Lease & Bonus checks

from Chesapeake received after 4 months. What is next? Is anyone getting any drilling on acreage?

In addition to Chesapeake, there was some Howard Bass activity that is now dominated by Range Resources. Range has a permanent office at Southpointe due to their success in lease agreements in Washington County. You may go 4-5 years with the lease agreement until they begin sismic studies in order to determine drill sites. Sismic studies can allow them to know the amount of methane gas at a particular site. Once there are enough signede lease agreements contiguous to one another and once the sismic studies are completed it takes about 18 months to finalize/create the drill site.

By the way, changed my name.

Are you in a group with your acreage? We will probably be waiting years to have any drillling activity on our acreage, based on waiting for agreements contiguous to one another.

I was fortunate enough for my Washington County property to be contiguous to 100+ acres that are leased. Consequently because the acreage in Cecil Township is oftentimes larger than just an acre lot, it makes it attractive for Range Resources (and others) to move forward in the process. For a while it was my understanding that Howard Bass was spending time in Canonsburg with owners of 1/4 acre lots; they learned the lesson that this type of lease for small parcels of land takes too long and has too many gaps. One thing for sure, people are either in favor of leasing OR they are not. There seems to be no middle ground on this topic. It is necessary for one's local government to develop some sophistication about road repair due to the heavy weight of fracking trucks loaded with water and chemicals, appropriate fees and approval processes for drilling sites, and the like.

We were paid handsomely for 20 acres Washington County & 4 acres Greene County. Based on what they paid us, my guess would be our acreage is contiguous or soon to be contiguous. Am I right?

Thomas Prickett said:contiguous

I was fortunate enough for my Washington County property to be contiguous to 100+ acres that are leased. Consequently because the acreage in Cecil Township is oftentimes larger than just an acre lot, it makes it attractive for Range Resources (and others) to move forward in the process. For a while it was my understanding that Howard Bass was spending time in Canonsburg with owners of 1/4 acre lots; they learned the lesson that this type of lease for small parcels of land takes too long and has too many gaps. One thing for sure, people are either in favor of leasing OR they are not. There seems to be no middle ground on this topic. It is necessary for one's local government to develop some sophistication about road repair due to the heavy weight of fracking trucks loaded with water and chemicals, appropriate fees and approval processes for drilling sites, and the like.

Historically there is not a direct relationship between what is paid for the lease (i.e., average of $600 to $800 per acre per year) plus there may be an incentive if they are trying to close on contiguous tracts of land and for what is paid during production. When production payments begin, lease payments end, and it is my understanding that you are paid on the % that is in your lease agreement (i.e., usually 12 to 16%). In essence with the price of methane gas "down" it currently amounts to about $659 per acre per month during production right now. This is based on $2.45 price of gas. As you can appreciate when gas goes up to $4 or $5 then you can see much more than $659 per acre per month during production.

Cecil is relatively full of housing developments. That, their stance on zoning (eg. MarkWest's compressor station), and their position relative to the wet/dry line means that activity in Cecil will lag behind the western townships for a while.


Independence seems to be getting the most new permit applications lately, with lots of wells about to go online in Cross Creek. Range can't say enough about the super-rich region.


T. Prickett -- your statement about lease payments ending when production payments begin doesn't match with the majority of leases in Washington county. Anything signed since 2008 was likely a "paid-up" lease, where all bonus is paid upfront. No payments would be made after that until an extension is filed, production begins, or a shut-in bonus is paid.

Gerald,

Not all lease agreements in Washington County pay "up front". Usually the lease is paid annually for the duration of the lease agreement (i.e., usually 5 years) with an option to renew for 3 more years. Only when the land owner requests/demands an "up front" payment is that offered. Obviously "up front" payment is preferred in that you receive your money in one payment. In regards to Cecil Township, we live there. I donl;t knlkw if I agree with your statement, "Cecil is relatively full of housing developments". One of the reasons that we live here is the availability of nice plotrs of land (i.e., 5-10 acres) on which a house may be built, giving privacy and multiple uses of the land. What I would agree with is that the Township Supervisors have been hesitant to "develop" the Township's resources. Cecil Township has, in fact, "developed" IN SPITE of its supervisors, not because of them. Many of the local politicians have resisted Marcellous Shale access by Range Resources.

Good to have you on the Washington County webpage. We can use as much information and updates as possible.

Tom

Many residents of Independence, Hanover and Cross Creek would say that "nice plotrs of land (i.e., 5-10 acres) on which a house may be built," would mean full of housing developments. ;) Just kidding - the expected Btu probably has more to do with it.


Who is offering annual payments? I've only heard of upfront bonuses from Range and Chesapeake. Atlas/Chevron has pretty much left the area. I think CNX is still wrestling with storage leases and others in the southwest.

In Cecil Township Range Resources offers annual payments to leases that are 4 or 5 years old.

I didn't know that. Were these originally signed by Great Lakes? I remember seeing some other companies active back then, but don't recall the names.

I only know one person in Cecil - they signed with Range in 2008, upfront bonus.

4-5 years ago Range Resources was seeing activity in and around Hickory, Pa. and also wanted to get leases signed in Cecil Township so they offered annual payments. Steve Hallam was the landman at the time; he is no longer employed by Range.

Another company (OTX or Exxon-Mobil) is also doing annual payments for leases in the northern West Virginia (Mannington in Marion County area).