Replies to This Discussion

Permalink Reply by Bob on July 22, 2013 at 12:43pm

Hi , I own 40 acres in Concord TWP, and have been contacted by US Energy back in April. They want to drill down to the speechley which is produceing oil in the Hooker area. They want my shallow right down to the top of the tully limestone. Their lease is for 50 dollars an acre and 12.5%. If you go to Butlers county public web access http://www.co.butler.pa.us/recorder/Navigate.asp?MainMenu.x=55&... and click on simple search. Type in us energy in the organization and hit detail data. it will bring up all the recorded deeds . Go to Gregory Gold and read the deed, he leased from the surface down to 1000 ft below the speechley. I was shown a lease that shell allowed the landowner to reserve the shallow rights and still leased the deep . It allowed the landowner to sign 2 leases getting paid for each. What I don't understand is the Fred Schrecengost lease where it state under royalities, that the landowner gets 12.5% and the assignor gets 27.5%. I'm not a lawyer, but it sounds like the landowner is getting the short end. Thats why I have a lawyer !!  If your read through the leases you will see where some are leased from heaven to hell. Make sure you get with a good lawyer and get depth restrictions. Although when I let us energy know I had a lawyer I was working with it was hard to get in contact with them. My lawyer told me not to walk away from this deal.......RUN!!!

Bob A.

Permalink Reply by nitr01 on July 30, 2013 at 3:52am

12.5% is the PA minimum that they can pay you.  I also got the same offer of $50 and 12.5.  From what I'm hearing from the neighbors this is obviously their starting point (as if it could get lower).  My offer also was specific to state the range of depth they were interested in and states several places that it still entitles me to my Marcellus and lower.  I still need to have it reviewed by my lawyer but will follow-up here after I talk to him.  Does anyone have any good info from any experience with the shallow rights?

Permalink Reply by nitr01 on August 6, 2013 at 12:36pm

Does anyone have a good recommendation for a counter for their 12.5% and $50 an acre delayed rental payment?

Permalink Reply by FairMktValue on August 7, 2013 at 3:08am

IMHO just say NO.

12.5 and 50 delayed payment sound like chump change to me. I would just wait on a deep driller to get a decent offer. Ya your still keeping the Marcellus and lower but the Burkett and the Rhinestreet have a lot of value longer term for a horizontal driller.

A shallow lease would have to be absolutely airtight and that would scare me.

Just my 2 cents.

Permalink Reply by nitr01 on August 7, 2013 at 3:50am

The lease scares you or the actual shallow well itself?  The lease terms are specific to the shallow area and allow other companies to lease the lower depths.

Permalink Reply by FairMktValue on August 7, 2013 at 8:50am

"My offer also was specific to state the range of depth they were interested in and states several places that it still entitles me to my Marcellus and lower."

I am not really sure what actually is considered a "shallow" lease. Down to the Marcellus at approx 5000' does not seem shallow to me.

It would seem to me that you would be giving away the Burkett and The Rhinestreet  which start somewhere around 4500' still not "shallow" in my opinion.

I am certainly not a geologist so my 2 cents may be worth exactly that.

Shallow wells do not produce near as much as horizontal fraced ones but enough apparently to keep the drillers happy as long as they are paying very little to the landowner and if they have locked up some deep strata that they can flip to the horizontals. At this point in time I can see no reason to sign a "shallow" lease.

I could be 100% wrong but it just doesn't "feel" right to me.

Permalink Reply by Geo5 on August 7, 2013 at 9:01am

I agree with a lot of what fairmktvalue says.  People in the old days would sign leases with drillers and figure they would get enough out of the well to pay the taxes on the land.  If your looking at getting rich off of the shallow rights, I wouldn't waste your time.  I believe your main focus should be on the deep rights.  if I had to do it over again, I would get a deep lease first, and try and keep the shallow rights to lease later, since the deep rights are where the real money is.  I gave shell all the rights to all layers, got $3000 per acre and have no regrets.

