Tioga Landowners News
Hometown News for Landowners in Tioga County, NY
www.tiogagaslease.org

First Edition
Monday, August 11, 2008______________________________________________________________________
Opening Remarks
Welcome to the first edition of ournewsletter. The Tioga CountyLandowners Group has been
formed to join landowners in Tioga
County together to obtain the best
possible gas lease compatible with
our ownership goals. We seek to
be a strong organization dedicatedto community education and anopen information exchange. We
will strive to be a resource to help
further educate landowners about
the impacts of gas leasing anddrilling so landowners can makewise decisions about theirproperty. We are dedicated tohelping friends and neighbors tolearn what is happening in thenatural gas leaseholds here andaround the country. We plan tocollect and report news which ispublished and in public domain.
To that end, let us start with somerecent history of leasing activities
in other parts of the country.
These are presented as a way tounderstand the evolution of leasing
in other plays. They are excerptsof news articles with reference
footnotes to define the source.

Barnett Shale gas leasedeals in Dallas get morelucrative
Dated May 4, 20081

Residents in Fort Worth's historic
Oakhurst neighborhood did their
homework two years ago before
allowing gas drilling so close to1

The Dallas Morning News

their homes. The neighborhood
association brought in an attorney
to answer questions and give
advice. Most residents eventuallyagreed to a signing bonus of about$200 per home, 20 percent royalty
payments and a $25,000 grant to
pay for neighborhoodimprovements. Now they lookback woefully, watching as otherneighborhoods in Tarrant County
get bonuses of $25,000 or more peracre and wishing their time hadn't
come so early. Royalties are now
regularly at 25 percent.

Strength in numbers

Gas drilling negotiations have
evolved into a frenzied system ofjockeying as savvy residents
organize into ever-larger groups
and pit energy companies against
one another to drive offers tounprecedented levels. The numberof gas wells has quadrupled in
Tarrant County in the last fouryears, reaching 1,176 as ofFebruary. Denton County had
2,339 wells. And drilling isexpected to escalate as activity inthe massive underground Barnett
Shale gas field moves farther southand east, particularly into
southwest Dallas County.

Beyond payouts, neighborhood
coalitions are demanding otherconcessions, such as limits ontruck traffic and charitable
donations for schools, libraries andmuseums. While the feverish
activity is typical for any boom,
experts say prices might beapproaching a ceiling.

Meanwhile, Tarrant County has
proved a sweet spot in the Barnett
Shale. "A year ago a signingbonus of $3,000 to $5,000 an acre
looked like a good deal," said Fort
Worth attorney Bob West, who
represents many neighborhoodgroups in negotiations with drillingcompanies. "But a few months
later, the standard rose to about$8,000 to $10,000 an acre."

Neighborhood groups, whichclosely track fellow groups, havefound strength in numbers. At first,
neighborhood associations
negotiated for dozens or a few
hundred houses; Now, corridor
alliances, representing thousandsof acres, are the hottest trend. OneEast Fort Worth neighborhoodeven requested what would havebeen a record $30,000 per acre and30 percent royalty, although it
found no takers at that price.

