Updated May 17 2021 they cut 5 padlocks off gate!Ember Resources defaults on surface rights lease

[wwbirds]

this could be the death toll for resources in Alberta. They apparently bought the well from Encana 5 years ago and it is no big deal with only 1 well on my land but some of my neighbors have 3 and more wells on their land.
Payment under the old Encana terms was due on March 29th even though Encana always paid it in February each year. Last year was the first year Ember said they were only paying in the contract month date of March. My wife said some land guy left a message on the phone that if they cant pay a reduced amount they will abandon the well.
Heard of companies filing bankruptcy and saddling the province with abandoned wells but never heard of an operating company walking away??
What is the real scoop?

[MountainTi]

CBM well?

Ember is taking over a bunch of the Trident cbm wells that were walked away from. Taxes have been reduced on them as well as lease payments reduced.

I guess one side of the argument is that a cbm well has a very small footprint, basically a veal calf hut and that's about it. Most do not have a road into them and are checked once or twice a year.
Back when gas money was flowing, lease agreements were signed on a cbm well for around the same amount as an actual full size lease with a road into it.
One good friend lost about $50000/year when Trident walked away
I know the wells that Ember is taking over, the lease rates are all being reduced

[Dean2]

Longshore Resources has wells on some of my properties. They had paid in Feb for the end of March payment in the previous two years, after they took the properties over. They too have tried to negotiate reduced rates, I declined. This year, payment still isn't here. I phoned and left a message a couple of weeks ago, no reply. I sent an Email to their VP of Land Wednesday Mar 31 which is the due date for the payments. I know he and the lady that usually does the payments have read the email Thursday. No response to date. If nothing arrives by Apr 15th, I will file a complaint with the Alberta Energy Regulator. This appears to be a scam some of them are starting to play.

[tbiddy]

Originally Posted by wwbirds

this could be the death toll for resources in Alberta. They apparently bought the well from Encana 5 years ago and it is no big deal with only 1 well on my land but some of my neighbors have 3 and more wells on their land.
Payment under the old Encana terms was due on March 29th even though Encana always paid it in February each year. Last year was the first year Ember said they were only paying in the contract month date of March. My wife said some land guy left a message on the phone that if they cant pay a reduced amount they will abandon the well.
Heard of companies filing bankruptcy and saddling the province with abandoned wells but never heard of an operating company walking away??
What is the real scoop?

If I’m reading this right, they aren’t waking away, they are asking you to take a reduced amount based on a reassessed value. If you don’t agree to the reassessed value they will abandon and reclaim the well. I’ve been hearing from lots of landowners that most of the oil companies are asking them to take a reassessed value or the company will abandon the well. Once a rec certificate is granted the landowner doesn’t get anything.

Here is a better explanation on what Ember is doing:

https://surfaceleaseinfo.com/whats-happening

[FCLightning]

Karve Energy tried that stunt around this area last year. They actually mailed out checks for the reduced amount with a letter to sign agreeing to the reduction along with the scare story that if you didn't agree they would be looking at closing wells and you would get nothing. Everyone told them to pound sand. They mailed out the top up checks.
The reality is that if they abandon the well they are still obligated to pay the lease amount until such time as the land is fully reclaimed with a reclamation certificate. One fellow here has a lease site that hasn't been operational in over 15 years. 2 years ago they cleaned all equipment from the site. They tried the reduced rent crap on him and he said that until I have a reclamation certificate and full use of the land (it is still fenced off) you can continue to send the check - please and thank-you. They sent him the balance of the payment.

[IL Bar]

That’s a new one. Most of us in my area have gotten notice from them that the rent is dropping to half come renewal time. They took over one of my wells that Trident had when they went broke but have been honouring the contract so far. I guess we will see this fall.

If they are behind on your rent. I would block access so they have to phone you to get in. If they can reneg then you should get to as well. Just my opinion.

[ditch donkey]

Depends what they mean by abandon the well.

