The Brinker Hilcorp Amendment- Five Great Reasons I support it

The Brinker Hilcorp Amendment – Five Great Reasons I support it.

I am NOT an Attorney, and I am not attempting to offer legal advice.  However I am offering this post as a concerned member of the Brinker community.

I am a Brinker Landowner who signed the amendment.

There has been a lot of comment about this amendment.  I wish many more folks would have come out to hear Attorney Stuart Strasfeld’s commentary of this amendment last month, which was open to the public.  He did not give a “glass is all the way empty” approach, nor was it a “glass overflowing” approach.  He pointed out many aspects therein without neglecting the positives.

I would like to take the time to point out some of the beneficial positives since some folks might not have read the amendment as it currently reads at the Hilcorp office.  Some rely on their neighbors to tell them about it who for some reason leave out the positives.

 Here are just five of many positive benefits:

  1.  A 15% royalty opportunity for oil and gas. This, despite the fact there are several interests in the oil and gas.
  2. Strong water protection testing and replacement, above and beyond that of many other modern leases.
  3. Numerous surface property protections established above and beyond many other modern leases.
  4. Shut in Royalties paid if you are part of a producing well that is for some reason shut-in.
  5. Taxation mitigation in-line with many other modern leases.
  6. Added 7/3/13: Limit any unfavorable potential threats from legislatures/ government (see post reply on page 3.

One of the latest looming “negatives” described by some people having old Brinker Leases, and others is that with the amendment the lease will be forever.  According to my old Brinker lease, my lease already goes on “forever”- so long as the described conditions for gas storage are met by the lessee.  The Hilcorp amendment could then “forever” add modern property protections, and royalty improvement.

 

While my property is already under contractual lease, and apparently was when I bought it, I accepted the amendment as a good middle ground approach that includes significant improvements and consideration.

Royalty enhancement could possibly positively affect the value of my property, as compared to selling my property if it were to be stuck with one of the $200 gas royalties as described in some of the old Brinker Leases, along with few property protections.

So, what is there to lose?  I do not know, but it might depend on each property owners’ recognition as to what there is to gain.

I do not know how long the amendment is going to be available.  Do you?

I can only imagine that my chances of being in a drilling unit go up by supporting the amendment.  AND, possibly gain maximum drilling and community wealth potential while engineering for well unit planning is underway.

In closing, some feel it is a good idea to start a neighbor to neighbor campaign to influence people to go against the amendment.  

If you are interested in being included in a drilling unit then you might instead want to start a proactive neighbor to neighbor campaign in support of the amendment to avoid what I will call “drilling unit blockade”, or maybe even no drilling unit at all (who knows?).

And I am always encouraged to tell people to see an attorney to help them understand the legal document.  Again- I am NOT an attorney.  I also encourage folks to talk to industry experts to learn and understand the oil and gas industry, and perhaps consult an economist who can also help folks understand the science of oil and gas commodity and compensation.  Perspective is always important.

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Replies to This Discussion

Permalink Reply by Finnbear on February 23, 2013 at 4:20pm

There always will be.

You can lead a horse to water...

Permalink Reply by hunter4440 on July 1, 2013 at 3:57am

Do you or anyone have a map that delineates the Brinker field? I own minerals about 1 mile south of State Route 62 along Georgetown Road in Butler Township. I am under a very storage lease for which I receive a few dollars per year with a gas royalty clause of $200.00 per year.. If I am in the Brinker field how do I join the class action group? Thank you ...

Permalink Reply by dr j on July 1, 2013 at 5:11am
Hunter,
Based on that location, that property would not be within the Brinker Storage Field. Your lease should be able to give you an idea who is storing gas in that area.
Permalink Reply by Inchworm antenna on July 1, 2013 at 6:04am

If you are a proponent of suing, you might want to start with knowing who it is you plan to sue.

It's hard to tell exactly but that location but I think it seems way too far away to be in Brinker.  You could call Columbia Gas to see if your property is in Brinker or it's buffer zone.   Columbia operates the Brinker field.   Who pays you the storage check?  I've heard there is small storage field in NW Columbiana County, but do not see it listed on my national storage field list so I don't know what to tell you, so all that could just be a rumor.  You might be able to call the salem ODNR Div of Mineral resources office in Salem to see if they have any info on a storage field in NW Columbiana County, and who might operate it.

