I apologize for the lack of contact in the last few weeks, but I have had to catch up on work for my Cincinnati clients, and I have been getting some things in order for the group that required waiting on a response from others. I have several pieces good news, an outline of where I think we will want to focus our efforts, and a tentative time table for action.
The first is that I have a tentative agreement with another law firm that fits the bill precisely to provide the assistance we need. To be clear, no one is bound to any agreement with this firm at this time, and as a group or individually, we can end up rejecting their help, but the firm has tentatively agreed to help us under what I believe will be favorable terms. The firm is Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. The link to their oil and gas page is as follows:
The substantial benefits this alliance provides, include:
- They have already negotiated at least 8-10 Utica group leases, with most or all of them being the top dollar leases in their respective areas, and with superior landowner protection.
- Their Senior Partner in this area, William G, Williams has been named to the list of “Best Lawyers in America®” for Oil & Gas Law (2007-2012) and named to the list of Ohio Super Lawyers® for Natural Resources Law for the 8th year.
- They are large enough to have seven attorneys in their O&G division, and large enough to have sufficient resources on staff to handle, Estate Planning, Taxation, Litigation, Title & Real Estate issues, etc. for those who need it, but small enough to have the flexibility to tailor a program to meet our needs.
My own research led me to want to work with this firm, and the firm was independently referred to me by a close friend from college who has used them. I have had extensive conversation with several attorneys in the firm, and I found them to be very knowledgeable, but also very down to earth and open to suggestions about how to make this beneficial for all involved. Significantly, as we discussed the trial and error process they have already been through on these large group lease – I could sense the genuine disappointment when the landowners expectations could not be always be met, and the genuine satisfaction when the landowners expectations were exceeded. I was also presented the option of working with another non-attorney gentleman who has run some large and successful landowner groups, but it is my opinion that the our interests are best serve by the manpower and experience of a firm like KWGD.
The agreement with KWGD is not finalized, but I believe we are close enough to make everybody aware of it.
The second piece of what I consider to be good news is that there is another Landowner group in the area that provides a third option besides Graham & Graham. This allows us to re-focus on a smaller geographical area, as I will describe below. Their website is:
Besides being an alternative, they will likely spur interest in our area, and perhaps we can even work with them on some things in the future. However, I’m not advertising for them as a substitute for what we are doing, because there are some very definite reasons why I think what we are doing and planning is going to yield better results and a better turnaround time.
Now for the less positive news. First, despite dealing with many of the larger and smaller drillers on a recent and regular basis, KWGD doesn’t have any more knowledge than I do that there are particular drillers ready to make a big move into our area. The silver lining of this is that it continues to give us time to be prepared. We know that major drillers have been buying assignments of existing leases within the primary term, so the interest is there. It appears to be about timing and geology as we have discussed in the past. The geology problem remains, in that, until proven otherwise, the testing data to date indicates the productive line of the Utica Oil Window lies somewhere in the middle of Perry County, with the Eastern portion being more likely to be productive. The next likely indicator of geology in time, is the Muskingum County wells, if they show similar results to the other Utica wells further East, that will likely trigger a further move to the West. The timing issue has to do with raising funds and building wells, because only so much can be done so fast. But this issue is highly unpredictable as more and more sources of funds come pouring into the play (recently hedge funds have been testing the waters as traditional sources of return continue to disappoint).
The combination of the geology problem, the existence of another landowner group, and the areas of interest we currently represent, helps to refine our strategy in terms of geography, number of groups, group size, and time frames. This started as Perry County Shale, then expanded to include adjacent counties. We will keep the broader geographical possibilities open, but re-focus our initial efforts down to developing a few groups, or one group starting from a few areas. Even with the additional help of KWGD, there is a lot of work to be done, and trying to build up five counties at once would not allow us to properly serve the groups. As a tentative outline, I think the total initial areas will primary be from Glenford east, and from Perry County Forest North (map below). With two starting points in Mt. Perry and Glenford. That is a total area of around 80,000 – 90,0000 acres (not including any potential bleed over into Muskingum County) as drawn within the red line in the map below. By total area, I mean we would not focus energy on developing groups outside of that area. By starting points, I mean that most initial efforts will be directed toward building the Glenford and Mt. Perry group to a critical mass of around 10,000 acres. Those points are where our current base, and they are within the tentative geological sweet spot. Other groups within the total area could also be developed, but those outside of the total area would not be developed initially unless a significant number of landowners from those areas came to us already committed to the process.
TIMEFRAME / PLAN
I am tentatively suggesting Saturday, April 31st as the next meeting date, likely sometime late morning / early afternoon. If this doesn’t work for anybody, please let me know. The goals of this meeting will likely be to 1) Ensure the viability of the groups, 2) Present and get feedback on terms of agreement with KWGD, 3) Present and get feedback on a more detailed plan, and 4) Potentially get into lease terms.
The question of viability is just to ensure people are really interested in this group. We haven’t required or pushed anyone to sign to any commitment at this time, and we won’t be doing that at the next meeting either. But, at the same time, we want to know if people know that they aren’t interested. We especially want to know if people have signed commitments with other groups or attorneys, that would pre-clude them from participation.
The terms are not yet finalized, but that should be available on the 31st.
The general outline of a plan is to increase the marketing of the group substantially beyond just the word of mouth we have been doing, and put in place an every other week meeting schedule, to get to the earnest work of meeting our goals. When there is sufficient indication that qualified bidders are interested, we will begin a 90 day countdown on closing the group. That is to say that we will pick a date certain to put the group we have out for bid. We don’t want to put out the bid if there is still little interest in Perry County, but once the timetable is set – we will likely close the group at the end of the period and submit for bids. Winning bids will then be subject to detail negotiation and approval by the group, and hopefully agreement and payment.
There is a very well-crafted lease already put together that will be offered with the bid. The prospective lease will only be shared with those who have officially become members of the group, and there will be a confidentiality agreement that this lease cannot be shared with those outsider group members. We won’t likely get to disclosure of the full lease during the first few meetings, but we will continue to discuss the various lease terms in the effort to make sure those who want to fully understand the lease terms and options will have that opportunity long before they have to decide on an actual lease contract.
Well, that is all for now. Please advise of any concerns, questions or comments you may have, and I will get back with you once the date and location is confirmed.