If they mean that if you don’t accept a lower payment they will do an abandonment- cement the well, cut the well head off, and reclaim the land, they’re not walking away.

Or maybe they mean they intend on shutting the well in, and walking away. And ignore any debt and obligation to you as the land owner. Which if they are still operating, doesn’t sound reasonable.

[Dean2]

Originally Posted by IL Bar

That’s a new one. Most of us in my area have gotten notice from them that the rent is dropping to half come renewal time. They took over one of my wells that Trident had when they went broke but have been honouring the contract so far. I guess we will see this fall.

If they are behind on your rent. I would block access so they have to phone you to get in. If they can reneg then you should get to as well. Just my opinion.

Operating well or not operating, even with no equipment left in place, they have no ability to reduce or stop the rent payments until they provide a fully competed and accepted reclamation certificate. I went through this with a couple of companies and AER backed me up all the way on refusing to renegotiate.

If you agree to reduced rents they can, but you do not have to agree and there is no reason you should. If they can get the rent low enough there is no incentive to do the Reclamation process, which varies form 25 to 100,000 a site. My suggestion is to push back hard. In my case Longshore is a very viable company, they just bought out some more smaller ones in the last 12 months. If they don't respond to the AER complaint I will take them to small claims court because a judgment is enforceable against a viable operating company.

[wannabe]

Originally Posted by wwbirds

this could be the death toll for resources in Alberta. They apparently bought the well from Encana 5 years ago and it is no big deal with only 1 well on my land but some of my neighbors have 3 and more wells on their land.
Payment under the old Encana terms was due on March 29th even though Encana always paid it in February each year. Last year was the first year Ember said they were only paying in the contract month date of March. My wife said some land guy left a message on the phone that if they cant pay a reduced amount they will abandon the well.
Heard of companies filing bankruptcy and saddling the province with abandoned wells but never heard of an operating company walking away??
What is the real scoop?

Any idea on what the well is and what volume it produces?

I know other companies that have said they're reducing the rental rate or they're going to reclaim the well. Guess what the land owner said no so now the company is reclaiming all his wells. He's out 10s of thousands a year and now complaining that the oil company is reclaiming the wells.

Don't bite the hand that feeds you. Escpecially if your sitting on a bunch of garbage shallow gas wells that don't make much gas.

[MountainTi]

Originally Posted by Dean2

Longshore Resources has wells on some of my properties. They had paid in Feb for the end of March payment in the previous two years, after they took the properties over. They too have tried to negotiate reduced rates, I declined. This year, payment still isn't here. I phoned and left a message a couple of weeks ago, no reply. I sent an Email to their VP of Land Wednesday Mar 31 which is the due date for the payments. I know he and the lady that usually does the payments have read the email Thursday. No response to date. If nothing arrives by Apr 15th, I will file a complaint with the Alberta Energy Regulator. This appears to be a scam some of them are starting to play.

This is who you need to contact
https://www.alberta.ca/surface-rights-board.aspx

[FCLightning]

Originally Posted by tbiddy

If I’m reading this right, they aren’t waking away, they are asking you to take a reduced amount based on a reassessed value. If you don’t agree to the reassessed value they will abandon and reclaim the well. I’ve been hearing from lots of landowners that most of the oil companies are asking them to take a reassessed value or the company will abandon the well. Once a rec certificate is granted the landowner doesn’t get anything.

Here is a better explanation on what Ember is doing:

https://surfaceleaseinfo.com/whats-happening

Yes, this is the story Karve was selling - basically I told them that if they wanted to re-survey the property and register a new lease agreement with the land titles division indicated the relinquishing of rights to the amount of land leased then they could do so. Till then they could pay the lease amount on the land area they had registered in the original lease. I also informed them that as yet I have never charged them anything for maintenance of the lease property but if they really wanted to push I could change the area of cultivation and they could hire a lease maintenance company to keep the area maintained and free of weeds, or I could keep looking after the property and send them the bill for the maintenance contract.... or they could just drop the whole thing and maintain the status quo.
The opted to maintain the status quo. We will see if their story changes this year.

