in the development process of building buildings ...when there is a top soil or environmental study done the owner of the land gets to know what the builder is up to as it is his or her land.   Why is it that taxpayer dollars which have helped out the oil companies most likely paid for these geological observations so they knew where to drill, how far, etc...why wasn't that disclosed to the landowners so they knew that it wasn't just speculation as many lands had been under leases for as low as 5.per year per acre for many years but no drilling was going on.

It is about time that our elected officials stop worrying about what the oil companies will do to them or the U.S. citizens and start getting involved in overseeing a legitimate fair and honest business dealings with the peoples of the USA.  Tell me, do you think the CEO of any of these oil companies would accept the Elexco rep at his door with their "standard contract"?   no, cause they know that one contact has different wording from another contract though it has the same lease term name.   they also would have to have an attorney...

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Permalink Reply by 0l1a6laz7smpf on April 7, 2012 at 4:50pm

I want to mention I was not talking about any addendums in that above post...I was specifically talking about these old lease contract forms (which have the same clause names on about 2 pages )  .   I recently discovered that the initial typed forms of the standard forms though having the same clause name in the same area on the two pages actually has some words either left out, reworded, or added to.   Had this had been discovered by even a few of the neighbors at the beginning of the rush (and it was a rush)....there would have been an outcry and most would have joined landgroups or held out til the oil company got their business contracts in good order.

Don't trust any of them....I believe that the drilling company part and the investors may be qualified professionals but the leasing agents and the leasing management definitely have soured the entire leasing process.   The fact that some got wise and utilized services of landgroups and owners is evidence that people found that they couldn't trust them.   So if you are thinking of signing that amendment...definitely seek help from a professional atty that is aware of the gas/oil leasing tactics.

what a reputation they have earned from doing business in  theirs and our own country, the USA...they should be ashamed, now I am speaking of what I know from the dealings with  Chief Oil company and the Elexco representation of them....I was more fond of Chesapeake but they had similar contracts and they also may have been re-worded on the standard form (don't know).   but there is much proof that Elexco did do dishonor to Chief evidenced by the court cases that have come up (which I think the judges didn't even bother to look at many contracts or they would have seen and heard about the poor quality of honesty..If these judges would just look at many of the oil company contract leases from people in the same area and see that they are out of order...meant to confuse, catch all clauses....they should not accept those contracts as legal...especially when the lessor is the only signature on the contract, though it is said if the bonus was cashed and the paperwork recorded then the signature only being the Lessor doesn't matter (so much for bonafide two party signed contractual agreements).

http://gomarcellusshale.com/forum/topics/chevron-offer-in-bullskin-...

http://gomarcellusshale.com/forum/topics/how-many-of-you-would-pref...

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Permalink Reply by craig on April 7, 2012 at 5:28pm

I agree that the leasing arrangements were purposely done as they were, to take advantage of the normal folks that owned the land. I know no other business that could get away with this, as you mention.

Knowingly conspiring to do what they have done ought to have some redress in the courts, civil or even criminal.... it will take a large group of people.  Someday this needs to come back and bite them. 

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Permalink Reply by Sam Douglass on April 8, 2012 at 1:00pm

More response than I expected.

One thread suggested concern that drilling next door to a property would suck the gas away.

In the shales that is not of particular concern since the horizontal wells are being drilled about 500 feet appart - strongly suggesting that gas can not be drawn into the horizontal well efficiently for more than about 250' - maybe a little more but these wells are very expensive and it is logical to think they would drill more than 500' if they could get gas from greater distances.

So you are pretty safe until the Governor "reluctantly" caves in and goes along with forced pooling.

A piece of an unleased parcel can stop the horizontal drill from getting to any parcels beyond it.  Your neighbors might not like that and the producer is likely to be a little frustrated.

Since they can not get gas from more than about 250' or so from a horizontal well after fracking, I wonder how far they can draw it into a vertical well?  Maybe about the same.  Maybe it's a good guess that the producer drills a few scattered vertical wells to confirm what the seismic info says - and saves the productive horizontal drilling for later.

Many wells are drilled for about 3/4 of a mile, it may even be the average length and draw for a width of probably 500' counting both sides of the horizontal line.  If you do the math, that is about 80 acres per well.  With 4 wells on a pad, 2 going NNW and 2 going SSE it looks like about 360 acres in a rectangle 1.5 miles long by 1000' wide, maybe the size of a unit. 

Of course with 10 wells from the drill pad, 5 in each direction, it might be 800 acres about 1.5 miles long by 2500' wide --  forming a unit  - but that does not mean all 10 wells will be drilled at the same time.

And so after a well is drilled in a unit, maybe the Producer will shut it in because he can't get it to market etc.,force majeurin some leases. 

So the well is drilled, the unit is formed, there is little or no production - and the leases are extended beyond the primary term. 

And the producers have to do this kind of thing because there are X thousand acres to drill in PA over a period of 75 years, 100 years, much longer considering all the productive strata available - even the Onandaga may have promise after fracking.

By the way, no one is rushing to use the Oil and Gas Conservation Law to do forced pooling below the Onandaga.  The industry doesn't like the law and the DEP apparently does not know what to do with it if someone tried to use it.

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