Permalink Reply by Inchworm antenna on July 3, 2013 at 4:56pm

Reason #6:

Limit possible potential unfavorable threats from legislatures.  Here's what they get to deal with in Pennsylvania: from 7/3/13 post on GMS, posted by Robert Goodfellow......................

Landowners angered over bill giving drillers power to combine leases

July 2, 2013

By Marie Cusick, for StateImpact Pa.

An organization representing Pennsylvania's mineral owners is angered over a bill that sailed through the state legislature over the weekend. It now awaits Governor Corbett's signature.

The Pennsylvania chapter of the National Association of Royalty Owners (NARO-PA) says Senate Bill 259 allows gas companies to combine, or "pool" leases.

They argue it could adversely impact some people who signed leases years ago and didn't anticipate modern shale gas drilling.

Vertical or "conventional" drilling techniques worked more like, "you stick a straw in and suck it all out," explains NARO-PA Vice President Trevor Walczak.

Newer horizontal, or "unconventional" drilling techniques don't just go straight down — they move sideways. So drillers can extract oil and gas from under multiple land parcels at the same time. It's often more efficient for companies to pool the parcels together.

The legislation would give companies the ability to combine parcels for horizontal drilling, unless it's explicitly prohibited in the lease.

The bill was introduced by Senator Gene Yaw (R- Lycoming). His district includes some of the most drilled-on areas in Pennsylvania.

The legislation was originally promoted as an effort to bring more transparency to the deductions companies take out of royalty payments. Complaints over those deductions lead to a Senate hearing on the issue last week.

Yaw disagrees with NARO's interpretation of the bill.

"This is not pooling," he says. "I don't understand what their concern is."

Yaw says the bill only allows gas companies that have already leased a contiguous piece of land to go underneath the parcels– minimizing the disturbance on the surface.

"We're giving the gas company the right to make the decision," he says, "They don't have to go on the property and drill, but they could go under it horizontally. Actually, it's an environmental piece of legislation because we're cutting down the number of well pads."

Governor Corbett has said publicly he would not sign a bill containing language related to "forced pooling" — which would give drillers the right to take gas from a property owner who has not signed a lease. This bill only allows companies to combine existing leases.

But Jackie Root, NARO-PA president, says the bill's language still leaves landowners at a disadvantage– hindering their ability to renegotiate old leases.

"[The legislature] just said: 'Here, oil and gas industry. You can pool, and you can make the rules," she says.

Walczak stresses NARO-PA supports the gas industry, but wants to make sure its business practices are fair to landowners.

"The Republican caucus doesn't understand the difference between supporting the industry and holding the industry in check," he says.

For the article use this link --> http://www.newsworks.org/index.php/component/flexicontent/item/5682...

Permalink Reply by Inchworm antenna on July 10, 2013 at 5:13am

To the disbelief of many in PA, Their Governor just signed the bill referenced in the above article Senate Bill 259, into law.  It's no mystery that Oil and Gas companies do lobby for their own benefit, advantage, and to create efficiency towards addressing issues with development.  I am not an attorney so I don't know how PA SB 259 will effect landowners with old leases in PA, or even if similar legislation would be Constitutional in Ohio, but one could read the article above to maybe get an idea.  I do not know if same or similar legislation has been introduced here in Ohio.  Nonetheless, old lease do exist in Ohio, and I would not put it past the O&G lobby to encourage Ohio legislatures to continue to introduce legislation that aids in efficient development of resources. 

There are sometimes advantages to holding out in leasing minerals, and then there can also sometimes be consequences; either way.  I think it is good for all landowners to consider all all possible advantages/ benefits, and all possible disadvantages/ consequences.  Oftentimes IMO as with any investment or business venture, the greatest benefit versus consequences are identified in hind-sight.  So be prudent, and consider all possibilities.

As an educational piece, I like the blog written by Oil and Gas Attorney Doug Clark, Esq. from Pennsylvania related to amending leases.  I re-posted his educational Blog as a topic in our Columbiana County discussion several weeks back.  I think he does a good job in laying out certain issues that might be pertinent to amending leases here in Ohio.  I think in comparison, a lot of the issues he addresses, and identifies in his blog appear to have been positively addressed in the Brinker Amendment.

Permalink Reply by hunter4440 on July 4, 2013 at 2:07am

Thank you for the information. My checks do come from Columbia Gas and have learned that I fall within a 1 mile buffer zone. 

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