Posts Tagged ‘South West Ross Township Property Group’

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

Luzerne County property owners hope to have their own deal by year’s end.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Lease signing begins today for members of the Wyoming County Landowners group who have accepted a gas-drilling offer from Chesapeake Energy.

The signings could foreshadow what other local landowners are hoping comes to them soon. The South West Ross Township Property Group and Columbia County Land Owners Coalition confirmed on Friday that they, too, are in talks with Chesapeake.

The Columbia group, which represents roughly 80,000 acres in Columbia, Luzerne, Sullivan and Lycoming counties, hopes to complete a deal before the end of the year, according to an e-mail sent out to its membership.

The Ross Township group, which includes roughly 10,000 acres around Ross Township, is affiliated with the Columbia group, but also making its own discussions with Chesapeake, said Ken Long, a member of the group’s executive committee.

Group leaders expect monetary terms to be similar to the one Chesapeake offered to the Wyoming group: a five-year lease at 20-percent royalties, plus a $5,750-per-acre sign-up bonus. It includes a five-year option Chesapeake could exercise for another $5,750 per acre.

But other recent events with drillers locally could foreshadow what landowner hope to never see. The state Department of Environmental Protection issued a notice of violation to Cabot Oil and Gas Corp. for a gas spill earlier this week and ordered the company to cease hydraulic fracturing in Susquehanna County until it had completed a comprehensive engineering assessment and updated its pollution-prevention plans.

The company is currently drilling seven new wells in the county that will require fracking, which forces water, sand and chemicals into the gas-laden Marcellus Shale to fracture the rock and release the gas.

The company has 21 days to complete the assessment and 14 days to update the plan. Once it’s approved, the company will have 21 days to implement the plan.

The situation is one that landowners like the Wyoming group hope to avert with their in-depth leases. The group has been split alphabetically for this weekend’s signing. Those with surnames beginning with “A” through “L” should show up between 9 a.m. and 7 p.m. on Saturday at the American Legion Post 510 in the village of Black Walnut on U.S. Route 6 between Laceyville and Meshoppen. Everyone else is assigned to between 10 a.m. and 4 p.m. on Sunday. Those who can’t make their assigned day may show up on the other one.

Landowners who can’t make either day should be receiving an e-mail with documents that need to be signed and mailed to Chesapeake. The $1,000-per-acre initial payment will be sent by mail.

On the Web

To sign up property for a gas lease: http://forms.askchesapeake.com/landowner

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

Copyright: Times Leader

Growing number of landowners hope to gain income by allowing gas drilling on their property.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

FAIRMOUNT TWP. – Scarring Michael Giamber’s 74-acre forested spread with gas wells and pipelines might seem like a nightmare to some, but that’s the fairytale ending for which he’s hoping.

Giamber is part of a growing number of landowners in Northeastern Pennsylvania who have leased their land for drilling in the Marcellus Shale, a gas-laden layer of rock about a mile underground that runs through the northern part of the state. They hope to collect not only lucrative bonuses paid upfront for signing a lease – one offered locally last week was $5,750 per acre – but long-term income from royalties on the gas pumped from their property and rent from hosting needed infrastructure.

Early estimates for some properties put earnings well into the millions of dollars over the life of their gas deposits.

Giamber isn’t necessarily expecting that, but he wants to give his property every chance to succeed. He signed a lease with Denver-based WhitMar Exploration Co., which has locked up more than 22,000 acres in, among other places, Fairmount, Ross, Lake, Lehman, Union, Hunlock, Huntington and Dallas townships. The company offers a relatively negligible sign-up bonus – $12.50 per acre – in exchange for 19.5-percent royalties, a short lease period and stipulations that require expedited permitting and drilling.

“As we all know, the real money is in the gas royalties, not the bonus money,” Giamber noted. “Getting a well with a 20-percent royalty is better than a high bonus and no well.”

Opponents of drilling, however, cite a slew of potential environmental indignities from overt destruction of bucolic rural lands to more insidious but less-proven threats, such as groundwater contamination, overuse of regional water supplies and geologic shifting that might cause earthquakes.

Giamber sees much of that as hypocritical moralizing, and he has but to look down his road for an example of it. Every time he drives from his yard to state Route 118, he passes what he calls a homemade scrap heap on a neighbor’s property that’s filled with abandoned cars, rusted appliances and other items long beyond their usefulness. “It blows my mind how they just abuse the land, and now we’re going to bring in some money, and they get all up in arms,” he said.

If people truly cared about the earth, he reasons, they’d be outraged by such overgrown trash piles. But it’s been there for years, and no one’s complained about it. There are no doubt more just like it, too, he says.