[MountainTi]

Originally Posted by wannabe

Any idea on what the well is and what volume it produces?

I know other companies that have said they're reducing the rental rate or they're going to reclaim the well. Guess what the land owner said no so now the company is reclaiming all his wells. He's out 10s of thousands a year and now complaining that the oil company is reclaiming the wells.

Don't bite the hand that feeds you. Escpecially if your sitting on a bunch of garbage shallow gas wells that don't make much gas.

This is the way things are going to go in Alberta. Going to be a bunch of unhappy landowners for sure

[Dean2]

Originally Posted by MountainTi

This is who you need to contact
https://www.alberta.ca/surface-rights-board.aspx

Thanks for that. Have had lots of battles with oil companies but this is the first time one has been late with their rent payments. Anyone who thinks these companies are your friend is badly mistaken. I am fine with no rent as long as they fully remediate the property because none of them live up to the fence maintenance, weed control etc they are obligated to do under the contracts. I have no love of having it on the property and would never allow another if I actually had a choice.

[IL Bar]

Originally Posted by tbiddy

If I’m reading this right, they aren’t waking away, they are asking you to take a reduced amount based on a reassessed value. If you don’t agree to the reassessed value they will abandon and reclaim the well. I’ve been hearing from lots of landowners that most of the oil companies are asking them to take a reassessed value or the company will abandon the well. Once a rec certificate is granted the landowner doesn’t get anything.

Here is a better explanation on what Ember is doing:

https://surfaceleaseinfo.com/whats-happening

Ok I just looked at that document. What a load of BS. They need to realize that they are getting free weed control in those fields because they aren’t looking after their leases to begin with. Also if they send in a service rig they will use every square inch of the original lease with no extra compensation. I know we need our resource sector in this province but outfits like this need to use their heads.

[MountainTi]

Originally Posted by Dean2

Thanks for that. Have had lots of battles with oil companies but this is the first time one has been late with their rent payments. Anyone who thinks these companies are your friend is badly mistaken. I am fine with no rent as long as they fully remediate the property.

As I said, this is where things are headed, particularly with the cbm wells. The counties/md's have even reduced taxes on them.
All signed when the money was flowing....now that it's dried up things will change on all those little gas wells. Both sides were greedy when gas was at $10. Life was good. Now, not so much...for either side
As I said, Ember is taking over a bunch of the Trident wells. They haven't touched a one on my buddies land I mentioned above that is out $50000/year rent. I'm sure he will happily agree to a 2/3 reduction just to get something on those tiny little leases

[tbiddy]

Originally Posted by MountainTi

As I said, this is where things are headed, particularly with the cbm wells. The counties/md's have even reduced taxes on them.
All signed when the money was flowing....now that it's dried up things will change on all those little gas wells. Both sides were greedy when gas was at $10. Life was good. Now, not so much...for either side
As I said, Ember is taking over a bunch of the Trident wells. They haven't touched a one on my buddies land I mentioned above that is out $50000/year rent. I'm sure he will happily agree to a 2/3 reduction just to get something on those tiny little leases

And I think that’s what these companies are hoping for. If you have 1-2 wells on your land, it’s not worth it to take a reduced payment. If they clean up the well, great. But if your out $50k/yr. I’m sure you’d be happy to get $40k/yr. That’s a lot more than zero. Oil companies are doing everything they can to reduce costs. Like somebody said, when the money was flowing these costs weren’t noticed. Now they are trying save a buck anywhere they can.

[Dean2]

Originally Posted by tbiddy

And I think that’s what these companies are hoping for. If you have 1-2 wells on your land, it’s not worth it to take a reduced payment. If they clean up the well, great. But if your out $50k/yr. I’m sure you’d be happy to get $40k/yr. That’s a lot more than zero. Oil companies are doing everything they can to reduce costs. Like somebody said, when the money was flowing these costs weren’t noticed. Now they are trying save a buck anywhere they can.

