Replies to This Discussion

Permalink Reply by Sam Douglass on November 4, 2012 at 10:29pm

Any thought that there is fairness involved when Producers approach a Landowner is pure satire - I hope everyone gets the subtle joke.

Permalink Reply by 2z248p19vqnh9 on January 22, 2013 at 10:30pm

Behind a jest is a bit of truth, eh? I enjoy your wisdom that you impart, sir. For 'those who have eyes to see'...this is the biggest roller coaster that many persons will EVER get to roll on in their ENTIRE LIVES! My dad said this to me - when we were participating in the crazy computer stock ride in the 90's - that I may only 'see' something like this once, MAYBE TWICE, 'in my lifetime'. Now, only, that it is 'done & gone' - do I 'understand'! Ha-ha! He also used to say, "FOLLOW THE MONEY." and "He who has the gold makes the rules."...then this is one of my favorites..."A live nickel is worth more than a dead quarter." (insight from his broker...). Everyone really needs to understand, more than anything - that once the landman is gone & 'the paper's dirty' (when the 'DEAL'S' been 'signed & deal done'...) that they just 'move on to the NEXT SHOW'! - Game over - do not pass go, do not 'collect $200 '.... Have you read THE PRIZE? I've trundled through about 1/2 way...long book! Also read Arm N. Hammer (OXY) & Rockafeller's biographies. It's really a very scary world with everything that's happening for people today, it IS.

I DID sign with REXX in Butler Co. - but It was a 'non-surface use' agreement...NOW I'm being approached by MARKWEST concerning a PIPELINE for a WELL that's on property - on farm right next to me! (BUT somehow...I'm NOT in the '640 acre' block ...!). BOY, is THAT tough. I agree with what you've stated - no one is going to 'protect yourself' more than YOU! It's always best to 'know what you know' & do your best to understand. 'Line of Capture'? Read an interesting statement by Texans: "Wells are temporary, but PIPELINES are permanent." Hmm. Interesting thought.... IF I didn't sign a 'non-surface use' agreement - I wouldn't even be approached for 'pipelines'...but, I'm NOT that smart. IF I was - I would have had something in REXX to the effect of - I am to be included in any 'block' of drilling royalty reimbursement IF any well is drilled within 'x' feet of any of this properties boundaries...*something to that effect. I'm really NOT that smart after all...makes me sad. I try.

Life IS tough.... *Life is but a dream...B'ding, B'ding - my dad used to sweetly sing with a smile! - Good day to you - GG

Permalink Reply by 2z248p19vqnh9 on January 22, 2013 at 11:08pm

One must recall the tale of the Father & Son...taking the Donkey to market to be sold. How They were BOTH riding the donkey - villagers of the town commented saying - "Look at that poor donkey - how he has to be burdened by TWO people on his back." - then both father & son got OFF of the donkey's back. Coming to the next town - they heard whispers of 'oh, for shame...they have a donkey, but the son looks tired - HE should be riding!" - hence, they stopped & the young one climbed aboard the donkey's back. Passing a group of merchants - they did not make an offer on the donkey, but expressed the thought that it was wrong for the elder man to walk while such a strong youth rode in ease on the donkey's back. Passing through one final town, "For shame, For shame" filled their ears. WHAT could be the matter NOW?...The people of THIS town thought that it was shameful for...WHATEVER! ENOUGH! - THE 'land' - it's 'YOUR DONKEY' to treat well & cherish. Do you best every day. ***Hindsight is 20/20!***

***What has changed, what has 'stayed the same'?***...The only thing that people can do is their best -each & every day - in EVERY WAY.

**You 'are what you are when NO ONE is looking' & you are what you are when EVERYONE is looking!**

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Just do your best. YES - there will ALWAYS BE a 'better deal' out there EVERY DAY. Here's the deal...try to protect yourself best you can in any & every situation that is dealt you. TRY to protect yourself best as you possibly can - learn, know, and grow. My dad always said, "There's a deal out there - every day." Sometimes, you'll 'miss' the deal, sometimes a 'better deal' will be waiting for you...and yes, sometimes - the 'best deal' will 'pass you by'. It IS hard to 'know'...it'd tough to 'call the high' as well as 'the low'...but sometimes - it's 'all about the ride'. Sure, you aren't going to 'call the ball' perfect EVERY TIME...BUT as long as you PARTICIPATE - and get a 'piece of the action' makes all the difference.

