NHMOC Updates

The NHMOC would like to update you on the following issues:

• Gas collection pipelines
• Expected leasing within our footprint
• Seismic surveys
• Gas well permits in Hurst

Gas Collection Pipelines

Since our last update, several new developments have helped shed some light on the Gas Leasing and Drilling in our area. According to the city of NRH, of the 59 permitted gas wells in NRH, only one has produced any gas. Chesapeake didn’t have the pipeline connections to take the gas to market, but drilled the wells to maintain the leases on the large commercial tracts such as TCC , Walker Creek Park, the Birdville School District properties, the Kroger/Health Markets shopping center and Fort Worth Christian School. New pipelines to those areas are almost complete and will allow Chesapeake to finally gather and market gas from the existing wells.

The map of NRH Proposed & Existing Gas Well Sites and Gathering Lines provided by the city* shows the pipelines that will connect the TCC wells, the Engler Pad Site, the Proposed Iron Horse Pad Site that Chesapeake calls the “Rick’s“ site, and the Birdville Pad sites to the main gas gathering pipeline that flows through the old North Hills Mall. This map also shows the proposed Kest site, which is the former North Hills Mall property.

Expected leasing within our footprint

The City of NRH says they expect 21 or more wells at each well pad. At this time the TCC site at Harwood only has 3 permitted wells, the Birdville site has 13, and the Engler site has 13. In order to drill the rest, Chesapeake will have to lease more property.

According to John Pitstick, Director of Planning and Development for the City of North Richland Hills, Chesapeake has 6 existing pad sites within the city, and plans three more. Chesapeake met with the city of NRH two weeks ago regarding a permit for the “Rick’s Site” and will pursue a special use permit for that well pad. Chesapeake already has a Railroad Commission permit for the Rick’s site and a surface lease for a well at the Richland Hills Church of Christ on Loop 820, just west of Rufe Snow. In addition, they have been negotiating with the Kest Group for a possible well at the former North Hills Mall site. Click Here to view the map of our footprint.*

The NHMOC has had several conversations with the Chesapeake Land Management people, both locally, and in Oklahoma City. They don’t have a problem paying $5250 per acre for a three year lease, with 25% royalty and your property measured to the center of the street. They just don’t want to lease large areas of property until they are closer to drilling. The completion of the gas gathering pipelines, and their pursuing the additional well sites at Rick’s, the Richland Hills Church of Christ, and the North Hills Mall indicate they are moving aggressively to achieve that objective.

We can’t pinpoint a possible signing schedule at this time; however, things are moving in the right direction. We have offered to lease our footprint out in quarters to benefit the folks who are within reach of the existing well pads. Chesapeake knows the size of our membership and understands that the NHMOC would be a great ally in their production of gas from this area of Tarrant County.

Please remember that, Chesapeake is the major gas company developing natural gas production in our area, and companies such as the Caffey Group and Dale Resources are trying to lease mineral rights for less than the market value, and resell them to Chesapeake. If you accept their deals you are leaving money on the table, both at lease signing and into the future.

Seismic surveys

We have been getting calls from our members in Home Town regarding Dawson Geo-Physical’s request for Seismic Surveying in their neighborhood. We talked about the Seismic Surveys in our updates last fall in the area of South NHR, Hurst, and Richland Hills. Seismic surveys are a good thing, as it provides Chesapeake with the information needed to plan the optimum well paths to maximize gas collection.

The city of NRH website addresses the Seismic Surveys and the following link, seismic surveying in North Richland Hills will explain the process and that you have nothing to fear from these tests.

Gas well permits in Hurst

Our neighbors in South Hurst make up the southeastern part of our footprint. Chesapeake has two surface leases for well pads on Highway 10 at Billy Creek, and at Arthur. Chesapeake applied for drilling permits last March for those sites, and the City Council denied them. They cited traffic concerns on Hwy 10 as a factor, and basically told the citizens that City Council knew what was best for them. As a result they are keeping the citizens of Hurst from realizing the economic returns of royalties from their mineral rights.

