Elbert County Colorado Lease Offer

I just watched the documentary "Gasland" around Christmas and was horrified at what they are doing in Colorado to ruin our water supplies. There are numerous cases of natural gas fracking ruining water supplies in Weld and Garfield counties (just to name a few in Colorado), yet they are now coming to Elbert County. I was shocked to see that so many people are getting offers to drill for oil in our county. We just moved here last year and now I'm scared that our water supply will soon be ruined. For those of you who haven't watched "Gasland", be sure to watch it. There are many articles on how the natural gas wells are ruining water supplies but here's one from just a few days ago.

http://www.postindependent.com/article/20101201/VALLEYNEWS/101139974/1083&ParentProfile=1074

Hi, I could not sign in on your site. I tried and tried.

As a land owner and resident of elbert county for 18 years, do we organize now and gain momentum before they do?

Experience: KECR, I was part of Keep Elbert County Rural, and started Caines (stop the plane noise when DIA first open) Both organization were successful.

Jeff what are your thoughts

In response to Randy,

I think we should organize now. Even though our community lives in unincorporated Douglas County, we face the same concerns and challenges. (We also own our mineral rights) The oil companies have no quams about crossing county lines.

I have no dog in the fight on fracing, since I do not work in an unconventional resource area. I am, however, a strong and vocal proponent of balancing the security needs of the country with the environmental needs of present and future generations.

I did watch Gasland on HBO and from my informed standpoint, they made many misstatements, which can tend to make their entire premise suspect. Sort of like former Speaker Pelosi saying that we need to reduce our dependence on fossil fuels and use more natural gas.

I did read an interesting paper located here:

As these things go, it appeared to be scholarly and balanced and in all likelihood a great prediction for the future.

The jury is still out on the whole issue.

I think accidents have certainly happened. I do not think fracing is to blame, I think less than ideal engineering is the real culprit.

At the end of the day, IMHO, fracing will continue, perhaps with stronger state or federal supervision (right now it is state, but the feds are trying to usurp state authority) and regulation to protect freshwater aquifers.

Amy Miller said:

In response to Randy,

I think we should organize now. Even though our community lives in unincorporated Douglas County, we face the same concerns and challenges. (We also own our mineral rights) The oil companies have no quams about crossing county lines.

I will be happy to help organize, but I do not want to be the spokes person. So who's on board?. I already know several families that are on board and more to come. We would have to create a name (if one exist please let me know). If there is already a group started, great I will be happy to help. rjmarder@comcast.net

Thanks

Yours

Randall Marder

I think that it is important to create a forum to get all points of view. I talked to Elizabeth HS to see what their availability is to hold a meeting in their facility. They hope to get back to me before the end of the day. Looking at the week of Jan 17. I will keep you updated. I am also going to contact Legend HS/or Sagewood MS to set up a second meeting. I think that there will be a huge turnout in both counties. Despite county lines, we should unite and go forth as one undivided unit.

The forum should also include non-mineral rights owners. The decision that we make will affect everyone's environment: water, air, traffic, etc.

IMHO it will not do any good to organize or try to fight the oil companies. Go to the Colorado Oil and Gas Conservation Commission website and read their charter. They are a regulatory agency, but their charter is to allow the mining of minerals. If you have a lease or not, if an oil company wants to drill, they will be allowed to do so within the regulations of the COGCC. For the people that are concerned about the fracing with gas wells, the formation these oil companies are interested in is the Niobrara Shale formation. It is predominately oil and covers the entire front range from Cheyenne to south of Elbert Co. I agree that protecting the water is the best thing to do. Our community in NW Elbert Co. organized into a group for bargaining power for the express purpose of negotiating protection clauses in a lease with the main priority being protection of our water. I’ve done much research on the subject both here on this forum and in other shale play forums. In negotiating a lease, I do not recommend trying it yourself if you want the most protection clauses you can get. The old saying “you don’t know what you don’t know” is particularly true in this industry. We hired an independent land owner representative that has 30 years experience in the oil and gas industry. I wholeheartedly recommend this to landowners, especially those that own less than a section of land. For those that are opposed to hiring someone and paying for this service, the old adage “you get what you pay for” is entirely true for this industry as well.

wow, there should be an active organization in place first.