This is an interesting time to be in! It's really, really EXCITING, SCARRY, & UNIQUE! It's almost as exciting as when Drake's Well was successful in THIS AREA back on Aug. 27, 1859! THIS area is unique - it's been 'drilled', BUT the well drilling technology is NOT what it now is TODAY! When I visited Drake's Well for their 150th anniversary back in 2009...picked up info. on this area's 'drilling history' - and thought to myself this: You know what - there's STILL lots of gas here! SO RIGHT!!! THEY were first drilling for 'snake oil salesman' MEDICINAL qualities of OIL...and the first driller (Uncle Billy) was a SALT DRILLER!!! - they HAD 'hit oil'...when 'oil' would infiltrate a 'salt well' - it was then TAINTED, ruined, & unusable! - Isn't that AMAZING?! It's funny - Rockafeller's father was a 'travelling SNAKEOIL SALESMAN'!...and then there's Arm N. Hammer (OXY - Occidental Petroleum). HE was the first person to 'think up' such a CRAZY NOTION that there was 'gas/oil' trapped in the shale formations - in fact, I believe one of OXY's 'branch Chemical Co.'s' STILL MANUFACTURE many of the 'chemicals' used in FRACKING...but you can try to look into that more for yourself. It's really interesting reading & learning - and now SEEING things 'come around' again. 

Old Saying: ***The more things change - the more they 'stay the same'.*** God knows - I don't! Try not to 'beat yourself up' mentally - life is hard enough. Hey - have fun with this! If you have land to 'be concerned about'...then you're blessed. Pray about it - it's GOD's country. We are just 'temporary' ants crawling about...enjoy the ride. SMILE, take a deep breath...relax AND be wise. God bless us all. I know this...'this Is' our 'Eden' - our 'Saudi Arabia'...our 'jewel'. - to 'make or break'.

Those 'G & O' individuals are getting 'their paycheck' - they have families, too. 

***IT TAKES THE CASH TO PAY THE RENT.*** - follow the money, FOLLOW the $$$!!! Rest & do your best! - GG

Permalink Reply by Bob Jenness on May 9, 2013 at 6:14am

There was a discussion on the main Crawford County thread on the subject of 

"sticking it to the gas companies" vs "let's be satisfied with "fair and honest business dealings"

, and I'm attempting to move that discussion here to work on some of the issues.  SLDouglass posted the following...

"I suggest that "sticking it to the gas companies", let's be satisfied with "fair and honest business dealings" are not useful phrases.

Even those who have been at this stuff for years have difficulty keeping up with the sophistication of the producers who are familiar with all the sticking tricks after years of experience. I think the producers and their landmen are honest, with rare exceptions - but do not expect the whole truth. They will let you believe what you want to believe.

Producers are not bad or good.

Corporations are in business to make money, as much as possible for the owners. Landmen are recognized for their ability to bring in deals at the lowest possible price and on the best terms possible. Initial offers are made on the lowest terms that find acceptance by landowners. Then the landman goes away and leaves the landowner hanging - until s/he comes back in a later wave and offers more.

IT IS NOT ABOUT FAIR DEALS. EACH PARTY TO THE NEGOTIATION IS TRYING TO GET THE BEST DEAL THOUGHT TO BE POSSIBLE UNDER THE CIRCUMSTANCES.

Sooner or later the producers will want and NEED the properties. Can landowners wait?"

so...

Sam, and all landowner group representatives,

As you would probably expect by now, I have some real issues with those who would tell me that as a Landowner in the USA, I have no right to an EXPECTATION of fair and honest business dealing with any and all American Corporations. 

