Barnett Shale

The last shoe drops: Titan terminates BC-MRC deal

Three days after suspending leasing with the Bedford-Colleyville Mineral Rights Coalition, Titan Resources on Wednesday told the big group that "all our efforts to lease mineral interests of members of BC-MRC are now terminated." Titan said it will not accept any new leases but is honoring drafts issued through Oct. 18. "It is our hope that new opportunities will occur for leasing activities in the future, and we appreciate all of the mineral owners in the BC-MRC," Titan said in an announcement sent the homeowners group. The group posted on its Web site a statement that it is "extremely disappointed and strong disagrees with this unilateral decision by Titan. It plans to consider all options at its disposal to seek to enforce the agreement which Titan has now repudiated, as should all individual members." The group estimates that Titan signed leases with 15 percent of its members, "but needs far more acreage within BC-MRC boundaries to form effective drilling units." It urged members to remain united and "not feel pressured to accept something less than what has already been offered and accepted just because of claims that competitive conditions have subsequently changed."

-- Jim Fuquay

Bedford-Colleyville-Grapevine deal with Titan suspended

Titan Operating today informed Bedford-Colleyville Mineral Rights Coalition that it plans to re-examine its
leasing strategy given the recent turmoil in world economic markets, the homeowner group reports. "Therefore, effective immediately, all signing sessions previously scheduled by BC-MRC have been suspended," B-C MRC said in an email to members. According to the email, "Titan has indicated that it will honor all executed lease agreements for which a bank draft has already been issued, including those signed Saturday, Oct. 18 at a scheduled signing session in Euless. According to Titan, it plans to suspend leasing on a temporary basis pending an executive management meeting and possible discussions with its financial partner(s).  Titan has indicated they will communicate the results of their
discussions to BC-MRC at the conclusion of its review process." 

Titan follows similar moves by Chesapeake Energy, Vantage Energy and XTO Energy in the past week as producers struggle with both falling natural gas prices and a tight credit market. Titan is backed by Riverstone Holdings, a private equity group that also has a stake in Vantage Energy.

-- Jim Fuquay

Lease slowdown hits home

Some of the biggest producers and most active leasing companies in the Barnett Shale brought their leasing activities to a screeching halt this week, disappointing unsigned property owners and perhaps changing the market price of signing bonuses in the play for good. Among the disappointed landowners is Rorie Cowden, whose Hidden Valley miniature golf course on 5.5 acres bordering Jacksboro Highway is part of a Lake Worth negotiating group that signed the richest reported lease in the county: a $30,000-an-acre offer from Chesapeake.

"I was waiting for them to send me my lease packet," Cowden said Thursday, but he got nervous when he heard producers were cutting back. When he walked into the Vance Godbey’s restaurant, where signings were under way, he was told that the new bonus figure was $5,000. The difference: $137,500. "I did not sign," he said. "I never thought it would hit like this. The bubble has burst."

See the Star-Telegram's full report here.

-- Jim Fuquay

Big SW Fort Worth lease deal suspended

Vantage Energy, which just weeks ago agreed to one of the largest single leasing deals of the urban leasing boom, says it is not signing new leases with the big Southwest Fort Worth Alliance group because of the drop in natural gas prices and turmoil in financial markets. The Denver-based firm, privately funded by three investment firms, said it will honor any drafts it previously issued, which some observers estimate at about half the landowners in the Alliance, which covers more than 20 neighborhoods north and south of Interstate 20. Vantage issued an apology and explanation of its actions this morning, which is available at the  Alliance web site or which can be downloaded here: Download vantagealliance_letter.pdf

"We are trying to make the best of a bad situation," said Vantage executive John Wehrle. He said the company has "tens of millions of dollars" invested so far in the Alliance area. He said the company intends to remain active in the Barnett Shale, but probably at lesser financial terms. "We still have our original commitments lined up" from private equity firm Riverstone and two other investors, Wehrle said. "But we're being told, 'Hey guys, it's a new market and new environment. We can't spend that anymore.' " Wehrle declined to discuss other Vantage deals in the Barnett Shale, such as its recent agreement with Titan Operating and two big Grand Prairie negotiating groups. Vantage and Titan share Riverstone as a common investor but otherwise are separate companies, both firms have said.