Debbie said:

IMHO it will not do any good to organize or try to fight the oil companies. Go to the Colorado Oil and Gas Conservation Commission website and read their charter. They are a regulatory agency, but their charter is to allow the mining of minerals. If you have a lease or not, if an oil company wants to drill, they will be allowed to do so within the regulations of the COGCC. For the people that are concerned about the fracing with gas wells, the formation these oil companies are interested in is the Niobrara Shale formation. It is predominately oil and covers the entire front range from Cheyenne to south of Elbert Co. I agree that protecting the water is the best thing to do. Our community in NW Elbert Co. organized into a group for bargaining power for the express purpose of negotiating protection clauses in a lease with the main priority being protection of our water. I've done much research on the subject both here on this forum and in other shale play forums. In negotiating a lease, I do not recommend trying it yourself if you want the most protection clauses you can get. The old saying "you don't know what you don't know" is particularly true in this industry. We hired an independent land owner representative that has 30 years experience in the oil and gas industry. I wholeheartedly recommend this to landowners, especially those that own less than a section of land. For those that are opposed to hiring someone and paying for this service, the old adage "you get what you pay for" is entirely true for this industry as well.

When I started Caines to fight the FAA and DIA with Becky And Dan, we were told the same thing, its impossible. We did and won.

Eric Peterson said:



Debbie said:
IMHO it will not do any good to organize or try to fight the oil companies. Go to the Colorado Oil and Gas Conservation Commission website and read their charter. They are a regulatory agency, but their charter is to allow the mining of minerals. If you have a lease or not, if an oil company wants to drill, they will be allowed to do so within the regulations of the COGCC. For the people that are concerned about the fracing with gas wells, the formation these oil companies are interested in is the Niobrara Shale formation. It is predominately oil and covers the entire front range from Cheyenne to south of Elbert Co. I agree that protecting the water is the best thing to do. Our community in NW Elbert Co. organized into a group for bargaining power for the express purpose of negotiating protection clauses in a lease with the main priority being protection of our water. I've done much research on the subject both here on this forum and in other shale play forums. In negotiating a lease, I do not recommend trying it yourself if you want the most protection clauses you can get. The old saying "you don't know what you don't know" is particularly true in this industry. We hired an independent land owner representative that has 30 years experience in the oil and gas industry. I wholeheartedly recommend this to landowners, especially those that own less than a section of land. For those that are opposed to hiring someone and paying for this service, the old adage "you get what you pay for" is entirely true for this industry as well.

Mr. Marder,

Just a few thoughts on what and who you plan to confront. To start with, what was it that you changed in the DIA & FAA senario? If it was noise abatement, they still fly right over my house. Did you confront Buckley AFB. Because they still fly over much lower than commercial. I like it when they fly over too. What did you do to keep Elbert Co rural besides put the county in a financial, econonic and growth downward-slide?? Who are YOU going to fight , the many people that have already signed with oil companies BECAUSE THEY WANTED TO?? Are you going to fight the COGCC who regulates the oil companies in their rightful endeavor to find and produce oil and gas?? Are you going to fight the state and county, because they receive tax revenues from any production of product?? The water is a very important issue. I like my water too. Maybe there is a way to work with this industry and our state and county organizations to stay on top of keeping our water safe!! Would that work too?? Just some thoughts. By the way there is a meeting on Jan 18th at Kiowa fairgrounds at 6PM on this whole issue of this industry coming into Elbert Co. I'm sure you would like to show up and LISTEN!!

Don

Don,

feel free to contact me via email, I give you my phone number. i will be happy to share Caanes story with you.

rjmarder@comcast.net

Don Jones said:

Mr. Marder,

Just a few thoughts on what and who you plan to confront. To start with, what was it that you changed in the DIA & FAA senario? If it was noise abatement, they still fly right over my house. Did you confront Buckley AFB. Because they still fly over much lower than commercial. I like it when they fly over too. What did you do to keep Elbert Co rural besides put the county in a financial, econonic and growth downward-slide?? Who are YOU going to fight , the many people that have already signed with oil companies BECAUSE THEY WANTED TO?? Are you going to fight the COGCC who regulates the oil companies in their rightful endeavor to find and produce oil and gas?? Are you going to fight the state and county, because they receive tax revenues from any production of product?? The water is a very important issue. I like my water too. Maybe there is a way to work with this industry and our state and county organizations to stay on top of keeping our water safe!! Would that work too?? Just some thoughts. By the way there is a meeting on Jan 18th at Kiowa fairgrounds at 6PM on this whole issue of this industry coming into Elbert Co. I'm sure you would like to show up and LISTEN!!