This issue is if you go from 50,000 a year to 15,000, is it still worth having a bunch of wells on your property. I know in the case of Longshore they were asking for an 80% reduction so that would be 10,000 a year, I would far rather have the land reclaimed and they can bog off. Others are of course free to make their own choices.

[tbiddy]

Originally Posted by Dean2

This issue is if you go from 50,000 a year to 15,000, is it still worth having a bunch of wells on your property. I know in the case of Longshore they were asking for an 80% reduction so that would be 10,000 a year, I would far rather have the land reclaimed and they can bog off. Others are of course free to make their own choices.

I agree. That is a big reduction. From the link I posted, Ember says they want to go from $2000-2500 down to $1500-1800. Not that big of a reduction.

[hal53]

Originally Posted by Dean2

This issue is if you go from 50,000 a year to 15,000, is it still worth having a bunch of wells on your property. I know in the case of Longshore they were asking for an 80% reduction so that would be 10,000 a year, I would far rather have the land reclaimed and they can bog off. Others are of course free to make their own choices.

Are you farming the land yourself?..or renting it out?, just wondering as this whole surface access lease fiasco has been going on forever and no one ever seems to be happy with the agreements

[MountainTi]

Originally Posted by tbiddy

And I think that’s what these companies are hoping for. If you have 1-2 wells on your land, it’s not worth it to take a reduced payment. If they clean up the well, great. But if your out $50k/yr. I’m sure you’d be happy to get $40k/yr. That’s a lot more than zero. Oil companies are doing everything they can to reduce costs. Like somebody said, when the money was flowing these costs weren’t noticed. Now they are trying save a buck anywhere they can.

Starland county was owed $6.5 million when Trident walked away. It's not a well off county considering most of the taxable land is ag. Not much residential taxation compared to where I live now (originally from Starland). Residential taxes have gone up there because of it. I believe about 30%. I'm thinking they will be pretty happy if Ember takes all the Trident wells, even at a lesser tax rate.

Greed from both sides caused a lot of the issues

[wwbirds]

15 or so years ago Encana approached me about putting a well in the south of my quarter but because of wetlands (we hunt and use for planting pheasants) the access would be from the north. A year or so later they put in a 4 inch line connecting wells in the area and 2 years after that they put in an 8 inch line.
I explained the shooting preserve hunting aspect of the land and Encana was very cooperative with minimizing the impact to our shelterbelts and wetlands often boring under instead of trenching. I can't remember seeing an encana employee more than once or twice a year at the well site (summer) except when flaring. On the 8 inch line they also installed valves they said would be connected to other wells (pipelines?) in the area (dont think anything has been connected to those valves since). 5 years ago we got a notice from both encana and ember that they had assumed? the lease.
to make a long story short we have had constant problems with Ember and each time we try to resolve it that person is no longer handling that aspect so we start all over again with our plan for the land and trying to minimize the shooting preserve and environmental impact. They sent out a big glossy pamphlet last november asking to reduce lease payment by 1/3 utilizing new phrases about land owners being unjustly enriched.
Having never dealt with them I looked up their website which boasted of Ember being Canadas largest holder of low cost methane wells. A quick look at their financial statements showed several breaks from generally accepted accounting principles in that they favored "hedge fund accounting".
Been a long time since my R.I.A. days but this type of accounting generally favors painting a "growth" status to encourage investors during good times and a ''crash" during belt tightening times. I looked at the proposal claiming to cause minimal disruption to 1.3 acres total and immediately dismissed the reduction in price. The meadering path from the north gate to the well is 2000 measured feet to the well head. If I assume a linear acre is 600 feet by 66 feet that is 3 acres just on the roadway to the well.
I emailed the rent email address that we would not be renegotiating the lease.
No reply until early march they were depositing the reduced amount to farm account. Called and emailed not accepting reduced amount and site will be locked after March 29th. Land guy called last week to see if any reduction was possible and I said no so he indicated they would probably just pay the difference. Then the message my wife received yesterday.

