Tioga County, Chattam twp. question

We are new at this so just a question... Has anyone heard of Shell wanting to sign up leases in Chattam twp. before the original lease is up? We have been approached by a landman and they seem anxious to sign us up.  Just want to be educated.

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Permalink Reply by Darrell Weaver on January 24, 2015 at 4:10am

yep.............they did it to me 8 months before expiration.

Does your current lease have an extention clause in it...........If u r being approached early that means that Landman is trying to get better terms for gas co more then likely with deductions with a lowball bonus offer....

Dig in your heels and enjoy the ride U R the landlord and U R in total control, don't let the big bad land man bully you or back u into a corner with his BS if you don't sign you could lose out line................

Permalink Reply by N Bohl on January 24, 2015 at 4:26am

It seems like SWEPI is looking forward to doing a lot more work in that twp.. I would call Greg Gass - my family used him extensively for gas related issues most importantly negotiating our lease. He is on this list occasionally and I am certain there are members on the Tioga County part of this site that would recommend him as well. He knows the county very well and has worked there for decades - he was very helpful in educating us. Good luck.

Permalink Reply by Ben and JoAnn Eshleman on January 24, 2015 at 4:34am

Thank you we will look into that.  Our offer was $1500 an acre and 12 1/2% royalties with no deductions.  I don't believe we have an extension.

Permalink Reply by N Bohl on January 24, 2015 at 6:24pm

Your welcome and it is one of the few things related to this industry that I could write with confidence. The terms and language of these leases are fantastically important. We took our lease to a law firm before finalizing it and they green lit and were impressed. It was Greg's doing and looking at it almost 5 years later we are still happy.

I don't know about the size of signing bonuses - there are too many variables, location, size of property and so on but a royalty of 12.5 would not be appealing to me. Keep in mind that the decisions you make today may have an impact on you and/or your family and property decades from now. So it may take some concentrated effort now but once it's done it's done. Good luck!

Permalink Reply by Jack Young on January 24, 2015 at 7:06am

Shell tends to work on renewals up to a year in advance. They have so many old East leases that expire at similar dates that waiting for the expiration dates would occasionally overwhelm their staff if they didn't. There was also a recent rush to sign leases before the 2014 budget money ran out, since bonuses and royalties are expected to be lower in 2015. Shell's overall budget has been reduced dramatically by the combination of lower oil and gas prices, and they have no alternative but to cut back somewhere. Luckily Chatham Township seems to be one of the better areas, so hopefully the offer you got isn't going to disappear while you research things further.

Permalink Reply by Tim on January 24, 2015 at 8:23am
Shell reports qtrly results Jan 29th, specifics on total budget will be in there. Of course, in current market conditions, the global budget will be lower. They just cxled a plant in qatar to the tune of $6.5bln dollars.

Shell is bringing an additional rig to tioga/potter this spring, and will be drilling out the area. Their budget for leasing in potter/tioga will not be going down, nor will pricing be cut in the area. If anything, prices will hold in the $2,000-2500 range, and potentially go higher when a utica is spudded in Potter.

I concur that Greg Gass is very knowledgable and professional and I def second the above recommendation!

Shell is going no where, the landmen are going no where, and the offers are going higher. PGE is permitting uticas in potter.

In mid-Feb, we will get reported results from the two new utica pads in tioga, the synnevedst and the watkins. The Watkins seems to be trending above everyones expectations, and could have three more utica wells north of 20mmcf/30 IP. Basically, almost 3 more Neal wells on one Pad! The watkins has 3 utica wells.

There is a lot of gas in the new northern utica, without a doubt! The only question that remains is the extent of the boundaries!

Take your time. You will get a lease in the $2,000s, higher than 12.5%. Give Greg a call, he will help you secure a lease on favorable terms. No need to worry about shell going anywhere, they are here for decades.
Permalink Reply by Jack Young on January 24, 2015 at 8:44am

So Tim, how many leases did you negotiate with Shell in Tioga and Potter Counties during 2014? And how many so far in 2015? Interesting that you apparently know more about Shell's leasing budget for 2015 than the guys who are in charge of their leasing in these counties. Of course, maybe they've been lying to me and you're better informed than any of us...

I'd agree that these folks will do better to consult with Greg Gass and ignore what they read here since not all of it is impartial or knowledgeable. The leasing markets in Tioga and Potter Counties have both changed radically over the past three weeks, with major reductions in bonus offers, royalties and leasing areas a reality or in process for each of the major players. I assume you've heard of PGE's 48 hour deadline on outstanding offers and the JKLM freeze on new negotiations. Also Shell's new (lower) offer in eastern Potter County.) Hopefully Greg will be on top of the latest news even if you aren't.

