Last July, the City Council awarded the Caffey Group, with our support, a padsite permit at the old North Hills Mall. During the next few months, there was little contact between us and the Caffey Group, as Caffey was further formulating their plans. Even the City of North Richland Hills that approved and regulates the padsite and drilling permits hadn’t been contacted by Caffey.
Accordingly, a month ago we reached out to Mark Caffey, and he asked for a list of our membership, as he was creating a map showing his leased property and our membership property to determine if the units could be drilled once an agreement was negotiated. Several conversations ensued, leading to a recent conference call with myself, Mark Nastri (our attorney), and Mark Caffey.
The map Caffey created shows the proposed units that could be successfully leased and drilled if a deal is reached between the Caffey Group and the NHMOC. With that information, Caffey was able to secure the additional partnership and funding to move forward with the project. Due to our non-disclosure agreement, I can’t mention the two partners but according to the Barnett Shale Energy Education council, they are both very reputable , well-funded, and active in the Barnett Shale gas play.
After the upcoming holidays, we will work with the Caffey Group to finalize negotiations, and move forward in lease signings for our members. While the bonus dollars and royalty percentage have not been finalized, we expect the bonus to be about 20% greater than what they have offered to the general public in the past. Our lease will also include measuring your lot to the center of the street, which can increase your lot size by around 15% on a normal lot, and about 25-30% on a corner lot. We will also push for protections against having production expenses deducted from your royalties and other substantive protections and benefits.
Mark Caffey told us he would no longer contact our members in order to sign them individually at the lower bonus, but would work with the NHMOC moving forward to sign property owners.
We hope to pick up the pace and have a deal in place by spring. We will keep you informed as any new developments occur.