In fact, in that context, Giamber sees his use of the land as beneficial. At least it has a positive purpose – providing a cleaner alternative to oil and coal, creating jobs and providing wealth – instead of just being a place to throw trash.

That said, Giamber has reservations. A few months ago, he visited a well site in Susquehanna County, where he found natural gas bubbling from the watery area at the base of a wellhead. He was told by a WhitMar representative that another company had made a mistake that wouldn’t happen in their work. “We’re all trying to rationalize it right now, and not get upset about it.”

While not necessarily an issue, recent lease agreements as close as Wyoming County make his deal look “anemic,” Giamber acknowledges. Chesapeake Energy, one of the largest companies in the industry, announced last week an agreement with the Wyoming County Landowners group for a 5-year, 20-percent royalty lease with a $5,750 sign-on bonus.

A landowners’ group near Giamber, the South West Ross Township Property Group, says it’s in talks with an undisclosed company whose offer is in the same “ballpark,” according to Ken Long, a member of the group’s executive committee. Long would neither confirm nor deny that it’s Chesapeake.

Still, Giamber believes the math of his deal could work better. “The fat lady hasn’t sung yet,” he said in an e-mail. “Let’s say I get a well three years before my neighbor that signed with Chesapeake at $5,500 (per-acre bonus). I’m still ahead. The variables are many and the future too hard to predict. I am just happy that WhitMar is moving forward by drilling the first wells in Luzerne County.”

Copyright: Times Leader

Some landowners holding back, banking on economic improvement to bring better offers from drillers.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The offer is somewhat unconventional, but a natural gas company that’s leasing land in Luzerne County says its deal is a successful compromise for both parties, and leaseholders agree.

Denver-based WhitMar has locked up more than 22,000 acres in, among other places, Fairmount, Ross, Lake, Lehman, Union, Hunlock, Huntington and Dallas townships, according to company representative Brad Shepard.

The company is offering an unusual deal that has garnered both accolades from landowners for navigating the money squeeze caused by the recession and criticism for its lack of a long-term commitment. WhitMar, which Shepard said is involved in similarly complicated and expensive drilling operations in Oklahoma, Arkansas, Louisiana, Utah and the Dakotas, is offering a four-phase lease.

Landowners receive $12.50 per acre for the first year, after which the company decides whether it will continue the lease for a second year at the same payment rate. The lease also requires that within the first year the company begin the permit process for drilling at least one well and within the second year begin drilling at least one well.

For the third year, the company will offer a $2,500-per-acre, five-year lease on the properties it wants to keep, and landowners whose land gets drilled also will receive 19.5-percent royalties. Conservation Services, the company that amassed most of the territory, receives .5 percent of the royalties.

“As far as I know, that’s the highest royalty that’s been signed in Pennsylvania or New York,” Shepard said. “The reason we offered that royalty is literally because the landowners were willing to let us come in and test it up for $12.50” per acre.

The company then retains an option for a second five-year, $2,500-per-acre lease. “All together, it could be a 12-year lease,” Shepard said, but noted that the leases dissolve if the landowners aren’t paid. “So if they don’t receive a $2,500 payment or a $12.50 payment, the lease has expired because we didn’t pay them like we said we would.”

The offer has aroused reactions on both sides among affected landowners. Some urge restraint, predicting that better offers will crop up when the economy rebounds. “Right now, (gas companies) are picking all this low-hanging fruit,” said Ken Long, an executive committee member of the South West Ross Township Property Group that declined to recommend WhitMar’s offer to their group. “People are panicking to sign leases … because they want to get this monkey off their back.”

Landowners who signed leases note the generous royalties and the commitment to quickly begin exploration drilling. “I firmly believe that a sweeter, more lucrative deal can not be found in Luzerne County,” leaseholder Michael Giamber noted in an e-mail. “By comparison, the folks in Dimock (a truly proven area) can only get 18 percent. Over 30 years, a 2-percent difference in royalties can literally add millions of dollars in a landowner’s pocket.”

Shepard added that forced drilling likely means additional drilling will occur. “For the most part, once the drill rig’s brought in, it’s not brought in to drill one well,” he said. “As long as they hit, we have every intention of drilling as quickly as we can and our partner wants us.”

The company is still working out important specifics, though. First, it needs to find a larger partner to help drill, Shepard said, and it also must secure the rights to millions of gallons of water for the process that cracks the underground shale and releases gas.

In nearby counties, the company is working with Houston-based Carrizo Oil & Gas, Fort Worth-based XTO Energy, Inc., Louisiana-based Stone Energy Corp. and others, Shepard said.

He added that the company has received many offers from landowners to sell surface water on their properties, but said the company is not yet at the stage where it’s investigating water-acquisition options.

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

Copyright: Times Leader