Replies to This Discussion

Permalink Reply by Josh on January 25, 2011 at 3:46am

I believe that this is a scare tactic and will probably get some more people to sign.  However with no other competition yet, they can do whatever it takes to put these drilling units together.  I think its still early, we (harrison county) still have only ONE drilling rig that I know of.  Theses are just my thoughts, time will tell.

Permalink Reply by James Harber on January 25, 2011 at 4:34am

You need to understand one thing concerning leasing in Harrison county and Eastern Ohio. You have no basis to get the pricing that you have heard is being offered in WV or NE PA. It will take from 2-3 years before anyone will know what production from wells being drilled will produce. One thing that you need to understand, you cannot pressure companies like CHK, Atlas, Range, EQT, etc, either they lease from you and other landowners, or they don't and if that happens then all your lawyers and their strategies go down the drain and you still get 100% of zero and you still owe the lawyers their fees. Take a reasonable offer for the lease and focas on the royalty. They may or may not drill on your property, don't let greed or the greed of others rob you a offers that are reasonable. I have been in the oil and gas business for more than 25 years and I have seen this same argument numerous times. The one thing you need to keep in mind, is if you do not lease, the energy companies will enforce the force pooling if they really want to lease your parcel, then you lose out on any original lease bonus per acre and receive a min of royalty. When that happens, you will think back on past actions and wish you had used more wisdom in making your decision to not take $1,500. per acre plus 15% royalty, which is really very good, since you are not investing one dime in the overall drilling process in the first place. Of course, that is just my opinion.

Permalink Reply by Nate on January 25, 2011 at 5:13am

Right on James, I couldn't have said it better myself. The worst thing that can happen is these lawyers getting involved to the depth they are. I've seen lawyers kill more good deals than they create them in my 10 years in the industry.

Permalink Reply by 1s7k1qp9wk1t7 on January 25, 2011 at 5:24am

this entire thing is one gigantic cluster....we now have companies like Chenier Energy Partners signing deals to ship OUR natural resources to foreign countries for higher profits.....see this article from the lakeland ledger dated 01/21/2011

http://www.theledger.com/article/20110121/NEWS/101215052

the word also is now some knuckleheads from Dubai want to become players AND chevron is supposed to be coming into the area in the near future.....we are right here, and there are wild storys and hyperbole way out there.....i think the TRUTH lies somewhere in between.....i don't care who you ultimately sign with, they are NEVER going to tell you everything they know

Permalink Reply by James Harber on January 27, 2011 at 11:42am

JRM,

You have made many, many valid points and for the most part I am right in there with you.

 

You need to prepare now for what is coming your way, and raising the bonding requirements might be a good start. I would suggest that you check other ares where the Marcellus Shale play is in full force and find out what bonding limits were set there.

 

Check in with Bradford County, PA in the heart of the Marcellus Shale play, I think you'll find good information there.

 

The pipeline issues will be dealt with when they need to move their product to market. You will find that information available to you again through research of areas that have and are experience these operations.

 

I only want to advise you so that you are aware of what decisions that you need to make before hand, education is the key.

 

Remember, addendum's are key in any lease that you sign. If you don't get the addendum's in on the front end, you are surely not going to get them at some later date.

 

Reclamation is normal and the parcel will be returned to far better condition than when the well pad site was constructed. The site will be reduced from a 5 acre+ pad to a 1 acre pad. *Again this is in and Addendum*.

 

Any frac fluid spills are covered under the liability of the company leasing the parcel. They will deal with their sub-contractors hired to do the service work, drilling, etc.

 

I hope my comment may have helped you, one last thing; oil and gas companies are not interested in owning real estate, no matter what the cost. leasing affords much less problems, liability making assigning a lease easier than transfer of title. and they do not have to pay property taxes, etc.

Permalink Reply by Josh on January 25, 2011 at 9:06am

You think it will take 2-3 years before we know what the buell well(Hanover Ridge) is producing?  I was not talking about NE PA I was looking at Washington PA which is just across the Ohio River due east of Harrison County and the figures I got were from their page.  I believe CHK current offer is reasonable but 45 Minutes away those people wouldn't even question the offer, thats all I was trying to say.  My other point was that they had well over a 100  wells in their county already.  I also think its early to be talking about forced pooling?  I am no lawyer just a country boy trying to survive. 

Permalink Reply by James Harber on January 27, 2011 at 11:25am

Josh,

I was talking overall for the area to know what the production will yield over time.

I only used NE PA because that is the heart of the Marcellus Shale play and that is the best place to use for comparison purposes.

 

I am just a country boy too Josh. I am only trying to offer some information for education, so when a deal does come your way you will already know in advance what decision to make or not to make.

 

There is and will continue to be alot of speculation, but I say don't get in a hurry and wait and see what the future will bring to you and all the other landowners in Harrison County. You will see in the coming months that you already have a ringside seat.

Permalink Reply by scott jackovitch on January 25, 2011 at 11:29am

James, while I realize we are a ways off from forced pooling.  Out of curiosity is there an acreage minimum that would make you exempt from it ? 

Permalink Reply by Dan on January 27, 2011 at 4:28am

Hi Scott,

 

Indirectly it seems to me that there is an acreage minimum.  The info on all this is found at the ODNR section on mandatory pooling. They are the ones who have the authority to approve requests for forced pooling.  They say that you have to have around 90% of the land already leased before forcing the rest in.  So you figure that as long as you own more than 10% of the total, then they couldn't force you in, because they wouldn't have the 90% yet.  So if the drilling unit was around 640 acres, then as long as you owned more than 64 acres they couldn't force you.

 

I'm not sure that we are a ways off from forced pooling. I think we are going to see a lot of forced pooling happening as these drilling units start to be made up in the areas with lots of smaller parcels.  It will be a tool to get all the smaller parcels in without having to pay them very much.  An example would be if the larger parcels are under lease but there are still several parcels of 1 or 2 acre residental lots in the proposd drilling unit area.  The gas company will knock on their door and offer them a $250/acre and 12.5% royalty lease, and then if they walk away from that because they think that is too low, the gas company will say "we tried", and then then force them in.  My understanding about being forced in is that there is no lease bonus, just minimal delay rental and the minimum royalty payment.  I would think that anyone in single digit acreages would be wise to try to get signed up now before they are faced with the limited options of either accepting a lowball lease offer or getting forced in.

Permalink Reply by scott jackovitch on January 27, 2011 at 5:56am

Dan ,   Thanks for the info.  Do you believe the drilling companies are already putting there drilling units together ?  Is there a website that you can search to see if drilling permits have been pulled for our area ? It would be nice to see just where the companies are planning to drill ?

Permalink Reply by 1s7k1qp9wk1t7 on January 27, 2011 at 6:38am

i have to believe that the acreage surrounding the 2 well pads in archer & north township are the most attractive acres right now......they didn't set those pads because some yoyo with a set of divining rods said "this is the spot".....they put them there for a reason.....i believe they will work their way out from those pads first....just my 2 cents

Permalink Reply by Dan on January 27, 2011 at 8:20am

I think the main reason they are there in Archer is because the gigantic mineral owner North American Coal Royalty made a deal with Chesapeake.  Also because the entire drilling unit is with one mineral owner, it made the permitting very easy.  Just my opinion.

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