Eclipse-Oxford leases and extensions in Guernsey County

I am a landowner in Guernsey County with a 4 1/2 year old Oxford lease that is set to expire in about 6 months.  I, and apparently many others, have just received an offer from Eclipse to extend the lease for 3 years for a generous one time payment of $100.00 and the same 12 1/2%  royalty (but no line charges).  The extension provides for the grouping of 640 acres instead of the 160 acres in the old leases.  I had hoped that Eclipse would treat the landowners fairly, in contrast to the Oxford way, but apparently not.  The landman, who called me, reminded (threatened?) me that Oxford (now Eclipse) is still drilling its shallow wells to hold them by production.  According to the DNR records almost all of these shallow wells have only the tiniest of production of oil or gas or sometimes only salt water or nothing.  My neighbors tell me that Oxford comes in, sets up a small rig and drills for a few days and leaves.

 

One leverage the landowners have by not signing the extension is to deny Eclipse the right to put together the necessary 640 acres to drill a deep well.  If enough people do not sign the extension maybe we could get a realistic offer. 

 

Has anyone on here received a similar extension "offer"?  Is anyone actually signing these things?  Does anyone know of any law suits or other methods to stop this bad faith drilling of the shallow wells?  

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Permalink Reply by Philip Brutz on January 27, 2014 at 2:12am

Would a 160 acre unit limit the length of the lateral?  

Permalink Reply by Gusher on January 27, 2014 at 2:15am

no.........that would give you a 6,500ft lateral 1,000ft wide

Permalink Reply by maag man on February 7, 2014 at 3:57am

 a land owner group will keep you out of the mix..  partnering with a company like Siltstone.. who funds much of what is going on in this play will allow you a much better situation..  are you, as a land owner,  going to negotiate with a big oil and gas company and get results..  definitely not..  but the largest money is in the area...  feel free to contact me for info..

Permalink Reply by evan on January 27, 2014 at 2:35am
Philip I don't think because chk just did this with me in the McClain unit they had a 639 acre unit then changed it to 137 acres for the one lateral. I think it was over 5000 feet and that was the most they could go northwest. It was just a skinny looking unit. I suppose they could have made it whatever they wanted but they got the distance they was after.
Permalink Reply by BIG on January 27, 2014 at 2:58am

Something else to remember is that if you don't amend and all your land falls in the 160 unit, you are only going to get royalties off that well.  Whereas, if you amend to the 640 or 1280 you will get royalties off the 4 wells (640 unit) or 8 wells((1280 unit) that are drilled.  I know your ownership in the unit changes, but you are pulling from a larger cash flow in the end.

The oil and gas companies are not going to sit around and wait for all the landowners to haggle.  They have to invest a ton of money into this before they even get one cent out of it.  They want to get this production rolling.

Permalink Reply by maag man on February 7, 2014 at 3:52am

the purpose of pooling is to not drill.. they just want to hold.. am breaking these deals daily.. for more info friend me.. 

Permalink Reply by BIG on February 7, 2014 at 4:47am

I thought old Oxford leases already had 160 acre unit language in them.  Many of the old leases out there had 160 acre unit language in them to begin with.

Most of the companies that are amending are changing the unit language to 640-1280 acre unit sizes.  This would allow the drilling companies to drill more laterals in the unit and longer laterals.  If you are part of the bigger unit you will get royalty from all the wells drilled in the unit.  If you stayed in a 160, you would only get royalties off that one well.  It would benefit you to be in the larger unit.

I think when a unit is designed by a drilling company, it doesn't matter if they own all the leases in the unit.  Normally the other companies that own the leases will participate in the well and the landowner will benefit too.

Permalink Reply by Paul Randles on February 7, 2014 at 1:29pm

  I have a question for you guys...a landman from oxford/eclipse stopped by my place, I have an existing lease with them and have a producing well on my property...he wants me to sign the lease "amendment"...terms are that my royalty would increase from 12% to 17%..30,000.00 for a well pad..250.00 /acre as an added incentive...what do you folks think of this offer ??  any of you folks approached with an offer like this..what are your thoughts ??  thanks for any feedback..Paul

Permalink Reply by Tom on February 7, 2014 at 1:41pm
I am surprised they are offering to increase the royalty at all. If you can get 17-18 cost free that isn't a bad royalty. As for the rest of the offer, I won't comment other than to advise you to call someone at the Vavra Law office in St. Clairsville. They are the ones who handled the case against Oxford for the West family. If your original lease has the same clause in it the rest do, the lease should never have been written in the first place. So, even though you already have a well producing, you may have legal options still.
Permalink Reply by Paul Randles on February 7, 2014 at 7:42pm

I appreciate your input..and will be in touch with the Vavra Firm..thanks.

 

Permalink Reply by maag man on February 23, 2014 at 1:08pm

vavra firm is like so many... worth nothing..   they all want to take your money...  shame lawyers have become theives

Permalink Reply by Tree Farmer on February 24, 2014 at 6:20am

Paul, this seems like a good offer, but I have to ask why? Why would they voluntarily make such a decent offer? You are very close to a great offer, so make that happen with a lease similar to one of the various landowner group leases that have been signed recently (the ALOV lease comes to mind for some reason, ha). I would bet that they will increase the cash upfront by a sizable margin and move toward a no cost/expense royalty with a little push. Wish you luck and hope the Vavra lawyers serve you well. I assume they are buried with work considering how long I have waited for a reply beyond the initial phone call.

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