10 March, 2010

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The Maine NY Gas Coalition was formed with the goal of enabling landowners in Maine NY to work together to obtain the best possible gas lease compatible with the group's ownership goals.

 

 February 14, 2010 Minimize

Subject: Natural Gas Update - 2/14/10

Several of our members have contacted us regarding the South Maine Coalition's proposed deal with Inflection Energy that was recently announced in the Press & Sun Bulletin and how it may affect our group.

Since the South Maine Coalition has kept the details about their proposed contract very much to themselves, we can only reply based upon the newspaper article that we’ve all read. It is our understanding that the wildcat gas
company, Inflection Energy, was organized within the last year and we would question what kind of capital they have to pursue or even back their endeavor should something go wrong as it has in Pennsylvania with Cabot Oil & Gas – or is their intent to turn over the leased property for a profit?

The payout of the sign-up bonus monies over eight years as Inflection Energy continues to develop their leaseholds would most likely negate much of the $6,000 per acre bonus monies since once the acreage is unitized or the company starts operations upon the leasehold properties most contracts stop other payments. Therefore, property owners might only receive one or two payments of the “signing bonus” monies. Remember that 3,200 acres will only support five 640 acre units for horizontal drilling so it doesn’t take too much effort on the gas company’s part to tie up all of the property to cancel further payments other than royalties.

Of course, as the newspaper article pointed out, the real money to the landowners is derived from the royalties. The concern here is that the article indicates that the royalty is 20% “subject to certain deductions”. These
deductions can be set by the gas company so there is a question as to what the real royalty might be.

We certainly hope the South Maine Coalition’s attorney has taken the steps necessary to minimize exposure. The bottom line is that "the devil is in the details" and the details are in the contract -- and we don't know what that contract states.

While we have been somewhat negative, our hope is that their legal representative is on top of all the concerns that are obvious to the landowners as well as those that can arise from misinterpretation and ambiguities of a
typical gas contract. If their groundwork has been done, the group is to be commended and we all wish them well since their success is ours as well. We were particularly happy to see the attention that is being paid to less than 5000 acres when associated with Millennium pipeline system. This could be the first real deal in what will be, no doubt, more that will come to our area in the following months. Companies are still reluctant to obligate themselves until the moratorium is lifted on drilling in the Marcellus. 
 

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 January 10, 2010

Tom Libous Reports to You

 
 
 
 

 

I'm disappointed in what I saw in Governor Paterson's Budget Proposal that was released yesterday.

 

He didn't cut spending.  In fact he increased it by $787 million.

 

He's looking for almost $1 billion in new taxes and fees.

 

Included in Governor Paterson's Budget Proposal is a 3% severance tax for gas companies extracting from Marcellus Shale.  In my letter to Commissioner Grannis I asked that any new taxes be dedicated to safe drilling.  It doesn't appear that the Governor is proposing that. 

 

The good news for safe gas drilling is that Governor Paterson has allowed for an increase in DEC, DOH and PSC staff specifically to handle safe natural gas drilling. 

 

Hashing this out over the next few months will be tough.  But we've got to get spending down and give businesses some tax relief so they are willing to keep doing business in New York.

Keep in touch!  

 

Tom

 

  
 January 5, 2010 Minimize

 

 

 

From the Desk of Tom Libous

Dear John,

Happy New Year! I hope 2010 will be a safe and happy year for you and your family.

 

As you know, the DEC's comment period on the draft SGEIS for natural gas drilling ended last Thursday.  I'm glad so many of you took the time to express your opinions on it.  If you'd like, you can read my letter at Safe Drilling Now. 

 

You can also read other comments from Assemblywoman Lupardo, County Executive Fiala and other community and statewide groups on the draft SGEIS.

 

Be sure to check for the latest news on www.safedrillingnow.com as we wait for the DEC's next step.

 

Stay in touch.

Tom signature

 

 
 
 

  

 

 

  
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 The Marcellus Formation

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The Marcellus Formation, also classified as the Marcellus Subgroup...

 

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