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Author Topic: QUESTION ABOUT ROYALTY ALLOCATION  (Read 18134 times)

Berak

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #30 on: January 26, 2010, 08:39:44 PM »
He said that the land leased with Fortuna would be deducted out of the units when they are formed.  
And that is precisely why if Chesapeake were to drill, you would receive "0" royalties from Chesapeake for that particular property.  The properties leased by Fortuna are not included in Chesapeake's unit.  They would be merely surrounded by Chesapeake's unit.   By PA law Chesapeake can not drill under those properties leased to Fortuna.  That is of course if Fortuna doesn't flip them to or make other arrangements with Chesapeake.  What lies?

Here is the "lie":

Quote
He told me once a unit is formed that is it and it will not be changed.  If the land you have leased with others ends up in a Chesapeake unit you get nothing for it from them.

First off we have "the unit will not be changed".  Now it's, the Fortuna land will be "deducted" from the unit.  Which is it?  And exactly how does land leased to others end up in a CHK unit to begin with?  Answer, it can't.  It wasn't ever "in" the unit to begin with to be "deducted".  They can try and isolate those lands, they don't have any real control over them.  CHK can go pound sand.

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #31 on: January 27, 2010, 04:32:38 AM »
Ok, the land leased to Fortuna was leased to them in 2008 and some before that.
At that time all of the rest of the land was leased to Dominion.  Dominion did not want the small parcels.  This spring all of the Dominion leased land was assigned to Chesapeake.  Nothing was ever said about what was going to happen to the Fortuna leased land until I ask that question last Thursday.

The Fortuna leased land is going to be in at least 3 of the 800 acre Chesapeake production units.  But, both companies are saying the landowners of the Fortuna leased land will not receive any royalties because no deal has been made between the two companies.  As it stands now the drilling has been done in 2 of the Chesapeake production units.  Chesapeake has drilled 2 horizontal wells in each of them.

That is all I know about it at this time.  The only reason that I brought it to your attention is so that if you are in a similar situation you could check it out before the drilling starts in your area!  We thought everything was fine to.  And look where that appears to have gotten us.  Maybe you are all right and both companies are full of baloney?  I guess we will find out in the very near future!

Berak

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #32 on: January 27, 2010, 05:03:06 AM »
...
The Fortuna leased land is going to be in at least 3 of the 800 acre Chesapeake production units.  ...

This is the phrase that causes a problem with me.  If they are "in" the production unit then they are in it and the owners MUST BY LAW receive royalties.  If they are being exlcuded then they were never "in" to begin with.  I have a map and a crayon, I can draw a big rectangle too, doesn't mean those lands are in my production unit.  Like I said, they can go out of their way to not pick up Fortuna leases and try to isolate them to "punish" Fortuna if that's what they want, but, in reality they are only hurting themselves by not making all the money on the gas, something I would expect a large company would be loath to do.  It just wouldn't make any financial sense.

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #33 on: January 27, 2010, 04:18:16 PM »
Berak,  That is a good idea and you get an A for thinking of it!

Take a sheet of paper and draw 3- 400 acre production units.  We are only concerned with the 3 units on the south side of the wellheads.  Now label them 1-2-3 and they should all touch each other.  In unit number 1 in the upper right hand corner draw a rectangular parcel and label it 20 acres and put Fortuna on it.  In the lower right hand corner draw a rectangular parcel and label it 12 acres and put Fortuna on it.  Now go to unit number 2 and in the lower left hand corner draw a rectangular parcel and label it 5 acres and put Fortuna on it.  Now go to the middle of number 2 and draw a rectangular parcel and label it 2 1/2 acres and put Fortuna on it.  now  go to unit number 3 and in the upper left hand corner draw a rectangular parcel and label it 3 acres and put Fortuna on it. Now go to the middle of unit number 3 and draw a rectangular parcel and label it 1 acre and put Fortuna on it.  The rest of each of these units are all leased to Chesapeake. 

duffy

  • Posts: 2813
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #34 on: January 27, 2010, 04:26:26 PM »
Given your unit description Jeb that would be 1200 acres to the south and if Red Sky got everybody to sign the things they want them to sign 1200 to the north. But then they don't give numbers north or south, just sign an it will benifit everybody, see the problem? Other leases in the proposed unit don't mean squat.

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #35 on: January 27, 2010, 05:04:04 PM »
Duffy,

Chesapeake signed up nearly all large parcels around here in 2006 and have been ever since.  Those of us that had signed up with Dominion back in 2002 in this area have been assigned to Chesapeake.  When both Dominion and Chesapeake started leasing in this area nether one of them would sign up parcels under 30 acres. Fortuna came along and leased up all of these smaller scattered all over the place parcels.  Now Fortuna leased parcels have a problem.  Chesapeake has all the rest of the land leased and apparently neither company is willing to swap or trade these Fortuna leased parcels.