--Jim Fuquay

Grand Prairie groups endorse Titan/Vantage lease

Close to 1,500 people from the southwestern Grand Prairie area turned out Tuesday evening to endorse a mineral rights lease offer from the team of Titan Operating and Vantage Energy, continuing a string of successes the two new companies have racked up. Gopo (Garden Oaks, Kingswood Forest, Horseshoe Bend, Beacon Hill and South Sheffield property owners) and Lake Parks Better Gas Lease Group represent more than 4,000 property owners and about 1,200 acres, says attorney Scott Bauer, who worked with the groups.

Titan and Vantage, which are separate companies but share a common investor, offered a three-year deal with a signing bonus of $25,000 an acre, royalty of 25 percent and rules on noise, traffic and other protections. The companies and their land agent, Caffey Group, expect to conduct title searches and contact landowners for signing meetings.  Bauer said XTO Energy had been working the area but pulled back, opening the way for Titan and Vantage. Titan recent gained the endorsement of the Bedford-Colleyville Mineral Rights Coalition, while Vantage inked one of the Tarrant County's biggest lease deals when it won the backing of the Southwest Fort Worth Alliance.

-- Jim Fuquay

Bedford-Colleyville-Grapevine group endorses Titan/Caffey offer

Bedford Colleyville Mineral Rights Coalition says it is recommending a mineral rights lease from Titan Operating and its land company, Caffey Group, for close to 10,000 property owners in the group's approximately 5,000 acres in Northeast Tarrant County. The group says it represents at least 80 percent of the land in its boundaries, generally Colleyville Boulevard/Brown Trail to the west, Hall-Johnson to the north, Texas 121 to the east and Harwood Road to the south. The three-year lease pays a bonus of $25,000 an acre and a royalty of 25.5 percent cost-free, and also includes environmental provisions that call for compressor stations to be completely housed. In an e-mail to members, organizers said.

It's only the most recent win for Titan, a new group formed by executives with experience at other large Barnett Shale producers. The group, with Caffey, also has won backing from big homeowner groups in southwest Arlington. Information and signing meetings will be publicized on the group's web site at http://www.bc-mrc.org.

-- Jim Fuquay

Southwest Fort Worth Alliance deal with Vantage Energy near record

One of the smaller operators in the Barnett Shale has inked one of the biggest neighborhood leasing deals, as Vantage Energy LLC’s offer of $27,500 an acre won the endorsement of a big southwest Fort Worth group representing more than 20,000 homeowners. That is the second-highest publicly reported signing bonus in the Barnett Shale, topped only by a $30,000-an-acre bonus Chesapeake Energy agreed in the past month to pay a group of Lake Worth area property owners. The Southwest Fort Worth Alliance, representing more than 20 neighborhoods, represents about 10 times more land, however.

Vantage agreed to pay a royalty of 23 percent, just under the 25 percent than has become common. But Tolli Thomas, lead organizer of the Alliance group, said the payment is not subject to production expenses sometimes subtracted from royalties and should prove to be favorable for landowners. “We think people will be happy when they see it’s truly a no-cost lease,” Thomas said. She said the Alliance group encompasses a total of about 8,000 acres both north and south of Interstate 20. The area has been heavily canvassed by other drilling companies, but Thomas estimated that neighborhoods like her own, Wedgwood Square, are less than 25 percent leased. “I’d say we stuck together,” she said.

John Wehrle, vice president of business development for Vantage, said Alliance presents the company “a big position, and that’s attractive in and of itself.” He said the company has conducted technical studies of the area and is currently evaluating drill sites, whose locations will ultimately depend on the configuration of leases. According to Texas Railroad Commission records, Vantage Fort Worth Energy LLC, the company’s local subsidiary, averaged daily production of about 6.4 million cubic feet of natural gas and liquids in the year’s first six months. Wehrle said the company has made acquisitions not yet reflected in commission records that boost that to about 10 million cubic feet a day. Vantage also was the biggest bidder last month in an auction of Colorado leases by the federal Bureau of Land Management. The company submitted $57.6 million in winning bids on 19 parcels. The company was formed in late 2006, when it announced $470 million in backing from three private equity investment firms.

