Utica Shale in Ohio

A few of us in southern Richland county Ohio have been approched to sign a lease on our farm land for $15 acre to horizontal drill for oil in the Utica shale. We are wondering if anyone else around the area has been approched also

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Permalink Reply by craig on February 25, 2011 at 4:46am

At $15 per acre I would be hesitant to do anything but get myself educated on this subject. Questions you need answered: Is there currently any drilling activity in your area?  If not, how do you know they are going to the Utica? The offer is from a drilling company, or what kind of entity? No expert here, but...

$15 is a rate where exploration typically hasn't happened.

With the revolution in horizontal drilling etc, $15 isn't worth considering, at least to me.

Data on the Utica play is sketchy at best, at least in our area (Beaver County, Pa). But they are just now starting to setup the first rig, and I hear it is going to the Utica.

I say wait and learn, then hire a lawyer before signing anything. Remember before you sign, you better understand completely what you are signing, because it is a legal document and can't be changed.

 

Permalink Reply by eric on February 25, 2011 at 5:27am
no drilling around this area for the Utica. The guy who wants to do this is small time. He does have a few well's in the state of Ohio and is suppose to be a reputable businessman. Not that any of that makes it better. He will not pay more then $15.
Permalink Reply by craig on February 25, 2011 at 8:20am

Eric, If this person is 'small time' then i suspect he is only leasing land for the express purpose of reselling 'blocks' of acreage to the real players of the Utica, in the future. Or, he is representing a larger company as a landman. .... Small time players don't drill horizontal to my knowledge. 

Since there is no drilling in your area, this makes me believe the above even more so.

No chance on posting the company he represents?

Permalink Reply by Josh on February 25, 2011 at 5:41am
If they for sure are going to horizontal drill than they already know what is down there, so I would definatley find out so more info and post it.  There are plenty of knowledgable people on this site and let as many other land owners know about this site so we all learn more about this shale play.  I would advise not to sign anything without doing your homework.
Permalink Reply by eric on February 25, 2011 at 9:48am
Dave Hill Inc. The landman who talked with us is contracted by Hill Inc. in southern Ohio. The landman has his own business Terra-Phoenix out of Canton Ohio. I spoke with him again and somemore questions such as were are they going to get the water to pump into the well, how will they dispose of the water, what do they really want oil/gas. They are going to do horizontal drilling for sure and are going to the Utica Shale which they seem to think it is only 2 to 3 thousand feet deep around here.
Permalink Reply by Farmhouse on February 26, 2011 at 2:05am

$15 is totally unacceptable. Get together with your neighbors and form a group to negotiate as a block. Then wait. Marcellus leasing began below $10 and eventually got above $6000. If the Utica becomes a hot oil play, I think you will see a frenzy that makes the 2008 Marcellus land grab look tame. 

Leases are forever so make sure you get it right.

 

 

 

Permalink Reply by Chuck Reed on February 26, 2011 at 8:52am
Leases are not forever. Police is for the amount of time the contract states. But in hindsight I would presume Does a company woodrow on you And I would worry about what happens when they do. I would make sure that in the contract it said Little well would have to be connected And that they could not shut you off intirely. I would not want to see the company's punch and roll.. That means they who won on your land never hook you up entire terminal right forever
Permalink Reply by bill h on February 26, 2011 at 11:23am
They are essentially forever if the well produces.  The lease will outlast most of those who sign them.
Permalink Reply by Chuck Reed on February 27, 2011 at 3:10am

uuuggghhhh, 

BUT it may not. i see your point, but a LEASE is not a SALE.  If the well produces and you actualy get on line then great. Send me a card from the islands.   But the ideas is to NOT let these companies just drill a whole and SCREW you over.

Permalink Reply by Mat B on February 26, 2011 at 2:15am
They started at $15 an acre is western pa, they are now signing for over $3500 an acre.  I agree this guy is probably going to flip this lease.  If he is small he probably does not have the millions of dollars it takes to drill into the Utica.
Permalink Reply by Richard Kubas on February 26, 2011 at 3:28am
No but the utica shale is deeper than the Marcellus. I understand you can actually fine tune leases for specific zones. You should probably hold out on leasing. What's the rush, if they hit a well in your area that could go for alot more than that. Remember that these leases suit there needs not yours so you need to fine tune any agreements for your needs. For example say you sign a lease for 5 years and the govenor shuts down drilling for 3 years there could be a clause that extends that for the time they are not permitted to drill. Say you sign a lease that gives you the mandatory 1/8 royalties, that 1/8 is not based on what is leaving the well but what makes it to the pipeline after processing. Everything needs to be gone through with a fine tooth comb. And as one person said they can sell the lease to a bigger player.
Permalink Reply by Chuck Reed on February 26, 2011 at 3:56am

ok, first off, don't presume that there will be no drilling for anything in your area.  Friends in Tioga Co had a lease that was written up for only shallow gas.  An over sight by a large company who came back 4 years later and said... Opps,  and it cost the new land man a few grand per acre.

 

15 bucks?  what the heck?   typeo....get some o's behind that.

 

I'm saying that you won't know what's in your area till they start to drill.  It's just the nature of the business.
Think of it as one of those new tv shows, pickers or pawn stars or that road show thing.

 

the seller never knows what he's got and the buyer has to resell it for something higher than he paid. 

 

nothing personal, it's just business.

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