 

Permalink Reply by Tim on January 24, 2015 at 9:30am
Jack,

Thanks for admitting you are plugged into the 'decision makers.'

Brings up a great question for the forum, why did you tell mineral owners to take a lower priced lease deal when you knew prices were going higher?

As far as shell, here are some stats to put the company in perspective:

Shell 2013 stats:

• Revenue: $451.2 billion

• Income: $16.5 billion

• Net capital investment: $44 billion

• Investment in research and development: $1.3 billion

Are you trying to claim that a difference of $1,000 per acre on a 640 acre unit is going to sway shell from not drilling? The math is $640k on an $8-12mln well cost. With the amount of gas in the ground, Shell will have zero issues with paying in the low 2's to secure acreage, along with other operators.

I obviously dont know shell's 2015 budget, but i do know that there is plenty of gas in the utica, and they, along with other operators are going to explore and drill. Yes, some times they will have more leverage, and some times the mineral rights owner will, but as far as them 'going away' and not developing, that is yet again another 'dire warning' from jack that is without merit.

So Jack, whats your decision makers @ shell have to say about the watkins production?
Permalink Reply by Jack Young on January 24, 2015 at 10:42am

You don't understand the business, do you. There are plenty of things I know that I can't post here. And that's one reason I'm trusted to know them.

Things change frequently in the business, often more due to competition (which isn't something anyone can predict accurately in advance) than the underlying economics. But while competition drives the timing, the economic fundamentals ultimately determine what actually gets drilled.

I have to admit that posting general 2013 financial data about Shell in 2015 is probably the biggest waste of space I've ever seen on this forum. But if that's all you know...

Permalink Reply by Tim on January 24, 2015 at 2:27pm
Just putting your 'dire warnings' in factual context for the board. $1500 an acre, vs $2,500 an acre for a lease all of a sudden seems insignificant in the context of $400 Billion revenue, or even a $100 Billion revenue operator.

Jack, there is a major difference between not sharing information because you are a 'trusted insider' and purposely misleading people who have viewed you as a source of 'truth.'

Ie, you know things, the watkins utica wells are not going to report weak production numbers, yet on this very thread you are warning a mineral owner to sign before the numbers go lower. If you 'know' then you know the production is going to be strong.

That there Jack, is not only a waste of space on this board, but highly unethical as well.
Permalink Reply by Jack Young on January 24, 2015 at 4:41pm

Tim, if you feel there's an ethical issue here, perhaps you could explain that charge to everyone in more detail. How can a landowner like myself profit from trying to talk lease prices down? Wouldn't I be more likely to be talking prices up like you do? Or is anyone who points out that lease prices fall when oil and gas revenues decline (all other things being equal) somehow automatically being "unethical" just because you don't like the message? I really wish you would stop these nasty responses and get back to trying to help others on the forum.

Permalink Reply by Tim on January 25, 2015 at 4:07am
Jack,

For the record, you have not answered any of my questions.

You put yourself out on this board as an 'industry expert', full of knowledge and information, and as someone whom is 'helping' others while they have major economic decisions. Yet, you also admit to being an insider and being held in a position of 'trust' by decision makers at the operator level.

I take exception to people who 'claim' to be doing others a service, yet their 'facts' are in direct contradiction to what ends up actually being reported. If you are in the 'know', than clearly your ethics have gone by the way side.

Again, if you are in the 'know' than you Know that the Watkins is going to report HUGE results, you know that shell is bringing up at least one more rig, if not more, to drill out the play, and you know the well above the point pleasant line, the synndevest, is going to report very strong production results, even if it is on some type of 'choke' and open up another part of the play.

So I ask, if you 'know' these things, why are you attempting to put doubt and fear into a family that is making a very serious economic decision for their family?

And i quote, from Jack Young, ".....since bonuses and royalties are expected to be lower in 2015. Shell's overall budget has been reduced dramatically by the combination of lower oil and gas prices, and they have no alternative but to cut back somewhere. LUCKILY CHATHAM TOWNSHIP "SEEMS" TO BE ONE OF THE BETTER AREAS, SO 'HOPEFULLY' THE OFFER YOU GOT ISN'T GOING TO "DISAPPEAR" WHILE YOU RESEARCH THINGS FURTHER."

That right there Jack, is some serious horse*#+^!

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