No guarantees
Despite widespread publicity about
record signing bonuses, not every
community can expect offers like
that, said Julie Wilson, vicepresident of corporate development
for Chesapeake Energy.
"Different areas get different
leases," she said. "Why some are
getting offers of $3,000 to $5,000
per acre as opposed to $20,000 to$25,000 an acre depends on
various factors." Those factors
include the quality of the minerals,
based on seismic studies, andcompetition among gas companies.
Bill Tinsley, who helped negotiate
a gas drilling contract with the1Villages of Fairfield Neighborhood
Association in Arlington, saidpatience and bargaining strength
benefited his neighborhood. The
initial offer in November was for a$5,000-per-acre signing bonus.
Residents held off and later joinedwith two other neighborhoodgroups, a move that helped themland a $22,500-per-acre signingbonus.
Regrets
But that's no consolation to thoseon the front end of the Barnett
Shale boom. Eartha Parker ofFort Worth, who leased herminerals in April 2005, received a$250 signing bonus and a 20
percent royalty agreement. She
regrets not organizing herneighborhood to negotiate a better
deal. At the time, she said, urban
drilling was new, and she and herneighbors knew little about theindustry. "They made it seem likeit was a rush to get stuff done,"
Mrs. Parker said. "If we didn't
sign, we wouldn't be included.
"Seeing it now, it's a whole lotlarger than what we would imagine
it would be."Chesapeake EnergyAnnounces HaynesvilleShale Discovery
News Release Chesapeake Energy,
Oklahoma City, March 24, 2008 –Chesapeake today announced anew natural gas discovery in theHaynesville Shale in Louisiana.
The company believes these
discoveries and projects are
significant and has decided toincrease its capital expenditurebudget for 2008 and 2009 in order
to increase drilling and leasing
activity on this new play as well as
its three most important existing
unconventional shale plays: theBarnett Shale, the FayettevilleShale and the Marcellus and Lower
Huron Shales in Appalachia.
Haynesville Shale is based on itsgeoscientific, petrophysical andengineering research during thepast two years and the results ofthree horizontal and four verticalwells it has drilled, Chesapeake
believes the Haynesville Shaleplay could potentially have a larger
impact on the company than any
other play in which it has
participated to date. Chesapeakeis currently utilizing four rigs todrill Haynesville Shale wells andplans to increase its drilling
activity level to approximately ten
rigs by year-end 2008 andpotentially more in 2009. The
company currently owns or has
commitments for more than
200,000 net acres of leasehold inthe Haynesville Shale and has aleasehold acquisition effort
underway with the goal of owning
up to 500,000 net acres in the play.

Chesapeake Energy
Corporation Provides
Update on HaynesvilleShale Activities
OKLAHOMA CITY, Jun 06, 2008
(BUSINESS WIRE) -- Inconjunction with its 2008 Annual
Meeting of Shareholders,
Chesapeake Energy Corporation(CHK: Chesapeake EnergyCorporation) today provided an
update on its activities in its
significant Haynesville Shalediscovery in Northwest Louisianaand East Texas. In the past month,
the company has successfullycompleted two additionalhorizontal wells in the play at flow
rates comparable to its first four
horizontal wells and the company
anticipates completing two morehorizontal wells by the end ofJune. The company now owns or

has commitments forapproximately 500,000 net acres ofleasehold in the Haynesville Shaleand has achieved its initialleasehold ownership goal. As aresult of ongoing drilling successin the play, the company has
elected to continue its leasehold
acquisition efforts. Chesapeake iscurrently using five operated rigs
to further develop its HaynesvilleShale leasehold and anticipatesoperating at least 12 rigs by yearend 2008 and at least 30 rigs byyear-end 2009.

Mineral Lease Sales in
Haynesville over the Top $35 million for June2
The state Mineral Board,yesterday, collected $35.8 million
in cash bonus payments for leases
primarily onshore but particularly
from oil and gas leasing taking
place in northwest Louisiana,
closing out the fiscal year with thehighest bonus year for the statesince FY 82-83.
According to Mineral Board
Secretary Marjorie McKeithen,“This is an extraordinary time forLouisiana, particularly in northLouisiana, where we areexperiencing something akin to amodern day gold rush due toexcitement about the HaynesvilleShale discovery. To put themagnitude of this sale into
perspective: This month’s leasesale surpassed by more than double
the bonus collections for theprevious 11 months of FY 200708 combined, almost entirely
because of activity in northLouisiana.” She said 25 of the 38
leases awarded were from Caddo,
Red River and Bienville parishes,
totaling approximately $34 million
2

Louisiana Dept. Natural Resources –News Release - June 12, 2008

2in cash payments, and the averagebonus per acre for these leases wasover $13,400 per acre, while more
typical prices in the past for northLouisiana have been around $400
per acre.

be a very large economic stimulus
to the states involved and provide adomestic, cleaner and lessexpensive alternative to foreignoil."Range continues to accelerate bothits drilling and acreage acquisition
efforts in the Marcellus Shaleplay. Including transactions thatare expected to close shortly,
Range's high-graded leasehold
position in the Marcellus play now
stands at approximately 850,000
acres.

