Replies to This Discussion

Permalink Reply by Lynn Wigglesworth on December 9, 2010 at 4:19am

Where did you find these maps? East's lease says that their units are up to 640 acres, so those numbers make sense. Are they all regularly shaped units, or do they go around some properties? The unit near me cuts out my property and another unleased property; I believe that not having these two properties makes it impossible to drill the planned 6 horizontals...they'd have to stop at least 2 of them short. They are no where near ready to finish the well here (it's a vertical, shut-in); until they are ready to finish it, I don't think they will be making me a decent offer. But I believe that they WILL come back and try to fill in the unit eventually.

Permalink Reply by N Bohl on December 10, 2010 at 4:13am

I think you might be right. I did notice of few areas within units that did not look leased and they looked hard to drill completely around. I have also been told that they can easily drill around things but I would think it would better to just deal with the land owner. We used a gentleman who used to work for decades in Tioga County OG industry to negotiate the lease. He was worth every reasonable dollar it cost. I would highly suggest him and anyone can e-mail me about this. He charged a very small percent of the signing bonus only. I think it was 3% and without him it would have been an entirely different experience.

Permalink Reply by Lynn Wigglesworth on December 10, 2010 at 11:46am

Did he negotiate with East? I (and many others) have found them totally unwilling to negotiate any important points...bonus, royalty, PUGH, limiting shut-in time, etc.

Permalink Reply by N Bohl on December 10, 2010 at 8:00pm

It was with East for us but he would do the same with other companies. He knows the business very well and that was one reason we found him to be so helpful. I think I can be tactful but this is an industry with its own set of habits, language, ways of communicating, time-frames and so on. We had certain goals and they were all met but it took a lot of thinking and work which was fine. We were also doing our best to be realistic and I think our priorities happened to mesh well with the company at that moment in time. When you are negotiating a lease with a gas company you are trying to go into some sort of business arrangement with them and it helps greatly to have an objective and experienced advocate. My impression was that the less land an owner had the harder it would be to negotiate. I also don't think these companies are in the habit of going back and forth with a land owner more than a few times before you hit a wall. So if you have many points it becomes less likely that they will agree to them all or even bend with each. So if you want a higher signing bonus maybe that's possible. A vertical Pugh is out most likely. A horizontal PUGH might be OK. If you prefer a slightly higher royalty percentage - 1 or 2 percent? maybe that would work but maybe not both a higher bonus than what they like as well as a higher royalty. If you want to avoid ANY work being done on your property that might be possible but without any extra money compared to their standard lease. The other factor with this is that East recently sold so who knows what Shell will want to do. If I were East and knew I was going to sell I would make a deal to keep some % of royalty of the tens of thousands of acres. So to do that Shell may actually be getting the leased acres at 17-18% and Easts owners keep 2-3% - that would be a huge chunk of change once work is done. Perhaps if that were the case Shell would be fine agreeing to that higher amount. 

Permalink Reply by Betty Jean Jackson on December 9, 2010 at 5:18am

Does each township have it's own map of drilling sies and acreage.

Permalink Reply by N Bohl on December 10, 2010 at 4:15am

You can look them up by township but may have to make your own quilt like map from those for a full and current view of a township.

Permalink Reply by Brian Day on December 9, 2010 at 5:45am

If you have acess to unit or pool maps, can you answer the following question for me? If a vertical well has been drilled and a horizontal unit has been declared with the well at the northwest end and a long rectangular unit declared to the southeast, has another unit been declared, using the same vertical well, to the northwest? This scinerio could be reversed with the first unit declared to the northwest with the well in the southeast corner and the second unit utilizing the wel in the northeast corner of it and extending to the southeast. A portion of my land has just been included in a unit of a well off of the property. I am wondering if East might try to designate another unit off of the same well in the opposite direction to hold the an entirely different set of lands and land owners in the opposite direction.

Permalink Reply by Brian V. on December 9, 2010 at 6:31am

If you are leased you have no choice but to be included in the unit. I'm wondering how these units are determined. It seems that in areas that are in a high elevation they would have to go deeper and thus expand the size of the unit. It seems like the deeper they go the more acreage should be included. One of these days I'm going to make my way down to Wellsboro and find these unit declarations in the recorders office. They are all "public knowledge" if you have the time to go to the court house or pay for LANDEX. It seems like these units should be more easily viewed given how big this has all become.

Permalink Reply by Lynn Wigglesworth on December 9, 2010 at 11:14am

I understood that once you are leased you have no choice about being in or out of a unit.

Permalink Reply by Lynn Wigglesworth on December 9, 2010 at 1:11pm

The East lease specifically includes "the right to  pool or unitize the leased premises..." It goes on to list the things East can do (revise or terminate the unit), but not a word about anything the lessor can do.

Permalink Reply by Brian V. on December 9, 2010 at 3:51pm

Sure about what. Read the pooling clause in a lease. That is why one signs a lease right?? To be pooled into a well unit.

Permalink Reply by Michael Karpiak on December 10, 2010 at 5:24am

Josie, we were never notified by East that we were in a unit, not officially anyway, the guy who staked out a drill pad told us that we were in a unit but did not know at the time how it would be handled. Right after we signed with EQT, East called us and said our properties (3 combined continous properties ) were in two of their units. I presume thats why they wanted to sign us. At this time the other landowners in that unit have not heard anything about being in a drilling unit. I am sure  Shell knows what they are doing.  I am guessing it is still in the early stages and a lot of bugs need to be worked out. It might take a couple more years before they are ready to drill and who knows when the wells will be put in production. Im sure Shell has their reasons why.....

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