Replies to This Discussion

Permalink Reply by DKinPA on June 28, 2010 at 3:22pm

REMINDER: We have a meeting Wednesday at the Unionville Fire Hall (corner of Rt 8 and Mahood Rd) at 7:30pm. This meeting will be very similiar to the last meeting.
For those of you who have attended one of the previous meetings, please tell your neighbors about this meeting. We are growing in numbers and acreage...that is good for all of us and our community!
Hope to see you there!

Permalink Reply by Shawn Kaswlec on June 29, 2010 at 4:16am

I'm not saying leave money on the table by any means. The shale is not good in northern butler. Its a fractured rock the same in Fayette county. There will still be production just not great production. Hence why William, Chesapeake, T W Phillips, and Penn Virginia all are staying in the southern 6 townships of butler co. So what I'm saying is high prices per acre in areas of lower production, companies will walk. Ive seen it happen in Fayette and Westmorland Co.

I feel what people should be doing is worrying more about the lease. Like i said these leases are not five year leases, like they state they are. Companies can hold the lease for any reason they want. You are signing that.

Permalink Reply by Alan Coogan on September 9, 2010 at 3:53pm

Shawn: interesting comment on fracture properties of shale in northern Butler
where we are--what is the source of this observation? please

Alan Coogan

Permalink Reply by DKinPA on July 18, 2010 at 2:56pm

The group agreements are ready to go! If you didn't recieve yours by E-mail please let me know BCLG@zoominternet.net

If you have property in Cherry, Clay,Concord, Marion, Venango or Washington Twp and you are not a part of this group yet, please E-mail me for more information.........Power in numbers!

Permalink Reply by DKinPA on September 9, 2010 at 3:46am

BCLG UPDATE

I wanted to keep everyone up to date on the progress of our group. As we receive your signed agreements we have been very busy contacting the landowners adjacent to your property to get them on board as well. This has allowed us to begin to form those larger areas of contiguous acreage that we had talked about, but it has been very time intensive. In order to make this process more efficient, we have ordered signs that you will begin to see around the area notifying people of our group and what we are doing. Additionally we want to get more contact with landowners, so we have been appointing a Representative for each township. This representative will be contacting your neighbors and informing them of our group and the advantages in joining.

One thing that we are most proud of with this group is the protection that it gives to our members. The land men and gas companies have been "preying" on the elderly and those that may not be as well informed as to what is fair and what options they may have, both financially and legally. Our group helps to eliminate this type of practice and helps to insure that landowners receive a fair and equitable lease.


As I am sure you have seen, Rex Energy has had a large infusion of cash recently due to a joint venture with Sumitomo Corporation. Sumotomo has bought a15% interest in the Butler County Phase 1 leases (41,000 acres) as well as a 30% interest in the 20 wells in Butler County, 11 of which are currently active. Sumitomo will pay 100% of the costs to lease the next 9,000 acres in Butler County and at the same time pay Rex Energy $1,000 per net acre as a leasing fee. In addition the processing plants that Rex has planned are moving along slowly due to the time to get permits but according to a member of the group the plan is still the same; to build several processing plants through Butler County up to I-80.


Gov. Rendell said yesterday that there will be no moratorium on drilling in Pennsylvania during the remainder of his term and that he does not believe that the legislature would support a moratorium. This is certainly good news, however the talk of a severance tax is very much on the table and the upcoming election could prove pivotal on that measure. Another measure which is on the table is the "conservation pooling act" being proposed by Reps Everett and Gergely. This is essentially forced pooling which is where the gas company can force a landowner into a group or unit against their wishes, which takes away many of our rights as landowners and gives them to the gas companies. I foresee a deal being made in the future where the legislature imposes a severance tax but in exchange they grant the gas companies the right for forced pooling making it a wash for the gas companies, a revenue explosion for the state and robs us, the landowners of our right to decide what happens with our property!

Permalink Reply by DKinPA on September 13, 2010 at 7:23am

Matt, not certain what you mean by no cost lease.....are you referring to the determination of royalties based on net production vs. gross production?

