Posts Tagged ‘county landowners’

STEVE MOCARSKY smocarsky@timesleader.com

An attorney and a gas company land man warn that attractive lease offers from energy companies might not always be as generous as they seem.

Kit Akers, lead land man for new ventures at EnCana Oil & Gas, said other natural gas companies could come in throwing around relatively large bonus money offers to Luzerne County landowners if EnCana’s exploratory drilling is successful in Fairmount and Lake townships.

“Sometimes people get blinded by bonus money and aren’t always thinking about protecting themselves in the long run,” Akers said.

Luzerne County landowners might be experiencing bonus envy, considering that gas companies in Susquehanna and Bradford counties are offering $5,000 to $6,000 per-acre bonuses for drilling rights leases while EnCana is offering $2,500.

But Akers said the value of drilling rights in Luzerne County will increase if EnCana’s exploratory drilling is successful.

“Just the very fact that (EnCana’s acquiring state) permitting for the wells made the area more attractive to competition; that alone increases the potential value,” Akers said.

But Akers said landowners should consider more than just the bonuses and royalties offered in exchange for drilling rights.

“The WhitMar (a company EnCana has purchased leases from) lease form is very friendly to landowners. The lease is 14 pages long and loaded with surface protections, generous well location fees and other benefits to landowners. Other leases can be as short as two pages and include none of these protections. People sometimes get blinded by the money offered on the front end for a lease that is not worth as much to them,” Akers said.

Garry Taroli, an attorney with the Wilkes-Barre law firm Rosenn Jenkins & Greenwald, has been representing landowners in lease negotiations for about three years.

“The leases have become more friendly to property owners. With competition comes more benefits from the property owners’ point of view,” he said.

Many newer leases require minimum setbacks from structures and water sources, extra payments for damaged timber, reimbursements for harm to water or land and testing of water before, during and after drilling activities – paid for by the gas company, Taroli said.

Taroli advised that landowners at least have a lease reviewed by an attorney before signing it.

Some leases he’s seen contain language that could be a headache for landowners. While most leases set specific time limits for drilling, one lease he saw allowed a gas company to drill “for so long as gas could have been produced on the property.”

That term, Taroli said, “could be until doomsday.”

Jeffrey Nepa, an attorney with Nepa & McGraw in Carbondale and Clifford, said he’s happy to see property owners communicating on Internet forums to try to stay informed about lease issues.

“It’s nice to see people pooling their resources together to battle against the gas companies,” Nepa said.

“We live in the age of information. … We see that the gas companies are controlling the information. And a lot of times we see them put out misinformation. But at the end of the day, it comes down to caveat emptor – buyer beware.”

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The yearlong wait was worth it for Wyoming County landowners who didn’t get a chance to sign a gas lease last year.

In a deal with Chesapeake Energy announced on Tuesday, they’ll receive almost double the bonus offered previously and an additional bump in the royalties they keep. The five-year deal offers $5,750 per acre immediately as a sign-up bonus, 20 percent royalties and a multiyear extension option.

The Wyoming County landowners group represents about 37,000 acres that haven’t been leased yet, and if all property owners sign up, the deal, in bonus money alone, is worth about $212.75 million.

Chesapeake officials were hoping to have a lease signing this week, but the landowners don’t think that will be possible logistically, group secretary Chip Lines-Burgess said. “The one question that comes up is, ‘What happens if we’re on vacation next week when this comes about?’ ”

After months of relative silence on leasing in the Marcellus Shale, a layer of gas-laden rock about mile underground that centers on northern Pennsylvania, interest is again heating up.

The agreement is somewhat bittersweet for members of the group who leased last year before the financial crash with Colorado-based Citrus Energy.

Lines-Burgess’s 42 acres in Meshoppen were among those roughly 35,000 acres. They received a $2,850-per-acre bonus, minus consultant payments, for a five-year lease with 17-percent royalties. If the lands aren’t drilled within five years, there are two one-year extensions each for $1,000 per acre.

“Yes, sure, it’s a tough pill to swallow … but who knew?” she said. “If it goes a year down the road, it might go to God only knows what, or it may not. … You just have to make a decision that when you sign on the dotted line, (you’re) happy.”

She said her family was able to pay off their farm. She remained on as secretary, as did other members of the group’s core committee, because “we just felt it was our … duty to make sure this happened.”

“Our county consists of a lot of people in their golden years. … We have a lot of people who have a lot of acreage and needed something. If this wonderful lease brings those people more comfort in their golden years … that’s the ultimate,” she said. “Their grandchildren, with this, won’t have to worry about what’s in this lease.”

The deal comes as groups in Susquehanna County are signing similar leases and about a month after the Northern Wayne Property Owners Alliance signed perhaps the first lease in the state with 20-percent royalties.

The South West Ross Township Property Group held a members-only meeting on Tuesday night, and member Ken Long acknowledged that the group is “in negotiations with a major gas company” and that “the monetary offers are in the ballpark of what” the Wyoming County landowners received.