Don

You might need to read again. What would be the point of the state setting a minimum% on a carried interest if the producer could then take it all back ? I think it would be a cost free royalty. I think you should read it again or contact a professional. Best wishes ; RWK

Eric Peterson said:



Kathleen MacLennan said:
I live on Delbert Rd and have been contacted a few times over the past 6-8 months, but not getting offers that high. We were offered $500/acre. There is a group just to the north of me just south of County Line that has been working with a landman. I guess they are getting in touch with everyone in this area. I know from a landman that if you do not agree to lease your rights, they can still access the oil/gas and not pay you. good luck
We have heard that if you do not sign the lease that is offered and the section is "forced pooled" you will only get the State minimum of 12.5% for your royality and you do not get the signing bonus of $500 as in your case or $1500 as in Jim's. To make matters worse the oil company can subtract expences from your 12.5% royality leaving you with alot less than the rest of your neighbors that signed early on.

HERE IS THE PART OF THE COLORADO STATE STATUTE 36-60-116 I FOUND THAT PERTAINS TO THIS QUESTION. HAPPY READING!!!

DON

(7) (a) Each such pooling order shall make provision for the drilling of a well on the drilling unit, if not already drilled, for the operation thereof, and for the payment of the reasonable actual cost thereof, including a reasonable charge for supervision and storage. Except as provided in paragraph (c) of this subsection (7), as to each nonconsenting owner who refuses to agree to bear his proportionate share of the costs and risks of drilling and operating the well, the order shall provide for reimbursement to the consenting owners who pay for the drilling and operation of the well of the nonconsenting owner's share of the costs and risks of such drilling and operating out of, and only out of, production from the unit representing his interest, excluding royalty or other interest not obligated to pay any part of the cost thereof. In the event of any dispute as to such costs, the commission shall determine the proper costs as specified in paragraph (b) of this subsection (7). The order shall determine the interest of each owner in the unit and shall provide that each consenting owner is entitled to receive, subject to royalty or similar obligations, the share of the production of the well applicable to his interest in the drilling unit and, unless he has agreed otherwise, his proportionate part of the nonconsenting owner's share of such production until costs are recovered and that each nonconsenting owner is entitled to own and to receive the share of the production applicable to his interest in the unit after the consenting owners have recovered the nonconsenting owner's share out of production.

(b) Upon the determination of the commission, proper costs recovered by the consenting owners of a drilling unit from the nonconsenting owner's share of production from such a unit shall be as follows

(I) One hundred percent of the nonconsenting owner's share of the cost of surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment, and piping) plus one hundred percent of the nonconsenting owner's share of the cost of operation of the well commencing with first production and continuing until the consenting owners have recovered such costs. It is the intent that the nonconsenting owner's share of these costs of equipment and operation will be that interest which would have been chargeable to the nonconsenting owner had he initially agreed to pay his share of the costs of the well from the beginning of the operation

(II) Two hundred percent of that portion of the costs and expenses of staking, well site preparation, obtaining rights-of-way, rigging up, drilling, reworking, deepening or plugging back, testing, and completing the well, after deducting any cash contributions received by the consenting owners, and two hundred percent of that portion of the cost of equipment in the well, including the wellhead connections.

(c) A nonconsenting owner of a tract in a drilling unit which is not subject to any lease or other contract for the development thereof for oil and gas shall be deemed to have a landowner's proportionate royalty of TWELVE AND ONE-HALF percent until such time as the consenting owners recover, only out of the nonconsenting owner's proportionate SEVEN-EIGHTHS share of production, the costs specified in paragraph (b) of this subsection (7). After recovery of such costs, the nonconsenting owner shall then own his proportionate EIGHT-EIGHTHS share of the well, surface facilities, and production and then be liable for further costs as if he had originally agreed to drilling of the well.

(d) No order pooling an unleased nonconsenting mineral owner shall be entered by the commission under the provisions of subsection (6) of this section over protest of such owner until the commission shall have received evidence that such unleased mineral owner shall have been tendered a reasonable offer to lease upon terms no less favorable than those currently prevailing in the area at the time application for such order is made and that such unleased mineral owner shall have been furnished in writing such owner's share of the estimated drilling and completion cost of the well, the location and objective depth of the well, and the estimated spud date for the well or range of time within which spudding is to occur. During the period of cost recovery provided in this subsection (7), the commission shall retain jurisdiction to determine the reasonableness of costs of operation of the well attributable to the interest of such nonconsenting owner.

