Transcript Ohio Utica and Marcellus ShalePROGRAM FOR C O S H O C T O N C O U N T Y.

Ohio Utica and Marcellus Shale
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PROGRAM FOR
C O S H O C T O N C O U N T Y L A N D O W N E R S G R O U P, L L C ( C C L G )
H E L D AT
COSHOCTON COUNTY CAREER CENTER
23640 AIRPORT ROAD
COSHOCTON, OH 43812-9222
W E D N E S D AY, A U G U S T 2 1 , 2 0 1 3
B Y: D I C K E M E N S A N D S E A N J A C O B S
E M E N S & W O L P E R L AW F I R M
COLUMBUS, OHIO
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Ohio Utica and Marcellus Shale
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Review of Past Presentations
1. Ohio Utica/Point Pleasant shale play
2. Landowner lease questions and general leasing advice
3. Quick overview of educational programs we have given :
1. Oil and Gas Lease Provisions
2. Clearing Mineral Title
3. Landowner Unfriendly/Friendly Lease Provisions
4. Easements
5. Ohio’s Conservation Laws—Landowner Benefits & Detriments
6. Tax Savings
7. Estate Planning
4. Utica/Point Pleasant Shale Update
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Shale Gas Plays, Lower 48 States
Devonian (Ohio)
Marcellus
Utica
Shale Gas Plays
Basins
Stacked Play
Shallowest / Youngest
_________
_________
Deepest / Oldest
© 2013 Emens & Wolper Law Firm
Source: Energy Information Administration based on data from various published studies.
Updated: March 10, 2010
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Utica and Marcellus Shale History
Isopach map of the Marcellus Shale in the Appalachian basis. Found in ONDR Division of Geological Survey’s oil and gas well
©database
2013 Emens & Wolper Law Firm
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CCLG
Utica and Marcellus Shale
Landowner Leasing General Advice
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Key Landowner Questions
1. Is there an opportunity to make meaningful money by signing an
Oil and Gas Lease?
2.
If so, how do I do this?
A.
Lease Bonus
B.
Delay Rental
C.
Production Royalty
3. How do I protect my land if I sign an Oil and Gas Lease?
4. What are the major factors that will impact numbers 1, 2 and 3?
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Landowner Leasing General Advice
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Mineral Deed versus Oil and Gas Lease
And Sale of Minerals Lease
A LANDOWNER wants to be even more careful if the
Landman wants a Mineral Deed rather than an Oil and Gas
Lease.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Landowner Leasing General Advice
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Landowner Beware of Signing
AFTER Term Expires
If the primary term of an old lease has expired, be very
cautious about signing any “renewal”, division order,
affidavit, etc., etc.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Landowner Leasing General Advice
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IF a Landowner decides to sign:
1.
2.
3.
4.
Be certain EVERY WORD of the lease is
understood.
Make sure the LESSEE ALSO SIGNS THE
LEASE.
Have two copies of the lease fully signed and the
Landowner keep one, with EACH PAGE
INITIALED BY BOTH PARTIES.
The Lessee should agree in writing to promptly
record the lease (or a Memorandum of Lease)
and advise the Lessor in writing of the
recording information.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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1. Educational programs we have given:
1. Oil and Gas Lease Provisions
2. Clearing Mineral Title
3. Landowner Unfriendly/Friendly Lease Provisions
4. Easements
5. Ohio’s Conservation Laws—Landowner Benefits &
Detriments
6. Tax Savings
7. Estate Planning
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Clearing Title for Oil and Gas Development


After a lease is signed the Lessee has a certain period of time to check
title and pay on the acreage that has clear title.
Therefore, you want to make sure that any title issues are discovered
and resolved prior to signing a lease.

Many Title Issues take time to resolve so there is not enough to time
resolve the issue if title curative work is started only after the lease has
been signed.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Determining if you have a Potential Title Issue
 Question 1. Do you own the minerals on the property you believe you
own?
 TITLE

OPINION
Question 2. Are there any unreleased oil and gas leases of record on
the property you are considering leasing?
 TITLE
SEARCH
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Do You Own the Minerals?
 Title Opinion can help determine
 If the mineral estate and surface estate have been severed by a past
instrument
 Rights
of mineral and surface estate owners depend on
the language in the instrument of severance
 Typically the mineral estate owner has right to lease
and receive lease benefits
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Do You Own the Minerals?


