Hidden Lakes Gas Lease Committee

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Wednesday, April 23, 2008

April 22, 2008 HLGLC Update

HIDDEN LAKES GAS LEASE COMMITTEE UPDATE - April 22, 2008

We know that many of you have received new gas lease offers recently, but your HLGLC (Hidden Lakes Gas Lease Committee) feels we can do better if we wait for a "group offer." The HLGLC is aware of news in the Star-Telegram last week of offers from Chesapeake ($17,000) and XTO ($18,500) for the areas east of HL and are working with those companies as well, for the benefit of HL residents. Having said that, you, of course, are free to negotiate and sign any contract that you wish at any time.

Sadly, the mineral rights for 101 acres in Hidden Lakes (actually 43 acres on Sky Creek Ranch and 58 acres of Hidden Lakes land) were deeded to Texas A&M. We will have a complete list of the HL addresses affected by end of week, we have been promised.

Also, research on the mineral rights ownership of the 43 acres of common areas in Hidden Lakes has brought more sad news. The developer, while transferring the surface rights to the HL HOA, has retained the mineral rights. We "maybe" own the mineral rights to approximate 9 acres. As many of you have emailed and expressed, research for one's mineral rights is very tedious and difficult, especially since the mention of mineral rights ownership is NOT carried forward with each new owner. We will leave that arduous chore up to the professional landmen who represent the various oil companies.

We expect to have this all tied up by early summer (but, no promises).

Click here to read an article about HLGLC posted earlier today - http://startelegram.typepad.com/barnett_shale/

Your Hidden Lakes Gas Lease Committee

gaslease@HLhoa.com

http://mysite.verizon.net/HLgasgroup

4:39 am | link

Tuesday, April 1, 2008

3rd Gas Lease Committee Update, Mar 31

Fourscore and seven days ago the Hidden Lakes Gas Lease Committee was formed, conceived and dedicated to the proposition that not all gas lease offers are equal.

Background

HL residents have been receiving offers for nearly a year from many different companies, yet the race for mineral rights in Keller is just now getting heated up. The Barnett Shale exploration in DFW started in east Fort Worth and Arlington and has gradually moved east and north. Questions have been received through the HL Annual Survey and many are addressed below.

Track Coalition Activity

You're likely read in the newspapers of other neighborhood coalitions forming and what they have negotiated for. There seems to be a new record amount each week. You can follow this action on the Star-Telegram's blogsite at http://startelegram.typepad.com/barnett_shale. If you click on Keller on the list of cities on the left, you will only find one entry. Colleyville and Southlake have a few more entries, but the bulk of the news comes from locations south and west of us. Put this Star-Telegram link on your desktop and follow the Barnett Shale news as it unfolds. You don't need to wait for updates from us.

Resources

If you know nothing about the Barnett Shale, an excellent source is at http://en.wikipedia.org/wiki/Barnett_Shale. Wikipedia states that "Some experts have suggested the Barnett Shale may be the largest onshore natural gas field in the United States." The Barnett Shale exploration has definitely been a financial boon for much of our part of Texas. One person equated it to a mini gold rush, keeping us from feeling the economic downturn felt in the rest of the U.S.

Having said all that, we will likely NOT be able to quit our day jobs!

Current Players

Your HL Gas Lease Committee has thus far met with 3 of the 4 major players who desire the mineral rights to our land. The 4^th one, Devon Energy, will likely be meeting with us in the next week or so. We have met with landmen for ExxonMobil, Chesapeake and XTO Energy. Chespeake and ExxonMobil only want portions of Hidden Lakes, not all of it (at least not at this point in time). Both XTO and Devon want it all under contract, including the rest of our coalition of 2200+ acres in Keller (and some acreage spread into Southlake east of Davis/Randol Mill).

Sky Creek Ranch Signs with XTO
Sky Creek Ranch just signed last week with XTO for $10,000/acre, 25% royalties, 4 year contract. XTO's drillsite is 14.3 acres west of Davis, just across from where Precinct Line meets Davis.

It will be difficult, if not impossible, to reach the gas shale on SCR without having Hidden Lakes under contract. They can't go under our properties without a contract. XTO has another proposed, yet to be announced, drillsite (north of Continental, west of Davis). Those two drillsites could conceivably reach all portions of Hidden Lakes (drillsite can go out in all directions 6000' to 8000')

Recommendation for XTO Offers
XTO landman, Colt Exploration, said that he was going to be sending out offers to HL residents for the amount given SCR. Although he stated that the wells in this area have NOT been producing the levels gotten in wells west and south of us, the HL Gas Lease Committee feels this $10,000/acre amount is too low. We recommend that you not sign any gas offers received from XTO (or any of the other companies) until we have done all our research and negotiated for a "group" price.