Is Marcellus for Real Range Provides Marcellus
Shale Update
FORT WORTH, TEXAS, July 14,
2008…Range Resources
Corporation (NYSE:RRC) today
provided an operational update on
its activities in the Marcellus Shaleplay located in the Appalachian
Basin.
John Pinkerton, Range's Chairman
and CEO, said, "With more than
100 wells drilled in the Marcellus
Shale, including 20 horizontal
wells, we are extremely pleased
with our progress to date. We
believe we have developed a solid
understanding of the play's
technical aspects and are movingfrom the testing phase to thedevelopment stage. Given our 1.4million acre leasehold position, theMarcellus play holds enormous
potential for Range and its
shareholders. Importantly, theMarcellus play has the potential to

The Marcellus play is situated in
an enviable position with regard to
selling natural gas into the highdemand northeastern natural gasmarkets. Range previously
announced an agreement withMarkWest Energy Partners, L.P. toconstruct and operate pipelines andprocessing facilities covering aportion of its Marcellus acreage
position. Work has commenced on
three infrastructure projects, two in
the SW and one in the NE. These
infrastructure projects will connect
Range's developing Marcellus
Shale fields to the larger interstate
carriers. Range has secured firmtransportation capacity on
interstate carriers totaling 150
Mmcf per day and is holding
discussions to expand this capacity
as the play develops.
Currently, Range has three rigs
operating in the Marcellus play andplans to drill 40 horizontal wells in2008. Later this year, Range
expects to add two fit-for-purpose
rigs. Preliminary planning for 2009
includes increasing to eightrigs. Wells are currently being
drilled, completed and tested, after
which they are shut-in awaiting
pipeline build out. The initial
phase of the pipeline andprocessing infrastructure isexpected to be completed in firstquarter 2009. Production start up

will be phased in, but is expected
to reach 30 Mmcf3 per day in thefirst quarter of 2009. As additional
wells are connected and drilled,production is anticipated toincrease throughout 2009.
Through the first quarter of 2008,
Range has announced results for
15 horizontal wells. The last 10
reported horizontal wells had anaverage peak initial rate of 4.1Mmcfe4 per day. Five additional
horizontal wells are in various
stages of completion andtesting. The results on several ofthese wells are expected to beavailable by the time of our second
quarter earnings release later thismonth. Based on the results todate, Range estimates that thegross average reserves per
horizontal well are in the range of
3 to 4 Bcfe. In a developmentmode, Range anticipates that atypical Marcellus horizontal well
will cost $3 to $4 million. Using
geological, engineering andproduction data obtained from thewells drilled throughout theMarcellus fairway, Range has
revised upward its estimate of theunrisked reserve potential of its
leasehold position to 15 to 22
Tcfe5.

3

Million cubic feet of natural gas
Million cubic feet of gas equivalent,
determined using the ratio of 6 Mcf ofnatural gas to 1 Bbl of crude oil, condensate
or natural gas liquids.
5
Trillion Cubic Feet Equivalents
43

Editors Comments
The previous articles are intended
to provide some historicalreference as to the activities inother plays which have developed
before Marcellus. With the current
offers in Tioga County running ator less than $2500 / acre and 14%
royalties there is a lot of room forprice growth.
The Landman and the Gas
company have a full understandingof the value of the mineral rights
under your property. Theirobjective is to commit you to alease for the least cost and with theterms biased toward the company.
The lease is a very complex
business transaction and represents
a legal contract between you andthe gas company. DEC does nothave authority to regulate private
contracts.
You have one opportunity to form
a contract which is compatible
with your planned use of yourproperty. The terms andconditions of your lease need toprovide the protection for yourproperty and the area environment.
The lease is the only vehicle which
can provide protection and define
the relationship between the twoparties. These rules of engagement
need to be well defined before thegas company starts working on
your property. Once the work
begins it is too late and you may
have up to forty years to regret
your decision.
Our objective as a landownergroup is to help educate you on gas
leasing and define terms favorableto your lease. We are landowners
like you and are providing our help
at our own expense.

Our group will obtain legal
council, draft a base lease, andevaluate any addendums. A
bidder’s package will beassembled and offered to viable
gas companies for competitive bid.
There will be a small cost for thelegal services which will bepayable when you get you signingbonus. Strength in numbers will
result in the best possible pricewith the most favorable terms foryour needs. We need to pull
together to obtain this goal.
Sign up sheets are available at ourwebsite www.tiogagaslease.org
and are in paper form at anymeeting. There is no cost to join
the group and you are under noobligation to sign the gas lease thegroup develops. You are eligible
to join even if you are currently
under lease with an ending term in
2009. Please sign up soon and talkto your neighbors, family, andfriends. This represents the largest
opportunity for you and future
generations. Please make sure it isdone with the up most care.

Nick SchoonoverPhone: 607-687-2800
Email: tiogagaslease@aol.com

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