Want to make sure there is an instrument of record
transferring the surface and minerals (or just the minerals) to
you
If you are the owner of a severed estate you want to be aware of
any Ohio Dormant Mineral Act (ODMA) Issues that may exist.
We
can further discuss the ODMA in a later
presentation
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Old Leases on Property

Landowners who own the minerals but have one or more
unreleased oil and gas leases of record should consider the
following questions:
How many acres do you believe you own?
 Has the primary term of the most recent lease expired? (How
many acres does the lease cover?)
 Is there one or more producing oil and/or gas wells on your
property? (How many currently producing wells?)
 Have you received any oil and gas checks and if so when was the
most recent check received?

© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Old Leases on Property

Questions Continued:
Were there ever producing wells on your property?
 Were there ever producing wells on property from which your
property was subdivided?


Important Consideration:
•
•
•
Was your property ever part of a larger tract of land?
If so, is there an unreleased oil and gas lease covering that larger
tract of land?
Even if there is no well on the property you currently own, your
property may still be affected by the terms of an old oil and gas
lease.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Old Leases on Property

An attorney experienced in oil and gas law can help you
determine if an unreleased oil and gas lease is still in force and
effect and can discuss with you what rights you may have if
there is an oil and gas lease covering your property that is still
in effect.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Clearing Mineral Titles
 Old Leases on Property

The three common methods of clearing your title of an
expired/terminated oil and gas are:
(1.) Recording a “Release” of Lease from the Working Interests
owners.
 (2.) Following the Affidavit of Forfeiture procedure in Ohio
Revised Code (R.C.) §5301.332.
 (3.) Bringing a quiet title action