The Southwest Fort Worth Alliance lists these neighborhoods among its members: Candleridge West, Foster Park, Hallmark Camelot, Meadow Creek, Meadow Creek South, Meadow Creek Southgate, Meadows of Candleridge, Overton South, Overton Woods, Ridgeview Estates, South Hills Gas Group, Summer Creek Meadows, Summer Creek Ranch, Summer Creek South, Tanglewood Park, Trail Lake Estates, Villages of Sunset Pointe, Wedgwood, Wedgwood Central, Wedgwood East, Wedgwood Middle, Wedgwood Square NEZ, Wedgwood West, Westcliff, Westcliff West. Information meetings at are set for each Tuesday, Thursday and Saturday through September. Vantage's land agent, Caffey Group, will contact property owners with each neighborhood's meeting schedule.

For a complete report, see Tuesday's Star-Telegram.

--Jim Fuquay

Overton, Southwest Fort Worth Alliance groups endorse leases

XTO Energy and newcomer Vantage Energy have won the latest endorsements from southwest Fort Worth homeowners groups representing thousands of property owners. The Overton Park and Overton West neighborhood associations, representing more than 800 homes covering about 350 acres, have set a Tuesday signing for a proposed contract with XTO and its agent, Holland Acquisitions. That lease offers a signing bonus of $25,000 an acre and a 25 percent royalty rate. And Southwest Fort Worth Alliance, representing more than 6,000 acres, has started information meetings on its deal with Vantage Energy and Caffey Group, which offers $27,500 an acre and 23 percent royalty.

XTO offered drill sites in locations that should minimize traffic disruptions and met safety concerns sought by residents, neighborhood organizers said. Bob Dellamura, president of the Overton Park Neighborhood Association, said the lease is an improved version of one XTO signed last year with nearby Tanglewood Neighborhood Association, and XTO’s presence in the area made it an attractive choice. XTO also agreed to donate a total of $70,000 to the neighborhood associations and improvement projects when it obtains leases covering 85 percent of the area. The neighborhoods are generally north of Southwest Loop 820, east of Hulen Street and west of Granbury Road. Those two neighborhoods were previously part of Southwest Fort Worth Alliance, but went their own way after Alliance leadership clammed up as if their talks were state secrets. The northern end of Foster Park, while also officially part of the Alliance, likewise can go its own way and join the Overton/XTO lease. Alliance leaders eventually released details of their lease Monday morning. The group says its three-year deal includes provisions to protect property owners within 1,000 feet of certain operations.

-- Jim Fuquay

Shhhhhhhhh! We've got big news

The Southwest Fort Worth Alliance reports in an e-mail to members that it is "THRILLED TO ANNOUNCE" that it has endorsed a "SUPERIOR OFFER & LEASE" from Vantage Energy and its land company, Caffey Group. The group just isn't so thrilled that it wants to release any of the terms. So until that moment, know that more than 20 neighborhoods in the alliance, which claims more than 6,000 acres, have an offer that tops the $25,000-an-acre bonus and 25 percent royalty on a three-year term that we previously reported. It "also exceeds all other offers in contractual concessions and in  environmental and safety considerations," the e-mail says. Informational meetings and signings are to be set during the next two weeks.

Vantage is a Denver company started by Roger Biemans, a former top exec with Encana Oil & Gas USA. According to a Denver business magazine, Biemans in December said it raised $460 million from Quantum Energy Partners of Houston, Carlyle Group, Lime Rock Partners and Riverstone Holdings. Riverstone also is backing Titan Resources, the Fort Worth company that has won several large neighborhood endorsements in recent months. Titan also uses Caffey for land services.

-- Jim Fuquay

New face Titan Operating is looking titanic

For a new company, Titan Operating is up and running like a veteran. In the past month it has won the endorsement of big neighborhood groups in Colleyville and North Arlington, and this week announced the financial backing of Riverstone Holdings, a $15 billion private equity firm with sizable energy holdings. Chalk up the fast start to Titan's founders, all experienced Barnett Shale producers. Titan Chairman Hollis Sullivan is also president of Wichita Falls-based Hollis R. Sullivan Inc., which in July was named as one of the sellers of $800 million worth of producing properties and leases in the Barnett Shale to XTO Energy. Other Titan co-founders are Christopher Hammack, former vice president of drilling and completions for Range Resources, and Mark Schumacher, who headed EnCana Oil & Gas USA’s Barnett Shale operations. Riverstone did not disclose the amount of its investment in Titan, but said it “made a significant capital commitment to Titan,” which it said will focus “on acquisitions and development in the Barnett Shale.”

Click here for the Star-Telegram's report on the transaction: Download titan_resources.doc

-- Jim Fuquay