Advice: can we be cut out of production area?

We are about to sign a lawyer-approved lease for our 20 acres with EQT, but recently received more letters/phone calls from Huntley & Huntley.  We had been in communication/negotiations with H&H earlier, but they were not as willing to negotiate as EQT has been. Overall, our experience in dealing with EQT has been more pleasant; H&H landmen were very overbearing, wanted to meet in-person all the time, and said some things that can be construed as threats.

 

The landman with whom we talked from H&H is trying to convince us that they are no longer swapping leases with EQT, but says that H&H will be the company to produce our area. Therefore, if we don't sign with them, we will be cut out of the profits and royalties. They do seem to have most of the leases in our area with a few exceptions.

The landman with whom we were dealing before (also from H&H) said, "If you sign with another company, we will get your lease anyway because we are going to produce here, and you won't be treated as well."

So which is it? Will H&H cut us out if they are the company to produce? Or will they acquire our lease from EQT? Can a gas company just cut out a property owner, or worse, just leach the gas out from underneath?

I hate this obnoxious, hard-sell tactic and based on that alone, I don't want to sign with H&H. However, I don't want to be left out of potential royalties.

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Permalink Reply by drill0317 on August 26, 2014 at 4:57am

A friend of mine recently attended a meeting presented by Huntley and they have over 400 laterals planned for the area along with a pipeline, these are facts, Huntley is an operator.  That sounds like EQT propaganda.

Look at the BBB ratings for the two companies too.

Permalink Reply by Megan on August 26, 2014 at 12:57pm

Very good idea. I took your advice and they both look pretty shady to me. Just saying. :o)

I see how H&H likes to present itself as a family operated, down-home company, but I just don't buy the Cracker Barrel image.

Permalink Reply by Megan on August 26, 2014 at 12:53pm

Hi Phil,

Thanks for your response. We heard the same thing about H&H that we'd essentially be signing with Range. The landman from H&H made it seem like they would be doing their own drilling, though.

 I think Range has been more active in the area, although I don't know if their activity has been shallow or Marcellus. It seems that EQT has the technology to drill the Marcellus, whereas H&H has to call in a subcontractor for this (Falcon, I think). 

Permalink Reply by Philip Thackray on August 26, 2014 at 5:54am

Megan, Drill,

I cannot find a horizontal well in Butler, Allegheny or Westmoreland Counties, PA where Huntley and Huntley is the operator.  They have been the operator in vertical wells.

Leasing through Huntley and Huntley is not a bad thing.  As far as I can tell H&H has a form of partnership with Range.  H&H puts up some of the upfront bonus money in exchange for some ownership in the wells.  Again, as far as I can tell, the H&H arrangement with Range does not in anyway affect the bonus payment or Royalties to the landowner.

Phil

Permalink Reply by Megan on August 26, 2014 at 1:00pm

Thanks for your response, Phil. 

My concern is that H&H threatened to "cut us out" or "encase their pipes under our property" if we don't sign with them.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 26, 2014 at 8:30am

I looked in Ohio and found EQT as a driller, but no Huntley&Huntley.

Me thinks they are Huntleying for some leases to flip. Using high pressure tactics also makes me think they want your potential wealth.

Going with the driller is the best bet as long as they are not one of the companies known to be thieves.

I could name the thieves, but they get enough press already.

Permalink Reply by drill0317 on August 26, 2014 at 8:32am

Huntley is only in PA, I believe her property is in PA.

Permalink Reply by Megan on August 26, 2014 at 1:02pm

Yes, that's correct. Allegheny County.

Permalink Reply by Booger on August 26, 2014 at 8:36am

go with the best lease and ignore the threats........

they will not likely go around 20 acres because it is leased by EQT........EQT wants to develop as much as H&H....they don't have to "swap leases".......I would guess that the majority of units have multiple operator interests..........they work together all the time to develop units.

that's why the first H&H landman told you "If you sign with another company, we will get your lease anyway because we are going to produce here".........the better lease will protect you from the other thing he said "and you won't be treated as well."

Permalink Reply by Megan on August 26, 2014 at 1:09pm

Thanks for your reply, Booger. (Love the name, by the way.)

Your response is aligned with gut feeling and in speaking w/ our lawyer just an hour ago, she stated the same. 

H&H referred to EQT as pulling a stunt called "punch leases." I'm not sure what that means. The best I can surmise is that EQT will establish leases here and there within an already dominated area. 

Permalink Reply by Philip Brutz on August 26, 2014 at 8:44am

Are more landowners in PA left out of drilling units compared to states like OH that have mandatory unitization? 

Permalink Reply by Megan on August 26, 2014 at 1:04pm

No idea, Phillip. I didn't know that OH had mandatory unitization. Is that different than the term "pooling" that I've heard of?

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