You may also wish to record an Affidavit of Non-Compliance as
discussed on the next slide
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Landowner Unfriendly/Friendly Lease
Provisions
DICK’S DANGEROUS DOZEN… PLUS TEN LANDOWNER
UNFRIENDLY TERMS IN AN OIL AND GAS LEASE
1.
2.
3.
4.
5.
6.
7.
8.
9.
Standard Lease (“Landman talk”)
Non-hydrocarbons (Granting clause)
“Water” (Granting clause or anywhere in lease)
Facilities/Structures/Buildings (Granting clause or anywhere in lease)
Operations (Granting and/or Term clause)
Disposal or Injection (Granting or separate clause)
Gas Storage (Granting clause or anywhere in lease)
“Neighboring lands” (Granting clause)
Capable of Production (Term clause)
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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DICK’S DANGEROUS DOZEN… PLUS TEN LANDOWNER
UNFRIENDLY TERMS IN AN OIL AND GAS LEASE CNT’D
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
“Other payments are made” (Term clause)
Net Royalty (Royalty clause)
Non-contiguous Land (Pooling clause)
Pool Before or After Drilling/Reform/ Enlarge (Pooling clause)
No Implied Covenants (separate clause or hidden)
Notice (separate paragraph)
“Commence” (Notice clause and anywhere)
“Force Majeure” (separate clause)
“No Forfeiture or Termination” (separate clause and anywhere)
“Option” or “Renewal” (separate paragraph or hidden)
Arbitration (separate paragraph)
Payments suspended (Lien clause or hidden)
Memorandum of Lease (additional sheets)
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Easements and Rights of Way
Development of Ohio Shales - - Utica, Point Pleasant
and Marcellus formations - - has located large
volumes of oil, wet gas, and dry gas
The oil and gas companies doing the development
need pipelines to carry these products and need
Rights of Way/Easements (“ROWE”)
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Easements and Rights of Way
• Many Landowners may be approached by companies who
want a pipeline easement
• Easements are NOT the same as leases
• The easement that a pipeline company will present to
you is likely to be a perpetual easement
• A perpetual easement is PERMANENT and could last
forever unlike an oil and gas lease which is for a
limited duration
• A perpetual easement can be extremely difficult to
remove from your title even if the pipeline company is
no longer using it and has removed all of its
equipment
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Easements and Rights of Way
• Every word in a Pipeline Easement is negotiable
• Considerations When Negotiating an Easement
•
Type of Pipeline
• Interstate
• Intrastate
• Local Collection System
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Estate Planning
 Do you want to pass your farm to your children and/or
grandchildren –or are they not interested? Do you have
a significant mortgage? Is your farm large enough to
support several families?
 Is your farm land your major asset? Are you concerned
about dividing your farm…your assets…among several
children?
 Do you have enough to care for your surviving spouse?
Enough so your children do not worry about how they
will pay for your –fill in the blanks…_____
(food/housing/healthcare) until you die?
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Utica and Marcellus Shale
Overview of Educational Programs
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Estate Planning
 For Farmers and other land owners, tremendous
opportunity to pass ownership from one generation
to the other.
 Make sure your advisor is experienced in oil and gas
law and estate planning, including how to best plan
for lease bonus and royalty payments.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Ohio’s Utica and Marcellus Shale Update
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 As of 8/10/13, the ODNR is reporting 34 drilling rigs
operating in the state. So far, 841 horizontal drilling
permits were issued since record keeping began and
502 wells were drilled.
 Ohio has 125 horizontal wells producing.
http://oilandgas.ohiodnr.gov/shale.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
UTICA HORIZONTAL WELL STATUS THROUGH
8/3/2013
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 Produced by
MacKenzie Land &
Exploration, Ltd. of
137 E Dublin Granville
Rd Ste E
| Worthington, OH
43085
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Ohio’s Utica and Marcellus Shale Update
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Company Updates
 Gulfport recently added 8,000 acres to its holding for a total of more than 145,000
acres in Ohio. http://www.timesreporter.com/newsnow/x997486876/Gulfportadds-acres-in-Ohio-Utica-Shale.
 Kinder Morgan and MarkWest announce a Joint Venture to support northern Ohio
rich-gas development and NGL takeaway from the Utica and Marcellus Shale
Resource Plays to pursue two critical new projects to support producers in the Utica
and Marcellus shales in Ohio, Pennsylvania and West Virginia: (1) processing
complex in Tuscarawas County, Ohio and (2) pipeline that originates at the planned
JV processing facilities in Ohio and transports NGLs to Gulf Coast fractionation
facilities. http://phx.corporate-ir.net/phoenix.zhtml?c=119776&p=irolnewsArticle&ID=1845755&highlight.
 EnerVest indicated it recently sold off 22,535 acres in Guernsey, Harrison and
Noble Counties to an undisclosed buyer for $284.3 million. That is an average of
$12,900 per acre. EnerVest indicated the prices paid range from $11,000 to $15,000
an acre. http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/moredetails-on-enervest-sale-stark-tuscarawas-oil-drilling-project-1.419918.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Ohio’s Utica and Marcellus Shale Update
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 EnerVest also indicated it plans to drill 20 new exploratory OIL
wells in three areas of Stark and Tuscarawas counties.
http://www.ohio.com/blogs/drilling/ohio-utica-shale1.291290/more-details-on-enervest-sale-stark-tuscarawas-oildrilling-project-1.419918.
 Vortex Energy, LLC recently leased 23,000 acres, more or less, in
Washington County, Ohio for $4,000/acre with an 18% royalty.
 Aubrey McClendon back in Ohio. McClendon’s American Energy
Partners put up the high bid for 50,000 acres offered by Shell in the
Ohio portion of the Utica. McClendon is also thought to have
acquired 22,000 acres of Utica acreage from EnerVest, one of
Chesapeake’s partners in Ohio, for more than $250 million.
http://www.forbes.com/sites/christopherhelman/2013/08/16/aubr
ey-mcclendon-is-back-with-deals-in-the-utica/.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Emens & Wolper Newsletter for Additional Shale
Updates
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 Emens & Wolper Law Firm produces a Quarterly
Newsletter designed to inform landowners on the
latest updates in the Ohio Utica/Point Pleasant Shale
play.
 If you would like to receive this newsletter, please
contact Chris Hodakievic in our office and ask to be
added to our email list. Chris’s contact information
is:
[email protected]
 (614) 414-0888.

© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
Educational Purpose
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 These materials have been prepared by Emens & Wolper
Law Firm for informational purposes only and are not
legal advice. This information is not intended to create,
and receipt of it does not constitute, an attorney-client
relationship. No person should act upon this
information without first seeking professional
counsel. While every effort is made to keep the
information accurate and up-to-date, Emens & Wolper
Law Firm makes no representation as to the accuracy,
reliability, timeliness, or completeness of the information
contained or referenced herein and the information is
subject to change.
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG
THANK YOU FOR YOUR
ATTENTION
WE WILL BE HERE FOR QUESTIONS
AFTER THE PROGRAM.
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DICK EMENS & SEAN JACOBS
ONE EASTON OVAL, SUITE 550
COLUMBUS, OHIO 43219
614-414-0888
EMAIL – [email protected]
[email protected]
© 2013 Emens & Wolper Law Firm
8/21/2013 CCLG