(8) The operator of a well under a pooling order in which there is a nonconsenting owner shall furnish the nonconsenting owner with a monthly statement of all costs incurred, together with the quantity of oil or gas produced, and the amount of proceeds realized from the sale of production during the preceding month. If the consenting owners recover the costs specified in subsection (7) of this section, the nonconsenting owner shall own the same interest in the well and the production therefrom, and be liable for the further costs of the operation, as if he had participated in the initial drilling operation.

OOPS!! KINDA LONG! I'LL TRY TO LINK IT NEXT TIME.

Just a heads up. There is a county meeting scheduled on the Jan 18th at the Exhibit Hall at the Elbert County Fairgrounds. It is scheduled from 6-8pm. Presentations by the National Associaion of Royalty Owners, Dr. Jerry Koch the local geologist, Steven Lindbolm and Deb Baldwin of the Colorado Oil and Gas Conservation Commission.



Amy Miller said:

The forum should also include non-mineral rights owners. The decision that we make will affect everyone's environment: water, air, traffic, etc.

From what I read the payment for the well and production only comes from the 7/8 ths part. Not from your 1/8th royalty if you are carried. Pretty sad in my opinion that the state lets them charge a penalty that high. In N.D. I believe the penalty is only 50% If you own the mineral rights and do not hold them through right of lease. The language seems pretty plain to me, but I’ve been reading alot of this stuff lately. Good luck! RWK

Don Jones said:

HERE IS THE PART OF THE COLORADO STATE STATUTE 36-60-116 I FOUND THAT PERTAINS TO THIS QUESTION. HAPPY READING!!!

DON

(7) (a) Each such pooling order shall make provision for the drilling of a well on the drilling unit, if not already drilled, for the operation thereof, and for the payment of the reasonable actual cost thereof, including a reasonable charge for supervision and storage. Except as provided in paragraph (c) of this subsection (7), as to each nonconsenting owner who refuses to agree to bear his proportionate share of the costs and risks of drilling and operating the well, the order shall provide for reimbursement to the consenting owners who pay for the drilling and operation of the well of the nonconsenting owner's share of the costs and risks of such drilling and operating out of, and only out of, production from the unit representing his interest, excluding royalty or other interest not obligated to pay any part of the cost thereof. In the event of any dispute as to such costs, the commission shall determine the proper costs as specified in paragraph (b) of this subsection (7). The order shall determine the interest of each owner in the unit and shall provide that each consenting owner is entitled to receive, subject to royalty or similar obligations, the share of the production of the well applicable to his interest in the drilling unit and, unless he has agreed otherwise, his proportionate part of the nonconsenting owner's share of such production until costs are recovered and that each nonconsenting owner is entitled to own and to receive the share of the production applicable to his interest in the unit after the consenting owners have recovered the nonconsenting owner's share out of production.

(b) Upon the determination of the commission, proper costs recovered by the consenting owners of a drilling unit from the nonconsenting owner's share of production from such a unit shall be as follows

(I) One hundred percent of the nonconsenting owner's share of the cost of surface equipment beyond the wellhead connections (including, but not limited to, stock tanks, separators, treaters, pumping equipment, and piping) plus one hundred percent of the nonconsenting owner's share of the cost of operation of the well commencing with first production and continuing until the consenting owners have recovered such costs. It is the intent that the nonconsenting owner's share of these costs of equipment and operation will be that interest which would have been chargeable to the nonconsenting owner had he initially agreed to pay his share of the costs of the well from the beginning of the operation

(II) Two hundred percent of that portion of the costs and expenses of staking, well site preparation, obtaining rights-of-way, rigging up, drilling, reworking, deepening or plugging back, testing, and completing the well, after deducting any cash contributions received by the consenting owners, and two hundred percent of that portion of the cost of equipment in the well, including the wellhead connections.

(c) A nonconsenting owner of a tract in a drilling unit which is not subject to any lease or other contract for the development thereof for oil and gas shall be deemed to have a landowner's proportionate royalty of TWELVE AND ONE-HALF percent until such time as the consenting owners recover, only out of the nonconsenting owner's proportionate SEVEN-EIGHTHS share of production, the costs specified in paragraph (b) of this subsection (7). After recovery of such costs, the nonconsenting owner shall then own his proportionate EIGHT-EIGHTHS share of the well, surface facilities, and production and then be liable for further costs as if he had originally agreed to drilling of the well.