He declined to confirm or deny that the company is Chesapeake.

It’s unclear what caused offers to rise so much so fast, but there are theories. “There’s been a lot of discussion about that,” said Lines-Burgess, who speculated that it might be a reaction to potential legislation that would affect leasing rights.

“We just don’t know what they (gas companies) are seeing. … Obviously, they have a plan, and we’re part of it,” she said.

Long said he believed the education efforts of land groups helped. “I would say that a lot of the efforts of the groups that have formed … are kind of paying dividends now. I think we’ve raised the standards of the leases, and we’re starting to see the increases in the bonus payment and royalties,” he said, adding that companies might be scrambling to get a foothold in the shale as more and more of the land is leased.

Copyright: Times Leader

Landowners in Wyoming County get some good protections, attorney says.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The lease that Chesapeake Energy is offering to Wyoming County Landowners group members is clearly a compromise between landowners and the company, according to an experienced gas-law attorney, but includes “many of the protections that we like to see for landowners are built into this lease.”

Dale Tice, an attorney with Williamsport-based Greevy and Associates who has clients in the Wyoming group, characterized the wording in the lease offer as “very competitive with the leases we’ve seen.”

Tice, whose office has gained somewhat of an expertise in gas law since companies began descending on Lycoming County a few years ago, said he usually disapproves of a five-year re-leasing option being available to companies, but noted that it’s “understandable” why Chesapeake would want that because it’s leasing so much land that it will take years to explore the whole area.

He also said that the $20-per-year fee paid if a well is shut off to eliminate production during a bad market “is as good as they’re going to do.”

While Tice declined to identify negatives in the lease and cautioned that his comments shouldn’t be construed as legal advice, he noted several positives: including in-depth wording to limit production-unit sizes, termination of the lease on land that isn’t part of a production unit, the company’s responsibility to pay property-tax rollbacks on Clean and Green properties and mutual written agreement on placement for wells, pipelines and other infrastructure. Additionally, he said, the lease requires that all infrastructure sited on a property must be tied into gas production at the property.

“There’s always somewhat of a question there because, although the gas company and the landowner must mutually agree in writing as to the location, the gas companies always add some language that says lessors can’t be unreasonable” about siting infrastructure, he said.

Though there is no specific reference to siting waste-deposit wells on the properties, “sometimes,” he said, “if they (landowners) don’t give them (drilling companies) the right, they don’t need to take it out, so to speak.”

The lease is “clearly the product of extensive dialogue between the parties,” Tice said. “I think this does a good job of striking a compromise where the landowner has a lot of good protections worked into it.”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

With lucrative natural-gas lease offers coming to Luzerne County, landowners are beginning to pool their land, resources and knowledge to score the best deals possible.

Gas companies are rushing to secure the rights to a layer of rock called Marcellus Shale. The shale is deep underground, perhaps as far as 8,000 feet, and stretches from upstate New York to Virginia. Though solid, the rock holds natural gas under intense pressure. The resource has been known for decades, but technology only recently improved enough to extract it economically.

One issue landowners might not be able to control is determining who owns the rock and gas.

“That’s a tough question. Eventually what’s going to happen is when push comes to shove … they’re going to do title searches” back about 150 years, said John Zucosky, who is part of a Franklin Township landowners’ group. His research, he said, produced evidence that gas and oil might not be included in the mineral rights. He said he hasn’t heard anything about anyone claiming to own the rights.

Many Franklin Township residents have attended meetings at which Matthew Golden, a West Pittston lawyer who’s worked in the gas industry, has outlined the leasing, drilling and clean-up processes. He pointed out companies will attempt to exploit landowners’ ignorance to get them to sign unfavorable leases.

“There’s a great disparity in knowledge between the companies’ land men and the landowners. This could open them (landowners) up to some risk,” Golden said.

Zucosky’s group, which is accepting new members, owns 1,500 contiguous acres in Franklin Township.

Zucosky said he got involved nearly a year ago when a Texas company offered to buy the mineral rights on his 100 acres for $300 per acre. Initially, he suspected it was akin to an e-mail scam, but some Internet researching convinced him the offer was genuine and that he could probably get a better one.

“I saw that contract. You have to be pretty naive to sign something like that,” he said. If the situation is as experts suggest, Zucosky said, “there’s a whole bunch of money involved.”

He’s already witnessing the rush. An offer of $2,000 per acre increased by $500 within a few days without any prodding from owners, he said.

The group is ironing out which issues it wants addressed in contracts. Then it will consider offers, and once an offer is accepted, will hire a lawyer to finalize the contract, Zucosky said.

“We’re trying to put a package together to address all the things we want … to try to get the most we could,” he said. “This is a once-in-a-lifetime thing, I think, so what the heck.”

online

For more information on gas leasing or to join a leasing group, go to www.pagaslease.com.

“I saw that contract. You have to be pretty naive to sign something like that.”

Landowner John Zucosky

On offer for his mineral rights
Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader