Gas Lease Information Sharing Center for
Hampshire County, WV
In the interest of the Free flow of Information in the Fresh Air and Sunshine
to Ensure Fair Deals for All
Maintained by rcherry@RaySoft.net Last Update: 11/27/2008 03:44:55 PM
This web page started out as a private web page for Patterson Estates (in Romney, WV). The private part is still private, but this part - about gas leases in Hampshire County - is now public. If you have information regarding gas leases in Hampshire County, please send it to the webmaster and it will be posted.
Disclaimer: Although we carefully check every piece of information that is posted on this web site for accuracy, we cannot be responsible for any unfortunate consequences that might arise from the use of this information. Please seek competent legal advice before you take any action related to gas leases.
We know that you're hard-working and busy. So, if you do not have time to review all of the information posted at this site, here is what you need to know right now:
(a) Please e-mail your comments and suggestions for improvements to Ray. If you have received contracts (or anything else) which you would like to share with the community, please send me a scan and we will post. If you do not have a scanner, please drop by and I'll do the scan and return to you.
(b) Please send anything that you receive from a "land man" and we will post it here. Business is best for everyone when conducted in the open air and sunshine. You might ask the "land men" if it is OK to post the material that you receive from them. If the answer is "no", then one might reconsider doing business with that person. m (Yes, this has happened ...)
Saturday, 11 October 2008, 1:00 PM. Excellent opportunity for landowners to hear from an experienced lawyer who is not connected to any gas company. More on this site as we get more information. Everyone is invited. Contributions are encouraged but not required. For location, please contact Allen Glasgow (firstname.lastname@example.org). (This meeting keeps getting larger and larger, so Allen will let you know where it winds up being held.)
Saturday, 1 November 2008, 6:00 PM (Tentative) Patterson Estates. Please look for e-mail confirming this.
Special Pages Within this Web Site
Marcellus Shale - Appalachian Basin Natural Gas Play - Downloaded from Geology.com
Recent Offers Made to Fellow Landowners - All details are on this page. Please contribute your experiences.
Actual Chesapeake Hampshire County Gas Lease - One of our neighbors provided this document to us. (Coming soon - expected 10/08/2008.)
Discussion Group. Thanks to Steve, we now have our very own discussion group. So, sign-in, ask a question and get a response from another member of the group. Here's the three-step process to join the group:
(a) Go to www.yahoo.com and become a member if you are not a member already. There is NO COST. There is no risk. You do not need to download the Yahoo toolbar. (I didn't.)
(b) Click on this link, and join the group: hampshirelandowners · Hampshire County Landowners Group After you join the group, you will automagically get a copy of each and every e-mail that is sent to the group. In addition, you can go into the group's archives and search for information. In another life, a Yahoo group helped to tie a world-wide collection of professionals together, and it worked (and is still working) GREAT. Many times I have had a technical problem which I couldn't solve: I e-mailed the group and within hours, I had my answer. Most of the time, the answer came from the US, but often a member in Switzerland or Australia could help me. So, bottom line for those of you new to groups and computers from someone who has spent a lifetime doing this stuff: Groups WORK. Please join us today.
(c) After you join the group, send out an e-mail to the group. Click here.
Friends - If you are just getting started with your gas lease, we hope that the information on this web page will be helpful to you. If you need to contact someone, a few ideas are below. Special Request: We need more names below, please provide your contact information.
Ray Cherry, Webmaster
Kelli Allen of Patterson Estates
Steve Martin - Not the actor, but our neighbor and super excellent Farmers' Market Member - Steve asks that you contact the group (see above), rather than him directly. Great site:
Fellow Landowners - This list was provided to us. The bottom line is that there are LOTS of us on the journey toward a fair gas lease.
hampshirelandowners · Hampshire County Landowners Group - Our very own group - for free!
Information About Chesapeake Energy - To what extent are they worthy of our trust?
Chesapeake Energy Home Page
Links between Chesapeake and the Chinese? We're not sure what this means, but keep an eye on this web page AND join Your Yahoo discussion group!
.com/2008/- Added 10/2/2008 07/29/chesapeake -is-getting- lots-of-attentio n-from-analysts- investors- the-sec-and- china/
.com/2008/ 07/27/chesapeake s-new-business- partner-china/ - Added 10/2/2008
China's CNPC may bid for Chesapeake Energy shale gas assets
Chesapeake Energy in talks on Marcellus stake
Oil&Gas Well GeoSearch - Added 12/1/2008 - Shows where the wells are.
Business Week: Does Natural-Gas Drilling Endanger Water Supplies? - Added 11/11/2008
Penn State Wiiki - Added 10/2/2008
Landowner Roster - From Steve 09/28/08
Gas Lease Interested Parties - From Steve 09/29/08
West Virginia Surface Owners' Rights Organization
The Marcellus Shale Today Blog
Pennsylvania Department of Conservation and Natural Resources - Note the lease.
Potomac Highlands Conservative - This is LOCAL information
Natural Gas Lease Forum for Landowners
West Virginia Farm Bureau - Links Page.
WV Natural Gas Exploration Companies Spread Sheet -
Scranton, PA Blog
NY Times article about PA
Documents that have been uploaded
August 24, 2008 - Jersey Mtn Property Owners Assn (MS Word)
August 24, 2008 - Protection Against the Gas Leasing Companies (MS Word)
Note: These documents are in Microsoft Word. If you can not read them, please send me e-mail and I'll post an HTML version.
From the Chesapeake (Gas Company) - These were handed out to Patterson Estates folks at a meeting in early 2008.
Brochure - Page 0
Brochure - Page 1
Brochure - Page 2
Brochure - Page 3
(More being scanned.)
Recent E-Mails and Blogs
(Latest on the Top)
What ever you send to us
will be posted. If possible, please send links to the
information rather than the actual information. This way, we can
avoid copyright issues (like the one below, which will be removed
shortly), and will have absolute knowledge of the source of the
11/11/2008 - from Steve
StatoilHydro buys into U.S. shale. Chesapeake Energy (CHK) agrees to sell StatoilHydro (STO) a 32.5% stake in its U.S.-based Marcellus shale acreage for $1.25B. Statoil will also pay $2.13B to fund 75% of the drilling and other completion expenses on those assets from 2009 to 2012. Norway's largest oil and gas producer, Statoil is turning to unconventional sources to increase reserves as production drops at maturing fields in the North Sea.
Another article stating the continued
interest in gas...note the next to the last paragraph. Kind of confirms
our decision to hold tough on getting a decent lease.
Honey, It Was Just a Mirage
Interesting that during the last two or three
Chesapeake calls, very little, other than the announcement of a
monetization plan, was said about the Marcellus. The Haynesville was all
the rage. During last week's Investor & Analyst meeting, the company
left no doubt that the development of the Marcellus is a major priority
and one that will contribute more than any other to the bottom line. The
company plans to ramp production from 20 mmcfd to 60 mmcfd by the end of
'09 and to 130 mmcfd through '10 with the rig count going from 4 to 10
to 20 during the period. With the lowest finding costs and highest net
selling price, the Marcellus will provide, by far, the highest IRR of
any of the shales; at $7 gas about 200% BFIT as compared to 25% in the
Fayetteville and Barnett and 50% in the Haynesville.
Some of Aubrey McClendon's more interesting comments:
"We did everything that we said we were going to do during the quarter and ended up with a stock price at $38 on September 30. Today we wake up 15 days later and the stock price is $16. So what’s happened at the company? We’re still going to earn almost $10 a share of cash flow in 2009. We’re still going to earn over $3 a share of earnings, and nothing’s changed.
...I can’t do anything to convince anybody here or anybody listening that we have enough money. We've told you that we have enough money, $1.1 billion. I think we’ll end the year at $3.5 billion. I just read that at September 30 British Petroleum had $3.6 billion. I’m sure they have more resources than us, but the point is that we have plenty of cash today, we’ll continue to build cash through the quarter and into ’09 and ’10.
...I guess another thing that’s been a little surprising to me is I’ve seen some analyses where if gas prices go to $5, people go out and spend their cash resources. Why would we do that? Why are we not capable of decreasing our capital expenditures? We are not going to spend more cash than what we can generate.
...I can assure you that buying leases for X and selling them for 5X or 10X is a lot more profitable than trying to produce gas at $5 or $6 mcf.
...The neat thing is that leasehold is always cheap in a play whether you pay $5,000 an acre or $10,000 or $20,000 or $30,000. In most of these shale plays it matters hardly at all as to what you pay for leasehold because you consume so much leasehold, 80 acres generally a well and these wells can cost $3 million to $6.5 million. So you put some leasehold on top of that it’s just not much money at the end of the day.
...Natural gas is simply the fuel that is going to continue to make an enormous impact in our country and in our world. My own view is that we’re near a point of peak oil production whether it’s today or two years ago or five years from now or 10 years from now. It doesn’t really matter to me if it’s geological or if it’s geopolitical or a little bit of both."
Thursday 10/9/2008 - from Kelli
The following is an e-mail that I sent off to Mr. Hart, who is President of the Appalachian Basin of the National Association of Royalty Owners. He called back yesterday and I will try to place his answers to my questions in my e-mail below. He has also given us the contact below if someone would like to phone him. I'm preparing for a ladies' retreat and won't have time to make that contact until next week. Mr. Canfield, who is in charge of a landgroup around Elkins, may have some info to share that could be helpful to pass around at the meeting on Saturday. Mr. Hart wasn’t sure if their landgroup was leasing in the Oriskany or Marcellus though.
Mr. Hart did look over a contract for him but he didn't know if they had signed up with anyone yet. Mr. Hart said he just went over a lease for a gentleman in PA and all the addendums were accepted but one. He suggested that after our landgroup's attorney reviewed our lease, that someone experienced with how these gas companies work in the field look it over to offer advice. I think I sent you all the e-mail stating that their org. does that for $500. We could always ask Mr. Canfield about NARO’s work in that area, if we're interested at all. Anyways, Mr. Hart was extremely helpful and I wasn't expecting a phone call back from him. We chatted for at least 15-20 min. He would like to make it to the meeting in Slanesville Saturday and I did give him your e-mail, Mr. Glasgow. He may get in touch with you, if he hasn't already. Their organization works to educate royalty owners as well as prospective royalty owners. I can't think of the exact address of their webpage but if you Google NARO, it should come up.
You all have a great weekend. Hope all goes well with the meeting Sat.
Robert Hart [mailto:email@example.com]
Sent: Thursday, October 09, 2008 6:49 AM
Subject: Re: Oriskany Sand and Gas Leasing in Hampshire Co.
Loyal Canfield's phone number in Elkins is 636-7385. He and other land owners in that area are experiencing similar oil & gas leasing issues as your group is. I am sure he would be happy to talk with you about their leasing concerns.
Sent from my iPhone
On Oct 7, 2008, at 4:53 PM, "waltandkelli" <firstname.lastname@example.org> wrote:
Hi there, Mr. Hart,
My name is Kelli Allen and I'm writing to you from the Romney area over here in the northeastern panhandle. I was just wondering if you're familiar with the Oriskany sand and gas production within it. He is familiar with it. Says that the Oriskany is quite a good producer of gas, in the right spots.
Chesapeake has been in here for the last year or so leasing up land. There's at least one other company that I'm familiar with also leasing mineral rights at this time. There's a land group that has formed in our area and we're trying to get the word out about our existence. Would it be worth having a geologist survey our area? He thinks it would be beneficial for us to work with geologists and petroleum engineers. Would that make a significant difference in negotiating a lease with a company? I know that the Marcellus is getting most of the attention right now and info is easy to find pertaining to that play. It's difficult to find anything to go by with the Oriskany. How do we know what to expect with the Oriskany in negotiating a lease? Can we even compare it to the Marcellus? No, we really can't compare it to the Marcellus. Drilling in the Marcellus one can hit gas about anywhere and it's a huge play. The Oriskany, on the other hand, can be good but it will have areas that are better producers of gas than other areas in the Oriskany. Chesapeake said in a meeting last week that they wouldn't use millions of gallons of water to frac the well but nitrogen. This is one difference I see between the Marcellus and the Oriskany. What implications would this have for landowners? One rep said they would haul the waste off and the other one said they would bury it so it's hard to tell what would be done with it. He said the DEP wouldn't allow them to bury it, that it would have to be hauled off. It was difficult to get any straight answers out of them. They had answers alright but answers without substance. Anyways, any info you can provide would be greatly appreciated. I checked out the NARO website for the Appalachian Basin but it seems as if one has to be a member to view most of the information on there. Yes, that's accurate. It's cost $105/year for an individual membership and that allows access to the forum where one can ask questions about the Oriskany in WV, or any other questions. It gives full access to the website's info.
Thanks so much,
Wednesday 10/8/2008 - Can they help us?
Taylor Green [mailto:email@example.com]
Sent: Tuesday, October 07, 2008 1:40 PM
Subject: The Lease Auction House
I wanted to contact you as I am aware you have put together a landowners group in Hampshire County, West Virginia for the purpose of securing an Oil & Gas lease. Our company is designed to assist groups like yours. We run a live online auction that makes Oil & Gas companies compete for leases. Every client of ours sets a minimum bid, usually the highest offer they have on the table at the time, and the auction results are only final after the bidding goes above that amount. And, our services are free if we do not get your organization a higher offer. As a representative for many individuals, it is important to explore all of your options, and our auction site is a great way to make sure that every Oil & Gas company competitively bid the property up to its maximum market value. I have attached our current newsletter which gives more information about our company and the services we provide. I hope you will share it with your group and speak with them about The Lease Auction House.
Please feel free to call me if you have any questions or if you would like more information. I look forward to hearing from you.
Director of Business Development
The Lease Auction House
500 Main Street, Suite 1000
Fort Worth, TX 76102
Friday, 10/3/2008, from Kelli
Ken Balliet, CED, is an Educator and Forester with the Penn State
Extension Office. His expertise lies in the areas of gas leasing,
gas well/access road planning, pipeline planning and
forestry/wildlife. It's worth repeating here in our forum that his
web page link is http://naturalgasle
out to Mr. Steve Martin for locating/linking us up with such a great
resource. What follows is an e-mail that I sent to Mr. Balliet and
his response to it. I will post any reponse I get from WVU Extension
Office as to any gas info they will make available to residents of WV.
From: waltandkelli [mailto:waltandkelli@
Sent: Friday, October 03, 2008 7:07 AM
Subject: Leasing for the Oriskany Sand?
Hi there Mr. Balliet,
My name is Kelli Allen and I first, want to say thanks for
making all sorts of info. public as those of us down here in WV have
benefited from your web pages. I've contacted our extension services
here in WV but from the looks of their web page, there can not be
found one bit of info on gas leasing/drilling anywhere. We are in
the northeastern part of the state near Romney and Chesapeake has
been in here the last year or two leasing up land @ $4/acre with a 10
[Ken Balliet] I would think longer and harder before signing for 10
years…than I would the $4.00/acre. Much will change in just a few
years! Up here 5-7 max.
At one of their meetings last night, they said they are after the
Oriskany sand and not the Marcellus that outcrops here. I'm not sure
if that is of any interest in your all's area or if it's even up
there but was just to see if you know much about this play.
[Ken Balliet] yes, Oriskany is here. We've had lots of exploration
for that as well. I would recommend that if they are looking for
that, have your lease limited to that layer ONLY. You can them lease
with other companies for Marcellus, etc…
They are now offering $20/acre but it's still a 10 year lease.
We're planning on joining a group that's formed here with about
20,000 acres so far. I definitely don't care for the tactics
Chesapeake is using in getting people to sign their leases down
[Ken Balliet] You are not alone, especially after Chessy bought up
hundreds of thousands of acres in Fayettesville Play of $100+/-
acrea, then just sold them to BP for $16,000/acre and 25% royalty to
BP Petroleum. You don't say how many acres you own…but if you owned
say 100 acres, you are risking only $2,000. Only you know your
financial situation, and your tolerance for risk. Given what I just
told to, you are on the bottom of the scale, your decision is wait
for it to go UP cause it can't go lower, or perhaps have them walk
away from the PLAY before you lease.
I am not an attorney, and this is not legal advice…but I think you
have probably decided by the time you got to this sentence on what to
Send you info to every one on the website , look at the listing of
companies on the left and contact them all.
The Pennsylvania Department of Conservation & Natural Resources announced the winners of its September 3, Oil & Gas Lease offering. Ten year leases at a 16% royalty were offered for eighteen tracts totaling 74,023 acres in Tioga County. The highest bids, $5,838/acre for a 5741 acre tract and $4,369 for a 3598 acre tract, came from Fortuna Energy. ExxonMobil, which low balled the process by bidding $1,151/acre for everything, picked up six tracts totaling 19,439 acres as the only bidder.
They have a copy of their actual lease on the web page and we know that the gas/oil company found it acceptable. Thought it might be helpful as you put the one for our land group together. The actual lease is found under the “2008 Oil and Gas Lease” link. Now it is a 10 year lease and it is for a considerable amount of acreage but thought it might gives us some new ideas of what might be acceptable to these companies as we negotiate with them.
Here’s the link to the page the lease can found on http://www.dcnr.state.pa.us/forestry/gasleasebidders.aspx
Q: My brother lives on 17 acres in Pennsylvania, where the Marcellus Shale is. A year or so ago, the gas company was paying $50 an acre; it's now up to $2,750. How can he gain the most with the least stress? – R.W.
A: While I can't speak directly about what your family should do, Pennsylvania State University runs information sessions for landowners like your brother.
I can say his land may be far more valuable than the gas companies are letting on. For example, XTO Energy bought 152,000 acres in West Virginia and western Pennsylvania for $3,600 per acre. That was just the first big deal in the Marcellus.
More are coming.
The Marcellus Shale is a natural gas discovery that spans New York, Pennsylvania, Ohio, and West Virginia. Underneath a huge swath of the Appalachian Mountains – from West Virginia northeast up into Canada – is shale.