Permalink Reply by Oily Gasman on August 8, 2013 at 2:31pm

Tim

When have you ever heard of someone drilling into the Burket/Geneseo and Rhinestreet Shales in the Butler area? There are a multitude of layers from the surface to the top of the Tully Limestone but the benefits of drilling into them just to say you can, do not outway the costs to the gas company. They are searching for a marketable quantity of oil or gas. Where is your property anyway. There are no properties listed in Butler County to you..  If you lease to the top of the Tully then lease below that for a deep lease; the deep company has to drill at least 1000' feet below the top of the Tully. "That's the Marcellus bud" They big boys never said it had to be a deep well. The top of the Tully in the Hooker area should be about 4200'.

Permalink Reply by robert g olsavicky II on August 7, 2013 at 4:22pm

I totally agree with Fairmarket and geo5.  I wouldn't touch a shallow lease at this time.  With stacking and now all the new layers and some above Marcellus (i.e. Darvonian). I wouldn't trust a shallow lease to not screw up some newly discovered layer.  I got $3,250 an acre and 18% no production costs with SWEPI/SHELL.  I used S.R. Law and couldn't be happier.  I'm also part of the Caporali Pad and after 90+ banking days the sign up money showed up in my account.

Permalink Reply by robert g olsavicky II on August 8, 2013 at 4:12am

I,ll stay in touch.  The Renick Pad is done and waiting for a rig.

Permalink Reply by Oily Gasman on August 8, 2013 at 5:43am

I worked in the Oil & Gas Industry for many years. Any company that is working towards the production of Oil is the company I would bank my money on. Todays prices on crude oil are still over $100 a barrel. The Concord Twp. area is known for oil and very little gas. Gas is down and is going to stay down or be forced lower than we've ever seen over the next few years.  

I've seen the EM Energy lease. I would not only run from it. My attorney said he wouldn't wipe his butt with it. I saw through their land guys bs tactics during our negotiations He did everything to try to keep me from contacting an attorney concerning Edgemarcs Lease..

Edgemarc is offering $3000 per acre and 15% net., after they remove every cost and fee imaginable. They also can add more acreage to their unit you may be in at any point in the future. Get it... The bigger the unit the less your royalty.

 They have the right to use your property for a disposal well... There's something to look forward to when that crap eventually leeches into the water table.

 Once a well is plugged (and no where in your contract does it state that more than One well needs to be drilled nor does it say it has to be DEEP WELL) they will continue to hold your acreage for an additional year. They offer Shut-in payments of $10 per acre per year. So they drill a vertical well into the Marcellus and don't market it for 5 years as per the shut-in clause and pay you basically nothing to sit on the well. Hope you saved your $3000 per acre in the bank...

Edgemarc "may pool or unitize any or all of the leased premises".  You better request a "Pugh Clause". Oh that's right they won't take a lease with a "Pugh Clause"... and when you sign the lease you agree to waive the right to a hearing or to object to any pooling or unitization because you believe whatever the decide is fair and appropriate.

They have the right to use any water source on your property or can drill new ones.

They have the "Exclusive right to lay pipelines. So lets say another company comes along and wants lay a 30" pipeline across your property, they offer you $100,000 to do it. Whoa!!! You can't do it but Edgemarc can, and that $ now will go into their deep pockets.  

Oh and you can't hold Elexco or Holland Land Services liable for anything they may have said during the negotiations....

 

 

 

 

 

Permalink Reply by Oily Gasman on August 8, 2013 at 2:07pm

Robert

I wonder how happy you'll be when you realize that the Caporali Pad your part of is only 34.5 acres. "Oh" and by the way it appears to be a "vertical marcellus well". Hope you still have some of the big bucks you got from that good deal your attorney got you on your 22 acres. That's not a unit. The most you'll probably get is what they'll pay you for your pipeline ROW you signed to sell the gas from the Caporali property. Check out the Plat I attached here for you to look over. Notice on page 2 it says depth is 5425'. Also angle & course of deviation is "NA" but number of laterals say "1", that means no laterals... They are not drilling under your property but they are drawing from it once fracked if your inside their frac radius...

Attachments:

• Caporali Plat (2013).pdf, 874 KB

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