First, on the expectation of fairness, here in the USA, we're blessed with a constitutional guarantee of the rule of law in both business and personal matters. The simple fact that landowners actually own and can lease the rights to drill for O&G is a blessing that follows directly from that, and it's value and significance in this matter is easily the equal of our First and Second amendment constitutional protections. We wouldn't even be thinking about a FAIR lease without this blessing, and many land”owners” in other parts of the world are still suffering from the accumulated unfariness over the last hundred years of “business” done without this fundamental expectation. Further, we have many legal guarantees against fraud and other similar criminal behaviors in business transactions. The heritage of these “incentives” to fair and honest business practice can be traced back through the entire history of our legal system and the British system from which it evolved.

Second, Fairness almost always can be evaluated quite precisely using modern math (including statistical), science, and technology tools, if the “judge” doing the evaluation is actually fair and honest. If we look at Exxon Valdez, Deepwater Horizon, and the treatment of old-time Bakken landowners, history, math, and simple human intuition show some deep cracks in the fundamental fariness and honesty of the practices that drove them. Some of those cracks go to criminal depth, but some simply constitute an accumulation of unfair and dishonest business practice that's either not strictly illegal, or 

“too expensive to prosecute at the time”. Those latter practical considerations don't change the level of fairness/honesty, do they? Neither do they change the inevitability of catastrophic consequences in each case. The bottom line of this item is that there's a statistical correlation, and perhaps even a logical mandate that individuals and corporations who practice unfair and dishonest business practices eventually produce some unintended catastrophic results, then they “get religion”, straighten up, and fly right for a long time, albeit at considerable cost to society and to their operations.

You may notice that this chain of actions and consequences is, right now, incomplete with respect to the landowner abuse cases. You may also not be aware that as landowners, one of the key reasons we join groups is to protect ourselves from such abuse. We may fully understand that it will be very hard to find and know a FAIR lease, but we have a compelling expectation that our groups will actively and agressively do all possible diligence to help us get there. We also understand that the more we know, the easier that daunting task will be, and we have a similar expectation that our groups will help us to learn enough to get there. We don't expect that our groups will advise us to “abandon all hope of a fair lease because all potential O&G partners and the market are intrinsically unfair” We fully expect that a careful analysis will show that 50% of such prospective partners are below average in leasing fairness and honesty, and that some small set may be so egregious that we should avoid any business with them, but we must refuse to just look at a lease as the most gentle rape we can find in a dishonest and unfair world.

Here's just one issue we could use some information on:

A few years back, some energy companies did big drilling programs in Crawford County. They leased a lot of land, and they did some vertical drilling and produced some gas and oil. They now hold some land by production that, taken as a whole is not spectacular, and have gerrymandered the unleased land and thus reduced its value to landowners. The key fairness/honesty question in this is DID THEY PLAN FUTURE HORIZONTAL DRILLING AT THAT TIME USING TECHNOLOGY KNOWLEDGE WITHHELD FROM LANDOWNERS? That would have been consistent with the “do not expect the whole truth” admonition above, but shouldn't we agree that it would also have been unfair and dishonest, and borderline fraudulent? Shouldn't we expect our groups to do this research and statistical math and make the result public for the promotion of a fair market in Crawford County? The study might, of course, show that they were as innocent as we were, but at least it would constitute more knowledge than we have now. If it were done by our diligent representatives.

SO, C'MON GROUPS, GROW A PAIR AND HELP US MAKE A FAIR MARKET IN CRAWFORD COUNTY, PLEASE...

Permalink Reply by Bob Jenness on May 9, 2013 at 6:54am

So we're all still in the land speculation business, eh?  At least the market for land seems to be a fair market, even if the players are just as shifty as those allegedly in the E&D business.

Permalink Reply by Bob Jenness on May 9, 2013 at 6:35am

And here's another interesting question of fairness:

Pick a date known to be just before horizontal drilling knowledge was first published to the industry. Look at the historical record in a county overlying the Bakken fairway, to determine who owned the land and what the fair market value of the land was then. Estimate the O&G value of the land. Now look at the ownership, land and O&G value at the present. Compute the portion of the asset values that stayed in the county. Compute the portion of the current asset value that transferred to the O&G companies. Compare it to the (generally regarded as fair) 12.5% share that the industry has agreed should be the landowners net benefit from O&G development. Use the above facts to answer the question “Did the market in the Bakken behave in a manner consistent with a fair market (e.g. real estate in a non O&G area, the DJIA, etc.)?  Or did it behave in a manner that deprived landowners of the O&G value to the benefit of land speculation interests?