Chesapeake Status
Time is money. We were told by Chesapeake that it would take nearly a year to sign up a neighborhood our size, sending out offers, dropping off flyers, making door-to-door visits. They love working with HOAs who can communicate with its residents in the flip of a switch (actually, hitting the Enter key to send an email to 93% of our HL residents). The time is cut to 1-2 months. They are willing to pay for such expediency. They save lots of money and pass it along in much higher gas lease offers. Chesapeake has sent out offers of $8500/acre, 25% royalties, 5 year term, but verbally whispered at our meeting that a group offer could be "in the range of what you read about in the newspapers."

However, at this point, Chesapeake was only interested in the eastern portion of HL, what could be reached by their proposed drillsite at Union Church & Davis. Yes, that is the 19.4-acre site behind our Hidden Lakes entrance tower. They said the "activity" would occur on approximately on 4 acres nestled back in the woods, closer to Union Church. Extra precautions would be taken to minimize noise, dust and visibility to any HL residents they say. The first 21-35 days of boring the wellhead is the worst, thereafter removed and replaced by something only 6 feet high. Moreover, more than one wellhead (usually 4-6) is bored over the life of a drillsite, meaning that the month of noise/dust/visibility keeps occurring for years. We would demand stricter requirements, all in writing, of any drillsite that actually borders Hidden Lakes.

Already Signed?
For those of you who have already signed a gas lease offer, we are told that the "majority" player in an area normally buys up those contracts, and royalties are paid to you from the majority player but at the terms in your original contract. If an extension is required by that driller, you can likely renegotiate with them at that time.

HL Gas Lease Website
One of our committee members, has created a website for the HL Gas Lease Committee!! You can read all past Gas Lease Committee updates at http://mysite.verizon.net/hlgasgroup. He has added FAQs and Links to some helpful websites, including an online Mineral Rights Search Guide.

Patience Pays

While some of us want this whole "BS Project" (Barnett Shale, what did you think?) to be completed soon, it might behoove us to play a waiting game. While signing sooner gets the drilling started sooner and the royalties start coming in sooner, waiting will likely ensure better terms (bonus per acre, percentage of royalties, length of contract).

Royalties
Speaking of royalties: We were given amounts ranging from $80-$200 per month payments for 1/5 acre. These royalties would be larger in the beginning and taper off over the life of a well (could be 25+ years they say). As well, as new technology is developed for "fraccing" more out of the cement-hard gas shale, drillers return to capped drillsites to extract even more gas with the new methods. Your mineral rights CAN be retained when you sell your HL home (it is your responsibly to keep in touch with the HL Gas Lease Committee if you do this, at gaslease@HLhoa.com). Also, royalty payments can be passed on to your children through your will.

HL Common Areas
We continue to research whether the HL HOA owns the common areas and will be receiving offers or whether the developer retained. Research done thus far has been conflicting. We are diligently working on this and will keep you informed. In the event our HOA receives these "extra" monies, the HOA would surely poll our residents (via a survey) on how to spend it (reduce annual HOA dues, major community improvements that would increase the desire for buying into Hidden Lakes, or a combination of both).

Do You Own Mineral Rights?
The major players we have met with have told us that they do the title search on mineral rights ownership BEFORE they send out offers; thus, if you have received a gas lease offer, you more than likely own the mineral rights. See the new website described above for a link and instructions for doing your own research.

Received No Offer?
A couple of areas in Hidden Lakes have not received gas lease offers. Initial research has lead us to believe that Woodlands I's mineral rights were given to Texas A&M, and portions of Haddington/Ashmore in The Woodlands were retained by the landowner who sold that land to the developer of Hidden Lakes. We will still be researching that as well.

Gas Committee Membership
On a final note, your HL Gas Lease Committee has grown from 6 members to 12 members, adding volunteer residents who offer their expertises to this whole process. Two of these new members are attorneys who have negotiated gas leases elsewhere. Others have worked or are working in the industry of oil and gas exploration (but NOT for any of the companies we are meeting with). Their expertise is much needed and their services are much appreciated, and are being offered at no expense. All members of the HL Gas Lease Committee are volunteer residents.

Your HL Gas Lease Committee
Deborah Gatzke, Secretary
gaslease@HLhoa.com
http://mysite.verizon.net/hlgasgroup/

7:14 pm | link

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