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TO: All CCNA Area Residents
FROM: Gary Hogan, CCNA Vice President
SUBJECT: Efforts to Purchase Mineral Interests in CCNA Area
I recently received an offer by Southwestern Petroleum Company L.P. to purchase the mineral interest to my property for a one time sum of $1500.00 per mineral acre, equal to just $250.00. I am writing this letter, as I assume that many others in our area have received a similar offer.
Keep in mind that we originally signed for $6,000.00 per mineral acre, which equaled about $550.00 minimum per lot. I feel compelled to educate people so they will not be confused by these offers to purchase your mineral Interest.
- This is a one-time purchase price (SELLING) for all your mineral interest to your property FOREVER. If you sign this and collect just $250.00 you will not receive any more royalty checks again. In my opinion, it would be very unwise to accept that paltry amount up front for your mineral interest.
- In Texas, mineral interest is the DOMINANT ESTATE. By selling your mineral interest, you would also abdicate rights and power of your surface property rights to a corporation. Please understand what this means: the mineral owner can literally give permission for surface use of your land. This is not a position any property owner wants to find themselves in!
- Also, regarding the economic issue, the mineral owners in our lease group have only received one royalty check to-date for the land that was pooled into a new lease with ours’. Although that was just $100.00 to $150.00 so far, there will be other dividends to that share soon. Chesapeake Energy was not forthcoming with even that original share of our rightful royalty until CCNA, which helped negotiate our leases, intervened to acquire our rightful share of that pooled interest.
- No well-bore has been drilled to access the mineral gas interest underneath our properties. At some point in time at least two gas wells will be drilled into the Barnett Shale under our properties. Although I have told people this will never be a grand fortune, it certainly will far exceed $250.00 over time. A conservative estimate would be somewhere between $8,000.00 to $13,000.00 per well shared, over an estimated 15 to 20 year well life.
- We stand to share from up to four wells in our area. Of course, this is all speculative and based on many uncertainties. There are many factors, including. but not inclusive: Quality of production from any given well, volatility of the price of the produced gas (value and market), and the desire of the operator to produce at all from any given well during any period of time.
- Per our lease agreement, we leased only the mineral interest in the Barnett Shale strata. There is evidence of another yet-to-be-reached gas-bearing strata below the Barnett that our lease also protects. This sale of your mineral interest would abdicate all mineral interest under an owners property, not just the Barnett Shale region.
- If this company was able to acquire a majority-voice of our leases, it could potentially give them the power to alter some of the protective measures we agreed to within our lease agreements.
- It is also possible that this company may be working for the main owner/operator (currently Chesapeake Energy) to acquire full rights to 100% of ALL mineral interest of the lease pool and land. DO NOT FORGET the DOMANANCE of The Mineral Estate in Texas.
Many of you may know that I have been deeply involved on these gas-related issues as a member of the Fort Worth Gas Ordinance Task Force in 2006 & 2008. I have represented not only our neighborhood association with leasing, but have also consulted with approximately 50 other groups with their efforts to lease, or resist leasing efforts, or at least to find ways to lease and protect their neighborhood interests. I have never been a strong supporter of dense urban drilling, and I retain my concerns on that. In my opinion, the Gas Industry has not treated people and neighborhoods fairly, equitably, or agreed to operate in accordance with environmental best-practices, and I continue to fight for these efforts as Vice President of the North Central Texas Communities Alliance, a region-wide watchdog organization. For more information on these matters, please visit the NCTCA website.
Thank you for taking the time to read this information. I hope you have found it helpful in your decision. If you have any questions, please feel free to email me at Hogangaryfwtx@aol.com.
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