Maybe Fortuna plans to drill on each one of them and run pipelines to them!  That would seem not very practicable. 

duffy

  • Posts: 2813
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #36 on: January 27, 2010, 05:20:39 PM »
Man i wish i had a crystal ball and the knowledge to use it, in my mind Chk left alot on the table by not signing those smaller parcels. There are town residents being contacted in Southern Brad. Co and N Wyoming Co. to sign Chk leases that are basically lots. Then there is a jv with Fortuna in Litchfield Twp. so i guess there is more behind the scenes than we are being told, the future of the dark side is not clear to quote Yoda.

JETHRO

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #37 on: January 29, 2010, 08:32:49 AM »
STILL  BELIEVING EVERYTHING THEY TELL YA HUH JEB...WERENT YOU SUPPOSED TO BE SEEING ROYALTYS BY NOW IF YOU AND ALL YOUR NEIGHBORS THAT YOU GOT TO SIGN FOR ...HOW MUCH WAS IT BACK THEN? BOY I BET YOU LOST A COUPLE FRIENDS WHEN THE PRICE DOUBLED ...LIKE I SAID IT WOULD{AND AM BETTING IT WILL AGAIN IF NG PRICES GO UP}....GOD FORGIVE ME I CANT HELP TO GLOAT!! ;D

How do you know that I am not getting royalties?  You didn't have anything to do with anyone getting a higher price for a lease or a higher royalty percentage.  
It was all because of the large group of landowners in Susquehanna county that made that happen.  It then filtered back to you!  I didn't lose any friends at all!
If you are so sure that the price of natural gas will double then why did you sign a lease with Chesapeake?   Why did you sign with Chesapeake if you think they are liars and crooks?  I can tell you why!  You were afraid you would lose out!  You are just as greedy as the rest of us!  

Good luck to you!
HOW DO I KNOW YOUR NOT GETTING ROYALTYS ? EASY..YOUR NOT TELLING EVERYONE
 I NEVER SAID I GOT ANYONE MORE MONEY BUT IT SEEMS YOU THINK I DID....  BUT I WILL  SAY I DID MORE THEN YOU DID...SORRY ABOUT THOSE FRIENDS ... ;)
 YES WE SIGNED WITH CHK .. FOR FINANCIAL REASONS AND THE FACT THAT THE NUMBERS ALMOST DOUBLED AND ALIGNED WITH WHAT WE NEEDED.. AND BECAUSE CHK HAS EVERYTHING LEASED AROUND US. AND ARE GETTING READY TO PRODUCE SOME ROYALTYS!!..DERRR ;D
 I AM NOT GREEDY CUZ IF I HAD THE ABILITY TO WAIT IT OUT I WOULD ONLY WANT 30,000 /25% CUZ THATS  WHAT OTHERS GOT.
 JEB YOU SEEM LIKE A SMART GUY BUT IM SURE OTHERS WOULD AGREE THAT YOU  COME ACROSS HERE  AS JUVENILE AT BEST...
 YES I STILL DO SAY THAT COPARATIONS SUCH AS CHK ARE RIPE WITH LIARS AND THEIVES.. ITS THE WAY OF THE WORLD..BUT I WOULDNT BITE OFF MY NOSE TO SPITE MY FACE...BOTTOM LINE WE SIGNED WHEN WE FELT IT WAS RIGHT NOT WHEN SOME CORORATE CHEERLEADER SUCH AS YOURSELF TOLD US IT WAS RIGHT  !!
 JETHRO
« Last Edit: January 29, 2010, 10:33:45 AM by JETHRO »

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #38 on: January 29, 2010, 04:37:37 PM »
Jethro,

I think you were very smart to sign that lease when you did.   Like you said they had you blocked in and the time was right for you to do it.  We can see by what has happened around here with the Fortuna leases in Chesapeake production units.
You could have ended up with a worthless doughnut hole like it appears some of us have?

I don't think you are a greedy person at all.  You come across as a very sincere and caring person. 

I don't know if I am anymore juvenile than some of the others?  I agree that some things that I have said should have been rephrased.  I guess we all have our faults!

I am a big cheerleader of gas drilling in Pa!  Without it Bradford County and Pa. would be in a world of trouble.  There are hardly any houses be built, the farmers are most all in financial trouble.   The jobs that are available are mostly all low pay with no benefits.  There is little or no new industry in Bradford County or PA.
Gas drilling can, will and is changing all of this!