(d) No order pooling an unleased nonconsenting mineral owner shall be entered by the commission under the provisions of subsection (6) of this section over protest of such owner until the commission shall have received evidence that such unleased mineral owner shall have been tendered a reasonable offer to lease upon terms no less favorable than those currently prevailing in the area at the time application for such order is made and that such unleased mineral owner shall have been furnished in writing such owner's share of the estimated drilling and completion cost of the well, the location and objective depth of the well, and the estimated spud date for the well or range of time within which spudding is to occur. During the period of cost recovery provided in this subsection (7), the commission shall retain jurisdiction to determine the reasonableness of costs of operation of the well attributable to the interest of such nonconsenting owner.

(8) The operator of a well under a pooling order in which there is a nonconsenting owner shall furnish the nonconsenting owner with a monthly statement of all costs incurred, together with the quantity of oil or gas produced, and the amount of proceeds realized from the sale of production during the preceding month. If the consenting owners recover the costs specified in subsection (7) of this section, the nonconsenting owner shall own the same interest in the well and the production therefrom, and be liable for the further costs of the operation, as if he had participated in the initial drilling operation.

OOPS!! KINDA LONG! I'LL TRY TO LINK IT NEXT TIME.

I’ve been reading your about your issues and concerns. I am a managing member of Petrovest, LLC, a small oil and gas land and minerals company based in Arapahoe County. Our principals reside in Elbert and Arapahoe Counties and been in the energy business in Colorado since 1979. We represent mineral owners in their negotiations with the large oil and gas operators and producers. We are independent and have no affiliation whatsoever with them. We understand the needs of local mineral owners, having negotiated oil and gas leases with Chesapeake, Conoco, EOG, Shell and many other large operators. Especially when it comes to the environmental impact of oil and gas drilling and operations including potential aquifer contamination, surface use issues, rig and operating noise, increases in heavy traffic, night-time operations and so forth. We are available to discuss potential solutions to these issues with you, however they must be negotiated into your oil and gas lease in order to be effective. If you work together in groups we can assist at no cost to you in negotiating your leases with the oil companies. So long as you are organized in groups of meaningful size and acreage, don’t be overly concerned about Colorado’s forced pooling statute. It is far more difficult to obtain a Commission order against multiple mineral owners over larger amounts of acreage, than individual holdouts. The statute should not be your motivation to lease. Making a well-informed decision and obtaining market rates should be your motivation. You are welcome to contact us at any time. Thanks, Jeff Lavenhar (303) 519-1142. Jeff@petrovestenergy.com.

Hi Jeff:

It sounds like your company is the intermediary between the owners of the mineral rights and the oil companies if this is correct? I recently attended a town hall meeting in Elbert County (KIOWA) where close to 300 people listened to the process of hydraulic fracturing. I had no idea the level of interest by oil companies pursuing this area of the niobrara formation. I will be in touch with you on an article that I'm writing.

J.

Get The Frack Out

Jeff Lavenhar said:

I’ve been reading your about your issues and concerns. I am a managing member of Petrovest, LLC, a small oil and gas land and minerals company based in Arapahoe County. Our principals reside in Elbert and Arapahoe Counties and been in the energy business in Colorado since 1979. We represent mineral owners in their negotiations with the large oil and gas operators and producers. We are independent and have no affiliation whatsoever with them. We understand the needs of local mineral owners, having negotiated oil and gas leases with Chesapeake, Conoco, EOG, Shell and many other large operators. Especially when it comes to the environmental impact of oil and gas drilling and operations including potential aquifer contamination, surface use issues, rig and operating noise, increases in heavy traffic, night-time operations and so forth. We are available to discuss potential solutions to these issues with you, however they must be negotiated into your oil and gas lease in order to be effective. If you work together in groups we can assist at no cost to you in negotiating your leases with the oil companies. So long as you are organized in groups of meaningful size and acreage, don't be overly concerned about Colorado's forced pooling statute. It is far more difficult to obtain a Commission order against multiple mineral owners over larger amounts of acreage, than individual holdouts. The statute should not be your motivation to lease. Making a well-informed decision and obtaining market rates should be your motivation. You are welcome to contact us at any time. Thanks, Jeff Lavenhar (303) 519-1142. Jeff@petrovestenergy.com.

I think Conoco is back peddling on their offers now. They sent a lot of us out here letters and some of the neighbors even got verbal offers which seemed pretty high, but no one ever saw a lease in writing. Now when we call them back they give us excuses about how they are re-evaluating, working maps, etc. I think their just trying to string us along to keep us from signing with another company.