If you are a Hurst resident, you are strongly urged to attend the next city council meeting, sign up to address the council, and tell them you want to exercise your royalty rights. Many of your neighbors have signed leases good until 2012, which they won’t realize royalties on, unless the city changes their position.

Talk to your neighbors and encourage them to attend the city council meetings and voice their opinions. The next City Council meeting is June 28th, and any questions can be addressed to the Director of Community Development and Planning – (817) 788-7095.

In summary, the gas leasing, and drilling in our area of Tarrant County is moving forward, but in a more organized format than three years ago. Chesapeake is committed to developing this area, but following a business plan that will enable the project to be successful. Talk to your neighbors, and help grow the coalition. They can join us on our website, www.NHMOC.com and help insure we all receive a fair deal for our mineral rights.

Still here and still working for you.

The past two months have seen increased leasing and drilling activity in North East Tarrant County. We are just in the beginning stages as many wells have been drilled but are not producing yet due to lack of pipeline connections. According to the city of North Richland Hills (NRH), they are working with Chesapeake to direct the pipelines though existing utility easements rather than through residential areas.

Since our last update, Chesapeake has requested and received from the city of NRH two more permits for the pad site at Harwood and Blvd 26. They also have received three permits for the Engler-Mann site at Iron horse and Mid-Cities. Chesapeake already has five additional well site permits from the Railroad Commission at the Engler–Mann site and will request permits from the city when they get the additional property leased. According to the city of NRH, they expect 20 to 24 wells at each pad site. As you can see, this is just the beginning.

Hurst has seen increased activity as well. Chesapeake has eight Railroad Commission permitted wells at TCC north, at the corner of Precinct Line and Blvd 26. They recently applied for additional permits from the City of Hurst and the request was put on hold as the city is in the process of revising their permitting requirements. At the city council meeting on November 9th, they announced that they had approved the TCC permits using the old standards for the time being. Chesapeake’s request for a permit at the Diffenworth and Weldon sites are on hold until the new permit standards are finalized, which the city says will be in February. Chesapeake reportedly has plans to apply for a permit for the Diffenworth pad site (HWY 10 and Billy Creek) at the City council meeting on Tuesday November 23rd.

The south Hurst area from Pipeline to Hwy 10 has been heavily leased. The primary term of many of those leases was three years and The Harding Company, the original Lessor, subsequently sold them to Chesapeake. They expired last spring. At that point, 161 families whose leases expired joined the NHMOC. Chesapeake has a large number of leases in that area that don’t expire until 2012. Last January, 6 weeks before the Harding leases expired, Chesapeake applied for a permit from the City of Hurst. It was denied because Chesapeake had never had the area platted. Last month Chesapeake sent registered letters to many of those expired lease holders claiming to extend the leases due to “Force Majeure” (act of god) because the city would not approve a permit.

The following link is the city’s response to that letter which is posted on the city web site: http://www.ci.hurst.tx.us/DrillingLetter.htm

At the same time, some of those who held expired leases did not receive the force majeure letter, but have received offers of approximately $5000 per acre for new leases after they told Dale they were members of the NHMOC and they wanted the same offer that Chesapeake had given to NETGLO members last spring.

The point I wish to make is that the story changes each time a leasing agent comes to your door. The Caffey Group is still sending out letters to the folks in the Glenview/Rufe Snow area, offering $3000 per acre and 22% royalty for a 5 year lease. According to the city, neither Caffey nor Chesapeake has yet to apply for a well permit in that area.

Please do not fall into the trap of anyone who tells you that you must sign now or miss out forever. They are not telling you the truth. And do not sell yourself short by accepting the first offer they make you. Better yet, stick with the coalition and let’s all get the best deal possible. We ARE still working for you and are actively pursuing lease deals at the best possible terms, including extra protections for you, the landowner.

If you don’t know what to say to a lease broker who comes to your door, just tell them you’re with the NHMOC. And don’t believe them if they tell you we’re not around anymore. That is not the truth either.