 


beazer

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #39 on: January 29, 2010, 07:11:36 PM »
Not to be redundant but does anyone have a theory why FG would just three weeks ago write a check (5500/20) for 50 acres in the middle of CHK country? That goes against what I understand to be in this thread. If FG knows they are land locked why spend the money?

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #40 on: January 30, 2010, 05:20:40 AM »
Not to be redundant but does anyone have a theory why FG would just three weeks ago write a check (5500/20) for 50 acres in the middle of CHK country? That goes against what I understand to be in this thread. If FG knows they are land locked why spend the money?

beazer,

They didn't do it 3 weeks ago. They leased it in 2008 and some before that.  I got $2500/15 and so did some of the others. The rest I don't know what they got.

I think of it this way.  They leased these small parcels to be used as bargining chips.  When if it didn't work out it was no big deal to them at all.  If everyone did get $2500.00 per acre and they paid everyone in full it was only $125,000.00.
Not very much money at all to an O&G!     

beazer

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #41 on: January 30, 2010, 03:52:20 PM »
Not to be redundant but does anyone have a theory why FG would just three weeks ago write a check (5500/20) for 50 acres in the middle of CHK country? That goes against what I understand to be in this thread. If FG knows they are land locked why spend the money?

beazer,

They didn't do it 3 weeks ago. They leased it in 2008 and some before that.  I got $2500/15 and so did some of the others. The rest I don't know what they got.

I think of it this way.  They leased these small parcels to be used as bargining chips.  When if it didn't work out it was no big deal to them at all.  If everyone did get $2500.00 per acre and they paid everyone in full it was only $125,000.00.
Not very much money at all to an O&G!     

JEB,
Thanks for the reply. Still have the same question though. The lease with FG was signed 10/09 not in 08.  The same time that CHK was leasing in the area.

Why would FG want 50 acres as a bargining chip if they know CHK is refusing to work with them. If that is the case I am sure FG knows this. All FG would have had to do is not pay the bonus monies and they would have gotten out of the lease. But they chose paid the bonus monies in full on 50 acres @ 5500/20 not 2500/15 just three weeks ago... Why...

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #42 on: January 31, 2010, 06:27:10 AM »
beazer,

I am afraid you have your facts and dates wrong on this one!  I signed my lease 10/08 and so did most of the other landowners.  The two larger parcels were signed prior to 2008! I got a five year lease and was paid in full.  2500/15/5 and that is what the others got. 

Why would we have signed leases for these small parcels with Fortuna on 10/2009 when the rest of our leases had been assigned to Chesapeake?  Chesapeake was already here on 10/09 drilling the wells? 

Three of us that signed those leases for the smaller parcels with Fortuna had around 1000 acres between us signed with Dominion in 2008.  Fortuna and Chief were here drilling within a few miles of us.  I had called Dominion several times and ask them what their plans for us were.  They told me they didn't have any plans and if they did I would be the first to know.  Chesapeake came along 11/2008 and wanted a pipeline ROW to cross the three of our properties and told us they had plans to drill several wells in this area.  We ask them if they could buy out our leases as well as the rest of the landowners leases in our group.  Chesapeake said they would try and they did get all of our leases assigned to them except for the Fortuna leases in April of 2009.

To the three of us the small Fortuna parcels that we hold are not much of a loss.  To the rest of the smaller landowners that don't have any other land, it is a very big deal!  They have all been calling Fortuna and they have been getting the same answers that I got!  If you are still a non believer stop by and I will show you the date on the Fortuna lease!     

JETHRO

  • Guest
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #43 on: January 31, 2010, 07:51:40 AM »
Not to be redundant but does anyone have a theory why FG would just three weeks ago write a check (5500/20) for 50 acres in the middle of CHK country? That goes against what I understand to be in this thread. If FG knows they are land locked why spend the money?
FG WILL SELL THE LEASE TO CHK..FOR PROBABLY 10K/25%...ITS FAIR

JEB

  • Posts: 1397
Re: QUESTION ABOUT ROYALTY ALLOCATION
« Reply #44 on: January 31, 2010, 10:43:52 AM »
Not to be redundant but does anyone have a theory why FG would just three weeks ago write a check (5500/20) for 50 acres in the middle of CHK country? That goes against what I understand to be in this thread. If FG knows they are land locked why spend the money?
FG WILL SELL THE LEASE TO CHK..FOR PROBABLY 10K/25%...ITS FAIR

Jethro,

Dominion got 15.5% right off the top for our leases that they assigned to Chesapeake!  Talk about a sweet deal, Dominion had peanuts in our leases.
I still hope that FG and CHK will make a deal on these smaller parcels.

 


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