I know this is a complicated question, but I'm hoping somebody here has maybe done some if it already - it should be history 101 for any landowner group...

Permalink Reply by Samuel J. Orr on May 9, 2013 at 9:25am

Why don't you just forget about fairness?! It's Economics 101 from beginning to end. Supply and Demand! Try reading a basic economics text. If you don't want to lease for what the prevailing market price is, then don't lease. That is your choice. To lease or not to lease, that is the question. The O&G companies will try to lease your land as cheaply as possible. That is what they should do and that is their obligation to their shareholders. Your job is to lease for the best price you can get! Enough said...but quit talking about "fairness"!

Permalink Reply by Bob Jenness on May 9, 2013 at 9:41am

Even Economics 101 assumes a free economy and a FAIR MARKET.  Otherwise the "market price" WILL be rigged to steal your assets and transfer them to someone else.  If this were working according to Economics 101, then Bakken landowners would not have been consistently raped til they have no assets left to benefit from the boom that finally arrived.

Permalink Reply by 2z248p19vqnh9 on May 10, 2013 at 1:16am

Sam Orr - your breakdown of the 'basic, common sense' Economics 101 is good...but where it does not 'fit' in the structure of these 'nebulous' G/O leases - concerning LANDOWNERS is this...that we're dealing with the average, everyday Joe, his land...and the 'big bad wolf'.

Red-ridding hood IS NOT going to be safe with the 'intelligent game-play' of legal defense that the G/O Co.'s have in their quiver. No simpler 'facts' than that, m'friend - is there?...in all honesty?...

In a way, the landowner DOES have a 'fair gripe' concerning 'FAIRNESS' - THEY are being 'preyed upon' left & right - even IF it does seem like 'fair pickins' - IS it? Hmmm.... Interesting times in these here America's now, eh? I'd say.

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Yes - the LANDOWNER should be fearful when the big, bad wolf coming knocking on their door. THEY have the POWER, KNOWLEDGE, & $$$ to 'spin one's head round' & mix-up quicker than quick THAT even if you (and your 'legal counsel'...) DO your darndest to 'dot the i's & cross the t's' you & I both know that there's NO 'lock, stock, & barrel' G/O landlease agreement (unless it's in the G/O Co.'s best interest...). THAT's just the 'way it is'.

SO with that said - YES, 'Economics 101' (IF there was a 'G/O ECONOMICS 101'...THAT would be an interesting study - ***IF you could have a book comprised of GOOD & BAD examples of G/O Leases - that would be very beneficial...but EVEN THEN there would be the things that you get & the things that you miss....

Sam - in mentioning that very thought - do YOU have any good advice on material to read that would give insight into what I just mentioned?> a 'G/O Landlease Economics 101' tutorial?

Samuel - any *Gas & Oil Lease structure Formats - things to strive for & things to avoid - for Dummies* books out there? - for people like myself? or anyone out there needing this manner of insight?... THAT would give 'fairness'.

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HERE is the 'clash' that is NOT such a 'simplified' Economics 101 lesson concerning the *G/O leases...

The G/O Co.'s come AT the landowner 'loaded for bear' (using Elephant guns & a 'smooth, slick-talkin' salesman...+++). They DO 'want' what they've got - YES they DO...and DON'T let ANYONE candy-coat that for you - any which way. YES - you can get 'good results' and STiLL get 'gotcha'd!...but HERE is the good thing to remember - they'll huff, and they'll puff & they'll BLOW ON YOUR HOUSE...but YOU hold the ULTIMATE deck of cards. Be wise (*G/O Economics 101*). Separate the 'wheat from the chaff' best you can - you, the 'little landowner' ARE honestly dealing with 'big boy' CORPORATE PLANS here - THAT is NOT addressed in Economics 101. YOU are just a 'statistic' waiting to happen....