[wwbirds]

After gates left open, big diesel smoke blowing plows driving right through a pheasant shoot opening up the drifts and causing a snow fence effect with 4 foot snow banks blocking 3 of my access gates I would rather not have the well here than receive the $3000 a year. Had Encana still been here the lease would have actually gone up 10% this year as in every 5 years in the past instead of all this bull

[jstubbs]

Originally Posted by wannabe

Any idea on what the well is and what volume it produces?

I know other companies that have said they're reducing the rental rate or they're going to reclaim the well. Guess what the land owner said no so now the company is reclaiming all his wells. He's out 10s of thousands a year and now complaining that the oil company is reclaiming the wells.

Don't bite the hand that feeds you. Escpecially if your sitting on a bunch of garbage shallow gas wells that don't make much gas.

Could be worse, could have had the oil company file bankruptcy and get stuck with an abandoned well with $0 coming in. Better reclaimed than have it stuck on the decades long Orphan Well waitlist.

If I had land with a low production well on it with a lease for only a couple grand a year, I’d probably try to force the company to move forward with reclamation over renegotiated lease for less any day.

[FCLightning]

Originally Posted by wwbirds

Land guy called last week to see if any reduction was possible and I said no so he indicated they would probably just pay the difference. Then the message my wife received yesterday.

As mentioned above they still need to make the rent payments until they provide a proper reclamation certificate on the land.

If you check the lease agreement there should be a surveyed plot plan that will show the area that they have rights to under the lease agreement and the payment will be a per acre amount based on that acreage. Their basic claim is that the operational lease doesn't need all that land and the landowner is still using it therefore they shouldn't have to pay so much money. In our letter they referenced the clause in the agreement that gives them the right at any time to reduce the size of the leased land. I asked if that is what they wanted - to re-survey a reduced lease size and register the new lease with land titles - they said no. I said if you want to reserve right of access to all the land on the lease then you will pay for all the land on the lease. Otherwise, reduce the acreage and the payment accordingly and if in the future you need access to any other land then send an agent and we can talk about temporary disturbance and loss of use payments.
Given all the costs associated with the production from a well, saving $1000/year on the lease of the well will not convert it from being a viable production well to a non-viable one.

[sns2]

This is a good thread. Oil companies are playing games with us too.

[hillbillyreefer]

1. They can’t unilaterally reduce the lease amount just like the landowner can’t increase it, except at the 5 yr renewal date on the lease.

2. File your section 36 paperwork with the Surface Rights Board. As a landowner you are a secured creditor. The SRB handling of their workload is like any other government department, useless, I’m almost at the 1 yr anniversary of my first filings and haven’t heard a word from them, I know people who are over 2 years and haven’t received their money.

3. They aren’t going to reclaim anything, especially wells that produce, if they’re too broke to pay the few thousand dollar access/lease fees they sure as heck don’t have the cash to cover rec costs. That actually is a problem, if the well is a dud the company should be rid of it and landowners should be some what happy, at least the mess was cleaned up. If they do reclaim they are still required to pay whatever amounts are written in the lease contract up to the time they receive a reclamation certificate.

4. As a landowner you really don’t have any rights to your property with respect to the O&G business, Battle River Energy is tens of thousands behind on lease payments and I can’t deny them access. When I did the wonderful sunny ways sob’s started threatening me with enforcement, lol.

5. I had a licensed Alberta landman inform me “the landowner was liable for the well if I wouldn’t sign a “nomination” to have the well reclaimed. He lied, don’t fall for that BS, when dealing with a landman ask for his full name and license number in the first 30 seconds of the initial call, that should eliminate the flat out lies some of the less scrupulous company’s tell. Battle River Energy in this case. If you catch them telling fibs document it and file complaints with the landman professional organization, they could lose their license over it.

6. Remember land values have increased drastically in most areas since the leases were signed, crop yields/prices have also increased, so before they cut lease rates you were likely already losing money, especially if you’ve never done rent reviews and the lease is 20yrs old.

