Replies to This Discussion

Permalink Reply by Bill Simpson on May 6, 2012 at 10:12pm

This is from an online search. I would imagine it is one and the same...
Can you identify the group you are with and which county? Would make it easier for positive feedback.

Byesville, OH
Mattmark Drilling Company is an independent Oil and Gas Producer focused primarily on the acquisition, exploration, development and marketing of crude oil and natural gas properties in Eastern Ohio. Our primary area of interest is the Marcellus and Utica Shale plays in the Appalachian Basin.Through joint ventures and partnerships, Mattmark acquires leasehold acreage to identify potential drilling prospects in order to successfully explore and develop this acreage.

COMPANY DETAILS

Location Type: Single Location

Industry: Lessors of Real Property, N.E.C.

Ownership: Private

Year Founded: 2001

Sales Range: Under $500,000

Employees: 1 to 5

Permalink Reply by Ed Ganelli on May 6, 2012 at 11:05pm

Hi Bill!  Thanks for the info...I'd found it online already.  I should have been more clear - I'm wondering if anyone else has signed with them or knows of others who have signed with them in the past and which O & G drillers they have worked with in the past.

Our group doesn't really have a name (everyone is pretty much calling it the Magyar Group).  We were originally just a few landowners who grouped together in southern Ashtabula/northern Trumbull with a farmer in our area who owns a lot of acreage because none of us were happy with the low prices and terrible leases we had been offered by flippers who came to our area earlier last year.  Neighbors since have heard of the group and joined it so that the group now has somewhere between 6000 and 9000 contiguous acres (some in the group still deciding whether to sign with BP or not).  We wanted to stay relatively small with the properties contiguous since we felt it was easier that way to attract drillers to the group.

Permalink Reply by Dan on May 7, 2012 at 1:40pm

I think we will see more of the smaller type drillers in Ashtabula County. The big guys have been getting all the press, but don't give up on the little guys just yet. I know of one other small company looking for that size of acreage.

Permalink Reply by Michael Temple on May 10, 2012 at 6:02am

Would love to know the names of some of the smaller companies that are in the hunt in Ashtabula.  Thanks for sharing

Permalink Reply by Terry Berkley on May 27, 2012 at 5:17am

I just got a lease contract from Wishgard..lots of blank spaces and only $1 for the first five years of the lease!  Oh yeah, the bonus information is on page 8 ( no page number however), which  is not part of the 7 pages of contract, but states on top right hand corner "THIS PAGE IS NOT TO BE FILED".  So, the BONUS monies are not part of the legal agreement it appears, and not subject to legal recourse if they are not paid, but of course, the $1 PAID-UP language/ stipulation  on the first page gives them legal lease of your land for 5 years...SHEESH!  How can they get away with this self-serving contract?  I hope other landowners get someone who is contract savvy to read theirs before they are foolish enough to sign away all their rights.  Oh, and it also gives Wishgard half the profits of any sale of timber on the land. PLEASE read your contracts carefully, folks!

 

Permalink Reply by Ed Ganelli on May 27, 2012 at 6:37am

Yeah, Terry...Wishgard has been covered MANY times throughout this site - about as bad a company as anyone could even consider signing with!

Michael...right now I know of 2 more companies in my area trying hard to lease - Black Ridge and Braxton.  Both have already signed acreage near us.  Black Ridge has begun going door-to-door here now...however, neighbors I've spoken with are starting to compare them to Wishgard (high-pressure tactics, half-truths or outright lies, etc.).  The difference, though, is that Black Ridge IS offering fair bonus money and a decent lease compared to Wishgard!

From everything I've heard so far about Black Ridge and Braxton, though, it seems as if Braxton is FAR more professional AND wants ALL acreage in the group I'm part of.  I want to go with Braxton...seems as if Black Ridge landagents have convinced most others to want to do the same...

Permalink Reply by Bill Simpson on May 27, 2012 at 8:26am

Do you know if Buckeye Mineral is involved with any of these companies? I am hearing of smaller companies like the ones in this forum working the area but nothing from Buckeye Mineral about where they headed right now. Wishgard is still pounding the pavement and has an office in downtown Jefferson. As bad as they are, they are signing up a lot of folks which takes away from the base of us folks who would like to stay as a group for the best deal. The numbers being posted by the Mattmark and others is, in my opinion is quite low for the Utica shale projections being put out for the northern Ashtabula County region.

I welcome all feedback as you only have one opportunity to sign the best deal.