SO 'fair' is a word (in this case...) left to a 'fair' position - in & of itself. It is an interesting chess game, indeed. 'Landowners' are NOT in the BOARDROOMS hearing in depth strategies...hence it IS like a 'chess master' playing against a 7 year old (+/-)...how's THAT for 'fairness' in relation to 'Economics 101' reasoning (rationality?...rational - good word, but for WHOM?...). *Brer Rabbit?

As one light lights another, nor grows less - so nobleness enkindles nobleness. This is simply a matter of 'corporate' vs. 'common' - unfortunately for the 'Tar-Baby' (landowner?...) ... ver-ry interesting, indeed. G/O Corporate boardroom 'economics 101'...could be VERY interesting!

Permalink Reply by Bob Jenness on May 9, 2013 at 9:45am

And this round goes to fairness... (with full acknowledgement to NWPALG, who published this compendium of public domain information in our newsletter this week)

Legal News

A judge in Washington County issued a landmark decision on March 20 that limits corporate privacy. The decision by the judge unseals a private settlement between energy companies and a family that claimed their health was harmed by nearby drilling. The claim was filed against Range Resources, MarkWest Energy Partners, and Williams Gas/Laural Mountain Midstream Partners.

The decision to seal the settlement was challenged by the Pittsburgh Post-Gazette and the Washington Observer-Reporter. The Post-Gazette reports that the unsealed records show the defendants agreed to pay the family $750,000.

“In a 32-page opinion, President Judge Debbie O'Dell-Seneca found that the presumption of openness in the court system must trump the interest of the companies to keep the record sealed,” reported the Post-Gazette.

”She wrote that the defendants acknowledged the presumption of openness in the courts and failed to present any evidence at the January hearing showing that any harm would befall them if the settlement agreement became public.

“Further, Judge O'Dell-Seneca found that businesses do not have the same right to privacy as individuals.

“ ‘Whether a right of privacy for businesses exists within the penumbral rights of Pennsylvania's constitution is a matter of first impression,’ the judge wrote. ‘It does not.’

The defendants claimed they had the right to privacy to protect the record from being unsealed.

”But Judge O'Dell-Seneca wrote that Article I of the state Constitution, which reads, ‘All men are born equally free and independent," cannot apply to them.’ “

Range Resources said it "does not have concerns with the judge's decision, which we greatly respect, to make the court file public. This information combined with the vast public data accessible through the DEP's extensive investigations should provide the public with even greater clarity that shale gas is being developed safely and responsibly."

Does anybody want to try to defend the duplicity of fighting to maintain confidentiality, then praising their own fairness in complying with the court order here?  If there were a free and fair market, there'd be some competitors with better records to do business with.  If our groups don't level this market, we'll all have to cave in and support this crap when/if we ever find someone who wants to help us change our business models from land speculation to energy E&D.

Permalink Reply by sldouglass on May 9, 2013 at 7:05pm

To Samuel Orr's comment about "fairness" I say AMEN!
Words suggesting that there is any even bargaining between producers rich in history, knowledge and financial resources and the cash poor landowners is untenable.
The landowner's only choice is to band together with others, as many as possible to pool knowledge and gain strength.
By the way, I do not think there is much reason to accuse producers and their reps of being dishonest. That would be a problem for them even if they were so inclined.
But do not expect to get the whole story from the landman - the whole truth is not likely to be told. And landowners are not be dissuaded from believing what they want to believe - even when it is likely to be wrong.

Permalink Reply by sldouglass on May 9, 2013 at 7:05pm

To Samuel Orr's comment about "fairness" I say AMEN!
Words suggesting that there is any even bargaining between producers rich in history, knowledge and financial resources and the cash poor landowners is untenable.
The landowner's only choice is to band together with others, as many as possible to pool knowledge and gain strength.
By the way, I do not think there is much reason to accuse producers and their reps of being dishonest. That would be a problem for them even if they were so inclined.
But do not expect to get the whole story from the landman - the whole truth is not likely to be told. And landowners are not be dissuaded from believing what they want to believe - even when it is likely to be wrong.

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