The Railroad Commission regulates gas and oil drilling in the state of Texas and has a website where you can view the well paths after the permits are approved.

http://gis2.rrc.state.tx.us/public/startit.htm

From the drop down menu, select Map Tool (zoom in) and County (Tarrant) and the map will change to this area. Click on the area you want to see close up and click “zoom in”. You can use the arrows to adjust the map in any direction. The online map is updated each time a new well is permitted for the individual pad sites. This allows you to see how close they may be planning to drill to your property. Keep in mind that the closer they get to drilling, the higher the signing bonus and royalty percent you can ask for.

The Hurst drilling letter has contact information for Mike Morgan, director of Community Development for Hurst if you have any questions. John Pitstick is the Director of Planning and Development for the City of NRH. His contact information is on the city website in the lower right had corner. Also you can click on “Gas drilling” and get detailed information on all the wells in NRH.

Be patient and stay strong! We are just at the beginning. The gas companies will drill a lot more wells when they get the pipelines in place and can actually produce and sell the gas. At that point the leasing will intensify.

If you have neighbors who do not have computers or internet access, consider printing this post out and sharing it with them. Lot’s of people are being contacted who have not had offers before and they sometimes do not know how to respond. Having this information should help them. As always, if you have questions you can email info@nhmoc.com or telephone Paul Lee at 817-284-4387. If you need to submit a Memorandum of Intent online, you can do that by clicking here.

NHMOC Steering Committee

There has been a lot of activity since our last update. As we mentioned, many of our neighbors in South Hurst whose leases expired in April have joined NHMOC, and new MOI ‘s come in every day. We now have over 250 members in the area from Pipeline to Hwy 10, and 820 to Precinct Line.

Chesapeake has a well site at Billy Creek and Hwy 10 and they are working to secure a drilling permit from the City of Hurst. Dawson Geophysical is canvasing the area for approval to conduct the geo-physical survey to help plan the most efficient well paths. This is a good thing and helps move the process forward.

North of there, from Pipeline to 820, the Caffey group has been sending letters and knocking on doors, offering $3250 per acre. Dale Properties, working for Chesapeake, is calling on homes north of 820 and west of Davis. They are offering $2000 per acre and telling people they have 90% of the property already leased, and you better sign up with them or you may miss out.

This is not true! The map we have included shows the NHMOC footprint with the property leased to Chesapeake highlighted in red. While the area at Iron Horse Blvd and Mid-Cities is heavily leased to Chesapeake, and includes the Engler well site that has been permitted by the city of NRH, that area only represents a linear well path of about half a mile. The Engler well site could easily reach south almost to 820 and Davis.

Chesapeake is building a frac pond at TCC and the Engler site. This indicates they plan to drill several wells from that location. The City of NRH has told us they expect Chesapeake to drill as many as a 12 wells from each TRC site, and just recently permitted two more well paths from the Harwood and Blvd 26 TCC site. We have a strong membership in those neighborhoods west of the Harwood location, North west, and south of the Harwood Blvd 26 well site.

Our attorney, Mark Nastri, who brokered the NETGLO and WAMRA deals is working directly with the gas companies on behalf of the NHMOC. The Chesapeake deal he negotiated was $5,250 per acre for 3 years, an additional $2,500 to extend the lease to 5 years, 25% royalty , your property measured to the center of the street, and his 16 page lease form that offers protections for the property owner. We expect to get nothing less for our members.

The fact that Chesapeake has a large amount of property already under lease inside our footprint (the property in red) and seven existing well sites (in the outer circle) should be a strong bargaining point in our favor. In order to fully develop the capability of those well sites, they need to lease the neighborhoods that belong to the NHMOC.

Everything they are doing indicates they plan to fully utilize those existing well sites, and to do that they need us. The longer they wait, the more property under previous lease agreements will expire. We need to stay united and reap the benefits that a united coalition can bring to the neighborhoods.

So please continue to hang in there with us. We are continuing to work for you and all of our neighbors. Do not be fooled by what the lease brokers are telling you. It is their job to get as many leases as they can at a bargain basement price. You can be sure that they are making money by doing so – money that could be going to YOU if you can wait for the coalition to complete its task.

We may be announcing a meeting soon, so please keep reading our updates.