Permalink Reply by Dan on May 27, 2012 at 2:20pm

Probably how this leasing goes, some are happy with any offer , some want a fair offer and some want the top offer. I don't think there is a right or wrong offer It's whats best for you at this point in time. Each of us has a dollar amount that will work. 

Permalink Reply by Brad on May 27, 2012 at 10:17am

It sounds like 18% net is the going rate.  Does anyone have insight on what percentage is lost after the lessee takes deductions?  Could 18% net be equivalent to 15% gross....approximately.   I  know the original Columbiana County ALOV lease seemed quite clear in specifying "gross".  Was the Trumbull lease the same?  The following excerpt was posted on this form.  Perhaps it can provoke further thoughts from some of you, which can only help us all make an informed decision.  Things are looking good, especially in light of the $1,600/acre Wishgard days! :)  Good luck to all!

“It might be worth a couple of percentage points of more.  And the deductions can be very complex for a variety of reasons.  Of course, it is in the interest of the producer to have the deductions as high as can be reasonably justified.  Think about how people feel about deductions when they fill out their tax returns.

There may be some confusion.  "At the wellhead" means net after all deductions the company can claim for the cost of moving the gas from the wellhead to the point of sale.   A lease without all these deductions is, of course, far more desirable.  The deductions can reduce the amount of royalty significantly.

Historically, when royalties were 1/8th for shallow drilling it was computed "at the wellhead" after all deductions that would cover the cost of taking the gas from the well head to the point of sale.

With the advent of Marcellus drilling, companies have been willing to go to a 20% royalty with no deductions from the sale price or limited deductions.  For more about this Google Barnett shale and find out what Texans pay Texans for production from a shale that is worth significantly less to the producers than the Marcellus.

 Did your neighbor make a huge mistake.  It depends on how you look at it.  He got the deal he bargained for.

 The people doing the leasing make one offer until they get all the takers they can get.  Later they come back and make a higher offer etc.  Sometimes people need the money from the bonus now and do not want to wait for a better offer later…………………

“The producer always pays the cost of getting the gas of the well to the wellhead and those costs come out of whatever income the producer realizes.  Some leases say that the lessee has his share computed from the value of the gas at the wellhead - whatever "value" means and there are other variations of this that most lessors do not read or understand.  It has not been uncommon for leases to have the lessee's share computed based on the price of the gas at the wellhead as if there was an elf at the wellhead collecting the gas in a tin cup and passing out golden coins.

In order to get to a wellhead price, the producer backs off the price for which the gas is sold at a transmission line by deducting costs incurred in getting the gas  from the wellhead to the point of sale.  These costs can include the cost of transporting the gas through gathering lines and intermediate pipelines to the main transmission line as well as costs of cleaning up gas that might be high in sulpher etc., and compression.  When the gas is "wet" the gas is processed to separate out for separate sale things like propane.  And there is the cost of compressing the gas at the transmission line in order to bring the pressure of the gas high enough to be accepted by the high pressure transmission line.  And then there is "line loss."  For some reason even new lines leak a little.  Most of these things are costs charged back except for the plant that processes the gas to take out valuable bi-products for separate sale.  All of these costs involve complex calculations made the more so by the fact that gas from other properties gets mixed in along the way.  It sounds like you already appreciate the difficulty in understanding it all.

It is believed that the best deal is ti have the lessors percentage computed against the actual sale price with the producer absorbing all of the costs along the way, but even that is not a simple calculation.  I try to get something in leases requiring the lessee to give some meaningful accounting when checks are mailed out.  Additionally, I like to include a provision requiring the lessee to submit to audits by the lessor.  For an audit it would, of course, be helpful to have other lessors share the cost.  Finding a good auditor may be a challenge.  If the auditor should find that there has been a significant underpayment, it is appropriate to ask the lessee to absorb the cost of the audit.  Another thing to consider is the possibility that the gas might be to hot with to many btu's per mcf to be accepted by the transmission line that requires a uniform product.  In such a case the gas has to be diluted from its "rawest form" - in effect increasing the volume of gas that is delivered for sale.  This is not unusual with Marcellus gas.   When you figure it all out let me know.  In the meanwhile, there is room for the lessee to make a lot of judgments as to how to make the multitude of calculations.

 Gathering lines are usually owned by the producer.  The gas gathered from a number of wells may go to an intermediate line to the transmission line.  That line could be owned by others but often the ownership is shared [with your lessee possibly sharing the ownership]  and whoever owns it may set a charges.  What is a fair charge?  Does the charge have to be fair?

Most people are glad to get a check and do not worry about such details.”