Shale is a sedimentary rock made of fine particles of clay and mud deposited at the bottom of ocean basins or giant lakes. The shale that oil and gas companies like has a lot of old plants and algae mixed in. Over time, that kind of shale makes natural gas and sometimes oil.
It used to be almost impossible to get the natural gas out. But advancing technology capable of mining shale took off in 1994 in Texas' Barnett Shale. Since then, it's spread to many shale basins, including Marcellus.
Thanks to an arcane bit of Pennsylvania law, the Marcellus shale was a black box for years – the companies drilling there weren't required to release data about what they found. That kept out most oil companies except for an elite few. It looks like that will change this fall, which could really open the spigots on the land rush.
Though the Marcellus shale play is in its early stages, we've already seen huge inflation in lease prices. Your brother's own experience shows you how fast the prices go up... $50 an acre to $2,750 in just a year? That's 5,500%. Wow.
Your brother has an asset that doesn't spoil. That gas has been in the ground for hundreds of millions of years already. And I believe the market will only get better.
In the Barnett Shale, land prices soared from $1,000 in 2002 to $3,500 by 2004. That same acreage goes for around $10,000 today. Gas companies want the Marcellus acreage now because many more companies will be looking for acreage in the near future, driving up prices.
Another way landowners can profit is by negotiating a royalty. Royalties are common in the oil business. The landholder leases access to the oil company in exchange for part of the cash flow from the well.
A 63-year-old farmer, interviewed in a New York Times article, already received a $16,000 royalty check for gas produced from his 700 acres. His 90-year-old parents got a $20,000 check.
Ray, the former mathematics instructor, wants you to know the following:
1 square mile = 640 acres
Remember the formula Area = π r2 ? Using this formula, we can derive a fact that may affect your life:
If a circle has an area of 1 square mile, then the radius is 0.564189 miles, or 2979 feet.
Bottom Line: If you are within 2979 feet of a gas well, then you may be eligible for royalties.
Yes, there will be a quiz tomorrow!
Homework: What is the area of a circle with a radius of 1 mile?
Super Advanced Homework: Prove that π is an irrational number. Express π as the sum of an infinite series. Answers in November.
Goings on in Patterson Estates -
I just wanted to send out a reminder of our upcoming meeting this Saturday, the 20th, @ 6 pm at Silver Tree Apartment’s office and also update you. Mr. Ken Hopkins will be there to talk about a land group that he has been working with that collectively has over 4,000 acres. Mr. Greg Bonnet sent an e-mail saying there is a group in Slanesville that may join up that has over 10,000 acres already. There’s also a group out Grassy Lick that has expressed interest in uniting as well. What I would like to do is have them present their ideas/expectations and answer any questions we may have. I believe Mr. Hopkins has received 4 contracts already from companies out of TX that has expressed interest in this area. We could then decide whether we would like to add our land to the pool. There is a lease that has already been worked up and Mr. Hopkins has been in touch with a lawyer in Morgantown who is not connected with any gas/oil company but is very familiar with gas leases. I mentioned that I would be in favor of using Mr. MacMahon (this is the lawyer out of Charleston that we heard in Moorefield) if he is still willing. Mr. Hopkins is open to that as well. I’ve attached Mr. Bonnets’s amendments here for those of you who did not get to see them at the previous meeting. If you could look over them and see which ones would be of significance to you as an amendment in a lease. For those of you who can’t make this meeting, please e-mail any questions or concerns you might have and as always please pass the word around to your neighbors, for those that live here whose neighbors don’t have e-mail. Thanks so much!
Post or Link Needed: Suppose that
(a) Your neighbor has a gas well that is 6,000' deep
(b) Your neighbor signed up for 12.5% royalty
(c) You did not lease your property.
Question: Under West Virginia law, what royalties are you entitled to?
According to Jerry L. Messetesta, Agent on 20 September 2008: You must go to court, pay lawyers fees and by the time you're done you will wind up getting far less than a 12.5% royalty.
Request: Can anyone provide a link to a web site that definitively answers this question?
Another question: What happens if you signed a lease with a different gas company at 12.5%?
Last week, Cabot Oil & Gas Corp. gave a tour of its natural gas well operations in Susquehanna County. State regulators from New York and Pennsylvania attended, including Pennsylvania Agriculture Secretary Dennis Wolff. It was the first time Cabot opened its drilling operations in the county to the public. About 20 people attended, including Susquehanna County Commissioner MaryAnn Warren.
Featured during the tour were separate locations where pipe will be laid, a drill in operation, a compressor station and a gas producing well. Cabot expects to lay about 10 miles of pipe.
After the tour ended, Wolff said that he found adequate safeguards for the environment. He also said revenue created by natural gas drilling could help struggling farmers keep their farms.
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