Replies to This Discussion

Permalink Reply by Michael P. Davidson on June 28, 2012 at 6:42am

It seems like cx-energy has really gotten things done elsewhere and the 6% tof the signing bonus seems fair to me.

Permalink Reply by Sam Douglass on August 29, 2012 at 3:06pm

I still think the producers are taking advantage of a time when prices are artificially low and using a lot of different landmen - and using various groups etc to buy while it is cheap.

If this is truly the wet stuff, it deserves a premium over the dry stuff where more has been paid - particularly when so many layers of the earth are productive.

And it is very difficult to get producers to just lease one layer.  They want it all to have reserves for guess how many years.

They are just drilling first wells in the area.  Whatever they are paying now, they will pay more once they have a better handle on what is there and a little less of a gamble.  Has anyone heard yet of a real drilling program in and around Crawford County?  Where is the infrastructure?

If you need the money lease now and take what these guys can get in a hurry.  If you are not so pressed, why not gamble on what the future will bring when things are in place and they no what they are doing.

But then, if you are working on a percentage, you have incentive to close the deal now rather than wait for the next deal - and you probably will not try to hard for a minimum advance royalty to assure landowners get something.

Permalink Reply by Sam Douglass on September 2, 2012 at 1:49pm

Titusville and the town of Pitthole are a lot different from what is happening today.  Pitthole is where they drilled so many holes that it let out all the gas pressure necessary to force the product to the surface.

In the shales, they have to blast open the rock in hopes of getting the gas to travel a fairly short distance to the well bore - maybe 250 feet or so is the limit on how far the gas will flow even after fracking.  And spending say $20,000,000 or so on a well pad, the producers are not being stupid about their drilling patterns.

Permalink Reply by Jim Litwinowicz on June 29, 2012 at 5:42am

Randy; What is "rightfully mine"? If someone has the skills, experience, industry contacts, and reputation to get you a better deal are they not entitled to make a profit? And when did profit become a four letter word? As a farmer, you sell your produce, grain, and/or livestock....hopefully for a profit.  Much of it is sold to your neighbors or shipped and sold to customers in the region. Should they refuse to pay enough for you to profit from their money?

If an experienced, well-connected firm can make you an additional $500/acre but charges you $200/acre, aren't you still $300 ahead? And when figuring royalties even a half percent better will more than offset any fees. Add in the value that the terms of the lease may save over the life of a lease and the fees and up looking pretty small.

You are paying up front fees.  What happens if they do not get a deal that is acceptable to you? Will they refund your fee? If not, all the risk is being assigned to the landowners that pay upfront fees.

Permalink Reply by Jim Litwinowicz on June 30, 2012 at 9:44am

Randy; I don't understand your long rant about the benefits of landowner groups as we organize groups and then represent them. I am not against landowner groups but have always encouraged them. And you have the right to not use my "stinking help" but nothing personal there....I guess.

My post was why the animosity towards someone making a profit? If a company in any endeavor, not just gas leasing, can add value to you whether it be a product or a service then they deserve a profit. And if an agent of any company can add hundreds of dollars of value to your acreage then they earned a profit. And by doing so, they are not taking any cash from your wallet but actually adding additional cash for both your wallet and ours.

It is profit motive that has made this country the economic dynamo that it is. The reward of profit has been the driving force for much of the inventions, the technology, and the rapid adaption of such that has improved our lives tremendously. Profit has allowed us to constantly be more efficient and produce better goods and services at better prices. Profit has even been a huge reason we are the key military power of the world with the best equipment on the globe.

Its not just you but many others that act as if profit is evil.  I heard it at some of your group's meetings by the group's leaders. I see it posted all the time. What we make should not be relevant but what value we bring to the landowner as long as that added value exceeds our profit margin. And so far, it always has. Ask the people in Mercer if they mind the profit we made while making them much more.

I really wish someone would have come to me that could have gotten me ten grand/acre...even if their fee was two grand/acre. Even if the fee was five grand per acre, I would have been much better off. Make me a much better deal and I wouldn't care what your profit was.

You may choose whatever system you desire. But why put down a company that actually makes a profit by helping landowners? Does not Agway make a profit? Or TSC? Or butcher shops or ADM? Even Giant Eagle makes a stinking profit off of your land.