7. There are lawyers and licensed landman that work for landowners. Usually the energy company is compelled to pay the costs of representatives under the surface rights act. It’s well worth looking into, even if it’s only a few thousand dollars. Most of the companies are smart enough to know spending thousands to save a few hundred isn’t worth it, especially when they don’t have any legal justifications for what they are doing.

8. Give your MLA a call and discuss the situation. Agriculture and energy used to be a great marriage, now it’s on the rocks. Unfortunately for the UCP, energy co’s are massive financial/vote contributors and rural people are a huge voter base for them. This has to be a political nightmare for them.

9. As a rural landowner remember a lot of these companies aren’t paying their municipal taxes either, pushing your County,RM, Special Area into the red financially. The local governments will get their money by raising taxes on the ones who are paying their taxes....landowners. Your local taxes are going to go up and I’d guess substantially in the next 5 yrs.

To see how limited your recourse is check out the Alberta Surface Rights Board.
https://surfacerights.gov.ab.ca/

Enjoy your locked down “long weekend” (skippy quote)

Happy Easter AO!

[hillbillyreefer]

Originally Posted by jstubbs

Could be worse, could have had the oil company file bankruptcy and get stuck with an abandoned well with $0 coming in. Better reclaimed than have it stuck on the decades long Orphan Well waitlist.

If I had land with a low production well on it with a lease for only a couple grand a year, I’d probably try to force the company to move forward with reclamation over renegotiated lease for less any day.

The orphan well fund can be compelled to pay lease costs until a rec cert is granted. That’s about the only advantage a landowner has in the event of a bankruptcy. Landowners can be forced to let companies on our land, we have no property rights, that’s the carrot the taxpayers offered in exchange. Once this cluster f#&## becomes well known to the public I expect proverbial heads to roll.

I’ve got leases the OWF has been screwing around with for 10yrs and still are, I’ve never filed for compensation, but probably should.

[MountainTi]

Originally Posted by FCLightning

Given all the costs associated with the production from a well, saving $1000/year on the lease of the well will not convert it from being a viable production well to a non-viable one.

While partially true, the cost associated with the production of a cbm well is pretty much non-existent.

[MountainTi]

Originally Posted by jstubbs

Could be worse, could have had the oil company file bankruptcy and get stuck with an abandoned well with $0 coming in. Better reclaimed than have it stuck on the decades long Orphan Well waitlist.

If I had land with a low production well on it with a lease for only a couple grand a year, I’d probably try to force the company to move forward with reclamation over renegotiated lease for less any day.

I've spent a lifetime working in the oilpatch, come from a farming background, and own land myself (with oil lease income). I see and get both sides of the coin.
Personally I'd rather see income off that lease at a reduced rate vs nothing.
Prime farmland is about $100/acre yearly rental. A lease is what? 3 acres with a shorter road in? That' well over $1000/acre per year income. I know what I choose everytime

[Rancid Crabtree]

I dealt with the trident stuff, and now Ember.

Until the Surface Rights board sets a precedent ordering a major reduction of a lease rate (I don't think this has or will happen) the land owner has no reason to agree to one.

File your section 36 if they short pay you (I have several filed) and wait patiently.

Eventually the company will have to explain why they should lower rents on land that is increasing in value and while other uses (crop rent etc) continue to increase.

Regarding lease size- it is registered on land titles and wasn't set by the landowner in the first place. I expect its set by government regulation and if they could have made them smaller they would have in the beginning.

At the end of the day we were here before CBM wells and will be here farming long after Ember either pays up or loses the wells.

The cost of reclaiming wells is like 25 times the rental cost, they may reclaim some but you taking a 1500$ reduction isn't a factor in that decision.

If the company needs to save some money it is much more likely they will lay off the land man and pay me what they owe.

When one company fails they lose the assets, creditors take a big loss, another company picks it up cheap and life goes on. Or the province ends up with the wells either way I will get paid eventually.

For what it's worth I do think the MD and Counties have been raping the companies and wasting the money.