Regarding the bonus amounts, that will be determined by the members of the group. When they have submitted their agreements a survey is also taken as to what is most important to them and we have been tallying those results as they come in. That will determine the parameters by which the group will negotiate. However, the members also agree that a slight reduction in the bonus amount for a more significant royalty amount is a worthwhile option, so it is not always cut a dry as far as the bonus amount. Attorneys who are negotiating leases for landowners will quite often take a percentage of the bonus amount, therefore they will push up the bonus amount, sacrificing the royalty amount and costing the landowner tens of thousands; if not hundreds of thousands of dollars!

Permalink Reply by DKinPA on September 14, 2010 at 9:20am

This is something we have discussed at our meetings and there is no doubt, we don't want this:

To pay Lessor on actual volumes of gas sold from said land, one eighth of the net amount realized by Lessee, computed at the wellhead. As used in this lease, the term "net amount realized by Lessee, computed at the wellhead" shall mean the gross proceeds received by Lessee from the sale of oil and gas minus post-production costs incurred by Lessee between the wellhead and the point of sale. As used in this Lease, the term "post production costs" shall mean all costs and expenses of (a) treating and processing oil and/or gas, and (b) separating liquid.....(c) Transporting oil and /or gas including transportation between the wellhead and treating facilities.....(d)compressing gas for transportation.....(e) metering oil and /or gas to determine the amount sold.....(f) sales charges, commissions....(g)any and all other costsand espenses of any kind or nature incurred in regard to the gas or the handling thereof.....Lessee may use it's own pipelines and equipment to provide such services....etc, etc.

They are very clever and with this in your lease you may not get much at all! They also know that by offering a high bonus payment and lower royalty they will make more for themselves....that is why they raise those bonus payments but are more stingy on the royalty. In addition we are insisting that all bonus payment be paid in full at the beginning of the lease.

Permalink Reply by Sam Douglass on September 14, 2010 at 4:07pm

Excellent comment DKinPa. Your lease needs to include a right to audit. Imagine how complicated it will be to figure out all those nice deductions back to a made up well head price. There was already a lawsuit aboout whether or not the producer had to pay royalty on the rich fluids it milks out of the gas. And what if the gas is 110% of pipeline quality. It has to be diluted a bit before it can go into the transmission lines - making a bit more volume to get paid on.
Some day you will need to get your group together to find the money to pay for the audit to make sure something is not done right.

Permalink Reply by Sam Douglass on September 13, 2010 at 2:24pm

It might be a long time before they aggressively drill in Butler County if they find thicker, better shale elsewhere. Maybe the Utica or the Upper Devonian [Ohio] shales will make BC more attractive. In the meantime, go for all you can - not less than $5000/acre bonus [$1000/acre/year and not less than a 20% royalty. If they do not pay it this year, some year they will. And to compensate you for what might be a long wait - think about asking for an advance minimum payment annually after 5 years or so. You might wait a long time for the big money.

Permalink Reply by DKinPA on September 22, 2010 at 7:07am

I see from your website that you (on behalf of MDS) are charging the landowner 15% commision on the gross sales plus 5% for additional fees? What is your definition of gross sale price? Is that everything including the proceeeds of gas sold?

The $10,000/ acre that you mention was not a lease but an acquisition by Sumotumo Corp. to create an area of mutual interest or AMI and can not nor should be compared to a land lease.

Permalink Reply by Outback on September 22, 2010 at 8:04am

I remain constantly amazed at the fees being "squeezed" out of the landowners. We live in Bradford County, home of the Friendsville Group. Those members paid $50. period. It didn't matter if you owned 1acre or a thousand. $5,750 per acre bonus and 20% royalty, no strings attached. Tens of thousands of acres in Bradford, Susquehanna and Wyoming Counties were signed by Chesapeake and Talisman. That was in September 2009. To this day non Friendsville Group landowners are signing for the same deal.
I'm not against lawyers making an honest fee for reviewing and/or negotiating leases but really the amounts being thrown around on this forum blow me away.

Permalink Reply by Shawn Kaswlec on September 22, 2010 at 9:15am

Pigs get fat and Hogs get slaughtered. good luck

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• Next ›
• Page