 We take no fee until after you are paid, assuming all the risk. Even if you refuse to sign a lease we negotiated or sign but your land doesn't clear title, we don't get paid unless you do. But in your group, if you walk away, you lose all the fees you paid, getting nothing for it.

If you are happy with your group that is great. I wish them luck. If they get a good lease it helps everyone, including people in our group. We are all on the same side, just with different methodology. Thats called competition, another thing that has made this the best country in the history of the world.

Again, best of luck.

Permalink Reply by Linda A on July 1, 2012 at 1:51am

@Jim -

I agree, there is nothing wrong with entrepreneurship, people finding or realizing a need and filling that need to make a living.  That is free enterprise and to knock someone for filling that gap is not necessary.

We should be thankful someone it taking up that slack and providing a service. Use them or not, that indeed is your 'right'.  Please don't ever loose sight of the basic foundation of this country.

There are dozens of examples like Jim sited about - perhaps you just never thought of it in that manner. 

Permalink Reply by Bob Jenness on June 28, 2012 at 1:58pm

There are 3 reliable measures of strength in a group (or in an individual, for that matter):

1. How many acres do they bring to the table?  (or will you be satisfied with number two and trying harder)

2.  Have the leases they've actually negotiated, signatures "sold", and checks written to landowners been leaders in the industry.  (or do you want to hire a newbie at "entry-level" wages to do this for you?)  6% is only fair if they can negotiate 7% better than the rest of the herd.

3. Do they have competent professionals committed to be there through the whole process until all land is leased, drilled, and PRODUCING?  (or are you satisfied to take the lease bonus and trust that all will go well with the chosen energy partner controlling your gas assets?)

So just collect that information from them, and the decision should be easy:-)

I've also received credible advice to "sell the land when the market appreciates it, take the money, put it in an annuity or other good investment, and enjoy the proceeds forever"

I have signed with one of the mentioned alternatives, but am open to any fair offer:-)

Permalink Reply by Sam Douglass on June 28, 2012 at 3:02pm

It is possible that you can do better on your own - particularly if your are at the right place at the right time with your property right in front of where the want to drill.   I do not know where that is.  Do you?

I suppose I am prejudiced about WWPA Landowners - but that group does not bind a llandowner to anything.  If it does not eventually produce something the landowner likes, the landowner can walk.  And know that while the landowners leading the group will try to get the best deal they can there will still be room to negotiate a few of the specifics like say "no drill pad in my orchard."

It is a small gamble to agree to share in costs that fellow landowners are trying to keep down - costs that are shared by an ever larger group.

Permalink Reply by petej on June 29, 2012 at 4:46pm

Great!

Thanks to Michael, Randy, Jim, Bob and Sam for posting with info and opinions.

At this time, there have been 305 views to this discussion. Please join in with your thoughts.

I have been through the wars. In my opinion, leasing your oil & gas is a very personal thing. Your beliefs, situation, age, family, landowners around you,....... and so much more. One size does not fit all!

Please keep the exchange going!!!!!!!!!!

 

Permalink Reply by Linda A on July 1, 2012 at 1:59am

you are absolutely right petej - gather information and then think about what you want to do.  Much of it is like gambling and we don't want to get greedy by thinking if we wait, we could get more.  Or seeing someone got more and then being envious...  Make the decision, it's a contract, and then be happy with that decisions, regardless.

Permalink Reply by Sam Douglass on July 1, 2012 at 2:30am

The following statement from a landman appeared in the Post-Gazette in July 2010 as to lawsuits by disappointed landowners who saw other landowners get better deals later.

"While landowners and their lawyers are quick to blame chicanery on the part of gas companies and landmen hired to negotiate lease terms,

the gas industry counters that many landowners bringing suits have only themselves to blame because their greed drove them to sign leases at a time when there was little competition for them."

"Patience is rewarded" according to this statement.

Landmen come in waves - signing up as many as they can before this or that may happen - then disappearing for awhile - then coming back to see if a little more money will get a signature.

Permalink Reply by Linda A on July 1, 2012 at 2:51am

@Sam - greed or not, who are they to judge.

People make their own decisions and when they sign contracts, they MUST live up to the contract and not wine if they see someone else get 'more'.

Would they wine if others got less?  I think not, so again, do your homework and do what is best for you. 

It's gambling at it's best and worst - just think about it. 

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