From the Marcellus Drilling News:
At a meeting of the uber-large Associated Landowners of the Valley (ALOV) landowner group last night in Youngstown, Ohio, lawyer Alan Wenger warned the 500 landowners in the audience that landmen are knocking on doors once again, this time asking landowners already signed to modify their leases.
Wenger told landowners what energy companies like Chesapeake are asking for, and what landowners need to consider before signing:
Be careful when landmen knock on your door, promising more royalties from even more gas wells if you amend your mineral lease, attorney Alan Wenger told some 500 members of the Associated Landowners of the Valley gathered Monday evening at the Covelli Centre.
“The largest protagonist for amendments is Chesapeake,” he said. “They have such huge holdings in our area, it’s very difficult for them to drill enough wells to hold all the parcels during the primary terms of their leases.”
ALOV convened the meeting to inform its membership – 5,500 people representing the ownership of more than 250,000 acres in 10 counties — of new legal challenges they face, including even higher taxes on the combined $500 million in income they have already received from bonus payments and future royalty payments.
Of immediate concern to Chesapeake and other drillers is the unit size of the leases landowners have signed, Wenger began. ALOV leases stipulate units of 640 acres per well, which must be drilled within a specific time frame, typically five years. Should landowners agree to expand the unit size by amending their lease, they give drillers greater flexibility.
“They’re coming back and trying to get another bite at the apple,” Wenger warned. “They try to appeal to the [landowner] by claiming they’ll drill more wells” and pay more royalties, “but in fact there’s no assurance of either of those things.”
And it’s not just the unit size some lease amendments seek, he continued. “We’ve seen amendments that are an effort to gut your lease, not just through utilization issues but also with royalties,” Wenger said.*
Read the rest of this excellent story Wenger’s expert advice by clicking the link below.
*Youngstown (OH) Business Journal (Nov 13, 2012) – Drillers Want ‘Another Bite at Apple,’ ALOV warns
Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.
Rig Count Interactive Map by Baker Hughes, an energy services company.
Shale Sheet Fracking, a Youngstown Vindicator blog.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.
Concerned Citizens of Medina County, a grass-roots group.
No Frack Ohio, a Columbus-based grass-roots group.
Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.