Replies to This Discussion

Permalink Reply by Joseph-Ohio on June 5, 2012 at 2:37pm

Bill,

I'm with you in that way of looking at things.

Just considering good marketing practice; since Chesapeake is divesting itself of it's Ashtabula County Leaseholds and any buyers will be paying Chesapeake the premium price per leasehold acre, it makes sense to me for landowners and landowner groups to negotiate for more than 4k per leasehold acre.  How much more without boogering your deal would be the pregnant question. 

Chesapeake advertises Ashtabula County lands as being in the prime shale oil and wet shale gas window of the Point Pleasant / Utica play.

We need to get as much for our resources as we can (signing bonus wise and royalty wise) - we get only one shot at making a deal.

The only protection we'll have against rampant inflation is the production royalty part of our deal.  That is to say if the resource prices rise in value (and I'm thinking they will over time) so will the production royalty paid to the landowner increase.

Permalink Reply by Bill Simpson on June 5, 2012 at 10:04pm

Are you saying that the royalty clause needs to be at a higher percentage and also be labeled as "Gross"?

Hopefully someone will put the BlackRidge lease on file for our review.

Does anyone know where ALOV is going with this part of Ashtabula and points to the North? Have not heard any news or updates.

Permalink Reply by Joseph-Ohio on June 5, 2012 at 10:52pm

All I'm saying is do the absolute best you can - you and any landowner or landowner group ought to do the absolute best they can - it seems like the marketing conditions are right - but, temper negotiations knowing we're dealing with professionals who really know how to play hardball.

I agree that your royalty taken as a percentage of 'Gross Production' instead of 'Net Production' would seem to be the better deal; and a higher royalty percentage is better than a lower royalty percentage.

Also, I've heard nothing regarding ALOV or Buckeye Mineral pertaining to points north of 6.

Good luck to us all - we need it.

Permalink Reply by Garfield on June 6, 2012 at 7:29am

I'm hearing that Buckeye Mineral will soon be officially signing up its landowners in Ashtabula (July-August).  They are doing things the right way... working with the state of ohio to officially set up their licensure to represent folks - makes their relationship to the landowner transparent.  The acreage they will represent on behalf of EALA alone should be very large, plus other landowners who sign up directly with them.  They will probably get a lot of folks who were let down by Wishgard.

Permalink Reply by Dan on June 6, 2012 at 2:00pm

Will have a new EALA meeting date shortly . Should be later this month. The committee is meeting tomorrow to firm up a date.

Permalink Reply by Bryan on June 6, 2012 at 2:33pm

"Do things the right way" ? BlackRidge did everything according to the ODNR. It is a very good lease.

Permalink Reply by Dan on June 6, 2012 at 10:09pm

Pigs get fed ,  hogs get slaughtered...

Permalink Reply by Bryan on June 7, 2012 at 3:12am

I know people who joined ALOV that are now being told that their land is not wanted and will not be a part of a drilling unit. As far as the $4250/18%, this is one of the better payouts in the state.

 

Very well put Dan.

Permalink Reply by Ronaround on June 8, 2012 at 1:08am

Its a basic lottery out there. I have to say even if i get the signing bonus only,that's  more than i ever expected when i purchased the land. Hopefully they'll start working there way up north around Cherry Valley, Dorset and Pierpont.

Permalink Reply by Ed Ganelli on June 9, 2012 at 3:11am

:-D  I don't exactly see where $4250 an acre is "selling out cheap"!!!!  Right now, $5800 per acre is the highest realized in Ohio (and ONLY in already proven areas!)! If a landowner KNOWS for certain that prices per acre are going to go up, then of course the wise choice would be to wait!  However, there are a LOT of variables that have to be looked at in deciding when to sign: what have existing wells in the area produced (NO wells yet!), who has leased the acreage in your area (NOT going to be worth nearly as much in the future since only the company already heavily leased in your area will be interested at all in it!), wait a year or more to sign and have the clock start ticking then rather than now to either have a well in to HBP or to get to the renewal period, etc.

A decent price now with a really good lease is beneficial NOW to landowners...ESPECIALLY to smaller landowners!  The old saying "A bird in the hand is worth two in the bush" pretty much applies here...at least in MY opinion it does!   :-)

Permalink Reply by Joseph-Ohio on June 9, 2012 at 3:38am

Right On Ed.

Also, things happening in other areas impact the overall picture in our geography.

I'm reading where the Muskingum Conservancy Lands are being once again studied for environmental impact in way of water resources.

I see all that as more hurdles for those folks but maybe of  benefit to our geography.

We're pretty close to Lake Erie you know.

Plenty of water available here.

Our lands are in the oil / wet gas / dry gas window.

Like you say $4250.00 per acre + 18% Royalty + a truly landowner cognizant lease + NOW (or in the very near future) sounds more than pretty good to me.

Hoping they continue north soon. 

Maybe they (BlackRidge or Braxton or some other equal) would want to buy out Chesapeake + EnerVest in our area and sign up other interested landowners / landowner groups.

Just so long as they honor their committments and pay up front.

I'm ready to rock.

Permalink Reply by Joseph-Ohio on June 9, 2012 at 12:09am

@ Fang

Everyone's situation is unique.

The best judge of when 'to sign' is the individual doing the signing.

Good luck to everyone.

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