Landowner Groups? Thinking about joining one.

Am considering joining a landowner group in western Pa headed by CX Energy. Any input, testimonials, etc.?

Thanks, Jeff.

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Permalink Reply by George Mac Pherson on December 25, 2012 at 4:08am

There are many Gas and Oil Company's out there leasing if u join a landowners group u than in turn cant just sign a lease w one of them if u wanted to if i were u i would just wait if a company is interested in leasing ur land for drilling they will come to u

Permalink Reply by jeff on December 25, 2012 at 6:22am

cc,

Yes, they are tied in w/ Co-Exprise, and I know about the 4 Cty. group. The attorneys they are joined w/ are the same as I had for my shallow well lease. The Idea is to make our properties more appealling once in a large group (20k+ ac.), thus get a better deal. The committment is for 6 months renewable unless given 30 days notice. Their fee is 6% of bonus payment payable when the landowners get paid. Signing w/ the selected gas co. not required. I have also seen a similar offer w/ only a 4.5% fee. Hoping someone who has done a deal thru CX to respond w/ pros  &/or cons. I know for sure I dont want chx or halcon.

J.

Permalink Reply by Jack Straw on December 25, 2012 at 7:54am

Jeff,

Should the extent of remuneration to the Landowner Group be limited to a fixed percentage of the sign-on bonus, it seems that the interests of the Landowner Group and the Landowner would likely be in alignment. A caution would be that the highest sign-on bonus would not necessarily be attached to the best lease. The sign-on bonus is the appetizer, what happens afterwards is the real meal.

In the past, I have heard of arrangements that also result in a portion of any future royalties going to the group that markets the lease. This practice greatly troubles me, as these individuals will be sucking off of the properties (in leach like fashion) essentially forever. I have seen one arrangement in which all royalties first go to the group that marketed the lease, then periodically are disbursed by them to the Landowner (after the marketing group has removed their cut).

An arrangement that I am a bit ambivalent about is one in which the group that markets the lease receives an Over-riding Royalty Interest (ORRI) directly from the O&G Company. In that case, the group that markets the lease is separately negotiating for what is in their best interests; perhaps in a fashion that does not necessarily align with the best interests of the Landowner.

For an individual, the assistance of a knowledgeable middle-man could well prove of value – so long as their compensation is reasonable and finite.

 

Before signing any agreement with a Landowner Group, I would suggest that you are given (in writing) a detailed description as to exactly how they will be compensated by any and all entities (do they obtain additional consideration/compensation from the O&G Company?). Additionally, I would separately spend the several hundreds of dollars required to have a disinterested qualified Attorney (who represents you, and you alone) review all documents – prior to your signing them. You only have one chance to get it right.

 

All IMHO, with nothing above substituting for advice from a qualified Attorney.

Good luck, and please let us know what you learn, and how matters turn out.

 

JS

Permalink Reply by Mtn Jack on December 25, 2012 at 11:34am
Jeff we worked with co ex on there first ever land group.We were happy with the job they did. We went to all landowner meetings that they held in beaver and Mt Jackson. Our questions were answered to our satisfaction and we got our money just as promised.I believe we gave them 150.00 per acre which came from CHk and not off of our bonus money if that makes any sense.I have a bit of chemotherapy brain as I just finished a bone marrow transplant. If you have any more ???? Just ask as I can look things up for you I have plenty of time on my hands.Buy the way we are in a unit in industry pa with one well drilled and a permit issued for the second one of a 6 hole pad.We are aprox 850 feet from the pad,and are now in the process of Dealing with 2 pipeline companies that want to run lines from well to well, and also a transportatin Line from butler county to vanport on the Ohio river.I think I have some bargaining power as our farm is in the way. We have six pads within a short distance of the farm.You might also look up mercer county pa on this site as they are having some trouble with companys cherry picking leases this is with the same co x people.Best of luck with what ever you do.Mtn Jack
Permalink Reply by jeff on December 25, 2012 at 4:13pm

MJ,

Thanx for your input. Are you permitted to indulge any of the particulars of your lease and/or group?

Jeff.

Permalink Reply by jeff on December 25, 2012 at 4:08pm

Thanx JS, That is both encouraging and informative. I do know of another attorney whom I can consult with - great idea. Part of what I like about the proposed agreement is each lease can be tweeked to some extent. By the way, what does IMHO mean?

Looking for a real meal,

Jeff.

Permalink Reply by Jack Straw on December 25, 2012 at 5:31pm

RE: "what does IMHO mean?"

In my humble opinion.

All I, or most anyone else on this board offer is an opinion.

It is up to the reader to decide whether that anonymous opinion is worth anything.

 

JS

Permalink Reply by jeff on December 26, 2012 at 2:30am

Oh yeah! I knew that (not!!). Thanx, and is that your pet coyote?

Jeff.

Permalink Reply by ShaleAdvice (Steven C. Townsend) on December 27, 2012 at 8:08am

It has been our experience with our clients that landowner groups sound good in theory, but they do not benefit the landowner as promised.  We do not recommend landowner groups for many reasons and there are hundreds of landowners who have signed that will agree.  Be careful and don't be fooled by the hype you may hear at the town hall meetings or with the fancy mailings.

Permalink Reply by elliemae82 on December 27, 2012 at 1:22pm

Do you have that opinion about all land groups? I want to sign up with Buckeye Mineral but haven't quite been convinced that's the right thing to do.  

Permalink Reply by elliemae82 on December 29, 2012 at 5:31am

Fang, Thank-you for your reply. I have read many of your posts and could not agree with you more. I have just under 70 acres in New Lyme Township.

I just can't see signing up with a Land group before knowing some terms of the lease. Everyone I talk to says I'm going to be left behind if I don't get in a group. I think I'd rather take my chances and make sure what I'm signing up for is what my family and future family will be happy with. I think many people are only seeing $$$ and not realizing what they're getting into. Thanks again!

Permalink Reply by Mark Dolezal on December 31, 2012 at 1:36am

elliemae,

Join a landowners group in your area that does not charge you a commission from your signing bonus. A group where the leadership has their own property involved as well as yours so you are not sold out for a quick profit. If the leadership has confidence in the job they are doing allowing members to opt out wont be a big deal as very few will leave. Exciting times ahead for 2013, Happy New Year ! 

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