Eclipse Resources wants Amendments to SEOLA/Garrison Leases in Monroe County Ohio

The screen shot above is from Eclipse Resources August presentation.   Check the Marcellus East numbers, they look good to me.    Eclipse has primary term lease on lots of acreage in Marcellus that expires in March of 2017.   Then another payment is due for the second five years.    This Marcellus area has the potential for a three pay zone return--Marcellus, Utica and Rhinestreet.

Interesting that as of Friday, Sept. 5 Eclipse already has landmen/women approaching lease holders to modify their lease payment terms to accept being paid the total due NOT in a one time payment as the lease states, but divided out over five years.    Interesting that Eclipse is working on this 18 months in advance of the March 2017 date.    So Eclipse leaseholders be aware of what you are being asked to do.

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Permalink Reply by Eric on September 9, 2015 at 8:07am

Sounds like a really good opportunity to get more money out of the deal.  In reality both can benefit from the deal.  hope landowners understand that they are financing Eclipse and ask for interest on that money..

Mike MurphyPermalink Reply by Mike Murphy on September 10, 2015 at 5:31pm

ANNE COOPER.....If you have been drulled on from that lease you are now HBP you will not be released because you are receiving royalties from that lease and your mineral rights are now held by production

Permalink Reply by Jeffrey Beunier on September 18, 2015 at 11:01am

PUGH clauses can be a great thing for mineral owners - essentially forces the operator to develop all depths.  I presume when you say you have 2 PUGH clauses, that you have both vertical and horizontal clauses?   Was all of your acreage pulled into the unit that contains the existing producing well or just a portion?  If the existing well a Marcellus? Rhinestreet?

Permalink Reply by BIG on September 9, 2015 at 9:06pm

Considering the market has collapsed in the last year and many other O&G firms spent money like it grew on trees, Eclipse is  trying to be responsible and not just blow millions of dollars.  It gives the landowner an opportunity to make money and Eclipse able to work their drill schedule.  Lets face it, we all want a well because that is where the real money is.

I would have to assume that they still could drill units given the amount of time remaining, but they may not renew leases given the current market conditions.

Permalink Reply by Jeffrey Beunier on September 18, 2015 at 11:06am

interesting perspective, modifying a lease to provide flexibility is great, but you certainly should get something for providing that flexibility - as in a larger total bonus amount (implied interest) or a modification fee or something along those lines.  When prices come back, acreage will get drilled again and if you are unleased because the operator chose not to pay you your extension bonus, then you can sign a new lease at that time.  Essentially, your extension is a free option, and you are still tying your property up for 5 years, unless they decide at some point in time over the next 5 years to stop paying the annual renewal.  Not saying being flexible is a bad thing, but getting nothing for being flexible seems less than prudent as well.  Depending where you are located in the play, other operators may be interested.  I know I have seen Antero top leasing MHR on leases they expect MHR to not develop within the required time frame.

Permalink Reply by st. croix on September 9, 2015 at 10:24pm
I don't know anything about eclipse but if they are anything like statoil I personally would not give them anything.Remember these oil people are really friendly when they need you but once they have you, your cooked. All of this is just my opinion and good luck
Permalink Reply by Bob Shaw on September 10, 2015 at 11:58am

I have a related question. Are the scheduled bonus payments conditional on start of production, as I have seen elsewhere, or is this a true scheduled payment?

Permalink Reply by searcherone on September 11, 2015 at 8:43pm

I think what you are asking is:   do those payments spread out over five years stop if a well pad or unit or production beings on the property.    It is my understanding that they do stop.   And my thought is Eclipse will attempt to tie up as much property in a unit as possible in some form or fashion in order to get the payments stopped   I think anyone accepting the payments spaced out over five years will never get the total amount and may not have a well drilled either at the end of that time.    That is why this needs considered carefully and looked out by a lawyer.

Permalink Reply by Carolyn Fox on September 10, 2015 at 4:21pm

We also got the same email today.

Permalink Reply by Jeffrey Beunier on September 18, 2015 at 11:08am

I would definitely have the amendment and modifications reviewed by an attorney or a non-company landman.  Outside of the bonus payment, are they modifying anything else?

Permalink Reply by searcherone on September 12, 2015 at 5:31pm

Being out and about on Saturday afternoon I heard a couple of things.

Woman working on getting the amendments says she wants to wrap this up in a couple of weeks.

Some leaseholder contacted Garrison who said don't sign the amendment.

Permalink Reply by searcherone on September 13, 2015 at 9:10am

No, Jay, this is a total Eclipse idea to change the terms of the original lease.   And hey, leaseholders didn't complain about after three years they got another payment on the lease.   Now they are looking forward to 2017 and the second five year term payment.  Hey if Eclipse doesn't want the properties some other oil and gas company will.  

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