0 – 15 Minutes
Doug explains his oil and gas practice across Pennsylvania and landowner only representation. Doug introduces listeners to Pennsylvania’s Oil and Gas Conservation Law and its applicability to the Utica Shale formation. Doug jumps on his soap box to beg landowners to “STOP SIGNING” oil and natural gas agreements without knowledgeable and experienced legal counsel. Doug again reminds listeners that when gas companies stop drilling expensive horizontal wells in a low natural gas price market opportunities may arise to negotiate new leases or to negotiate landowner friendly addendum terms when extending or modifying your oil and gas lease.
Lessors are missing out on thousands and hundreds of thousands of dollars by failing to identify powerful negotiation leverage and opportunities which can be extremely difficult to recognize without significant oil and gas experience. Doug gives an example of where the landman failed to delete language from an addendum that reveals that the landman was to not provide landowner friendly addendum language unless specifically requested by the landowner during negotiations. Landowners must identify and recognize their negotiation leverage and understand what additional addendum terms to request.
15 – 30 Minutes
Doug discuss how low natural gas prices have resulted in gas and pipeline companies contracting and reducing or halting horizontal well drilling, pipeline installation and other related gas development projects. Doug explains Pugh Clauses and Depth Severance provisions and how gas drilling companies may limit themselves to only penetrating and developing the Marcellus Shale layer. However, due to the exciting prospects of the Utica Shale formation in central and western Pennsylvania, companies who are limited to the Marcellus Shale formation are seeking to extend, modify or amend existing oil and gas leases to allow access to develop the Utica Shale and other deeper formations.
It is not always easy to identify the intent of the drilling company when asked to extend or amend your gas, so it is very important to identify whether modifying your existing gas lease will open up Utica Sale development. If so, there may be a substantial opportunity to negotiate a separate lease or additional terms to permit Utica Shale or deeper shale formation development. Intelligent negotiations may result in:
1. Significant per acre bonus payments;
2. Increases in the landowner’s natural gas royalty percentage;
3. Elimination or reduction of deductions of post-production costs such as pipeline gathering and transportation fees; and
4. Many other property protection terms.
30 – 45 Minutes
Doug explains how gas lease extensions may have a secret motivation to allow the drilling company to continue to have access to the Utica Shale and other deeper geological formations. Doug explains Pennsylvania’s Oil and Gas Conservation law and how it may have a critical impact on Utica Shale gas development in Pennsylvania. The Oil and Gas Conservation law involves the possibility of “forced pooling” and all signs point to the notion that gas companies want to avoid any application of the Oil and Gas Conservation law due to the uncertainty of its application. Doug goes through a case study and explains a recent case involving Hilcorp and the Oil and Gas Conservation law and how the case was ultimately dismissed before any final decisions were made and precedent set.
45 – 60 Minutes
Doug continues to discuss the Hilcorp case and the impact of the Oil and Gas Conservation Law. The existence of Pennsylvania’s Oil and Gas Conservation law may provide landowners additional negotiation leverage when negotiating leases for the Utica Shale formation. This conservation law involves potential and considerable company expenses to develop the Utica Shale formation and companies appear to want to avoid these expenses, but perhaps more importantly for the companies, they do not want to enter into the unchartered waters of the applicability of the Pennsylvania’s Oil and Gas Conservation Law to Utica Shale natural gas development.
The show concludes with the announcement of The Clark Law Firm’s free landowner only seminar to be held on June 15, 2016 at the Dean Center in Wellsboro, Tioga County Pennsylvania.