Click on any question below for details.
Who owns Reserve and CSi?
Both companies are privately held and owned by David A. Freshwater and J. Scott Freshwater. The Owners are also the largest capital contributors to each and every Reserve well drilled.
What does CSi do exactly?
CSi is Reserve’s primary contractor. CSi builds Reserve’s well locations, drills Reserve’s wells, trucks in the required materials, constructs the pipeline systems and finally, reclaims the well location. When required, CSi also mobilizes its well servicing rigs to timely address well production concerns. In other words, you are not only dealing with the potential well operator, you are also dealing directly with the people who will be completing the field work.
Does CSi actually have its own drilling rigs?
Yes, CSi currently owns and operates four (4) double derrick rotary drilling rigs—one of which (Rig #2) is designated for exclusive use on Reserve drilling projects. Reserve’s affiliation with CSi allows us to drill targeted leases in a timely fashion while our peers are coordinating a multitude of contractors.
Why should I even lease my property?
Once all the required leases are obtained and a formal title opinion is completed (which verifies the mineral ownership & Reserve’s right to drill on the property), a well may drilled on the tract. You will be entitled to 1/8 (or 12.5%) of the monthly income generated from each well drilled plus annual delay rentals to hold the lease until the well is drilled.
Why should I lease to Reserve?
Bottom line, we are confident we offer better lease terms than our peers and increase the likelihood that your tract will be developed in the very near future.
Are you leasing properties and giving them (brokering) to another company?
No. Reserve’s intent is to lease properties for Reserve to drill. Reserve is not in the business of collecting and then ‘peddling’ leases to other companies.
If I own all the minerals, how much would my monthly royalty check be?
Obviously, we are leasing your tract because we suspect there may be oil and/or gas underlying it; however; there are no guarantees that oil or gas will be present once a well is drilled. Your royalty check amount will primarily be dependent upon: (1) how much oil and/or gas the well is capable of producing (which we honestly can not answer until the well is placed into production) and (2) the realized price of the oil and gas sold (which is variable each month).
Why is the gas price on my royalty check statement less than what I pay at home?
Simply put, producer’s usually sell their gas production at wholesale prices and you buy it at a retail rate. There are a number of costs, mark-ups and profits added to that price as the gas moves to your home. In WV, gas prices are regulated by state public service commissions and there is often a time lapse between market prices and consumer prices.
How many drill sites do you already have in your inventory?
Unlike the major companies, we do not boast of thousands of available drill sites while only drilling a few hundred per year. Reserve tries to maintain an inventory of ~40 drill sites at all times (of which we drill 50% of those per year).
How much does it cost to drill a well?
The drilling cost will vary with the depth (i.e., the deeper the more expensive). However, a Devonian shale well (~5,500 feet) generally requires an investment in excess of $300,000 per well (with no guarantees it won’t be a dry hole).
Who mails me my monthly check and may I contact with questions?
Reserve completes its disbursements in house and our office is open 7am-5pm, Mon. to Fri. to answer any questions you may have. Should you call, rest assured, an actual person will answer the phone.
Would you be interested in purchasing my mineral interests?
Although we do not advise or recommend it, there are times that your interest is so small it may make sense to sell or when you have an immediate cash need. Reserve routinely purchases mineral interests on tracts we are leasing and on tracts in which we currently operate existing wells. Should you be interested in selling your interest, just let us know and we will at least make an offer.
I leased my property to Reserve and they drilled on an adjoining tract, when will my well be drilled?
There are a number of factors involved in Reserve drilling on a specific tract of land. First, we need to lease 100% of the mineral owners. For highly fragmented tracts with lots of owners, that can be difficult at times. Second, the well we drilled on the adjoining tract may not have met our economic expectations. Since gas wells represent significant upfront investments, we have to target the most productive areas where we anticipate the most favorable results. These are just a few examples.
Can I visit the site during drilling?
Yes. In fact, since we may be partners for the next 25 years or more, we encourage and welcome it.
Why do I own such a small percentage of the minerals?
West Virginia law allows the minerals to be severed or separated from the surface. Therefore, when a reservation of minerals is made decades ago, this interest sometimes splits many ways via heirship throughout generations. Such a division sometimes creates small fractional interests, as miniscule as 1/360th. However, each interest is an undivided interest, meaning that fraction is that portion of the whole acreage. So no matter where a well may be drilled, the owner has that fraction of the minerals produced. Every mineral owner is as important to the process as any other because all mineral owners, no matter the percentage of ownership, have to enter into a lease to allow Reserve to drill.
Why am I paying/ not paying taxes on this mineral interest?
Many times the mineral interests are maintained on a tax ticket under the name of a long deceased relative and someone else has been keeping the taxes paid, even thought the interests are split between the descendants. Also, it frequently occurs that when the mineral reservation is made in a deed conveying the surface, the minerals are never assessed separately in the name of the party reserving the minerals.
Why does Reserve get 7/8 of revenues of wells drilled when I own the minerals?
Reserve is making a large capital investment of several hundred thousand dollars per well location and assuming all of the risk as there is no guarantee that oil and/or gas will be found. If you desire to receive the entire revenue then you may drill the property yourself and assume the risk entirely. Of course, you may contact our sister company, Contractor Services, Inc., to contract out the drilling.
What happens if one mineral owner chooses not to sign the lease?
All mineral owners must sign the lease in order for drilling to occur. If a mineral owner is unwilling to lease, any other mineral owner may seek a partition suit in circuit court which would authorize public auction of the entire tract on the courthouse steps. After the sale occurs, each owner split’s the proceeds of the sale according to their proportionate interest. The purchaser of the interest (who may be a previous mineral owner) then may enter a lease to develop the minerals. This process may be involved and time consuming however.
I have read about leases that pay a lot more money per acre and a larger percentage of royalties. Why don’t you offer that in your leases?
The leases being signed in north central West Virginia, Pennsylvania, and New York are for the development of the Marcellus Shale (See www.marcellusshaleformation.com). Our findings indicate that the Marcellus Shale in Kanawha County does not contain such reserves of gas and we are not drilling into that formation. Therefore, the competition for leases and potential for large volume production of natural gas does not exist in Kanawha County and the lease terms being offered are what is standard for the region. We always instruct mineral owners to accept a competitor’s lease offering exorbitant delay rentals although such offers seem to indicate a desire to hold leased acreage as an asset rather than an intended well location.
Why don’t you offer a lease giving gross proceeds at the wellhead?
See www.wvsoro.org/curent_events/tawney.html. The Tawney case prohibits companies from deducting post production costs from the royalty payments unless the lease expressly provides for such decductions. Ourl lease allows for post production costs to be deducted that are charged by a non-affiliated third party associated with the sale of the oil or gas. This means that the purchaser of the gas (i.e. Columbia, Dominion, Mountaineer Gas, etc.) deducts certain transportation and gathering costs for using their lines to transport the gas. This amount is taken off the top before any check for the purchase is cut to Reserve. Reserve does not deduct any costs associated with installing, using, or maintaining our own gathering system. Therefore, the royalty owners receive 1/8 of what Reserve receives as payment for the gas; ;you get 1/8 of what we get. We all share in the costs of getting the gas to market using the transmission line infrastructure established long ago by other companies.
Do you think you own all your minerals, maybe, maybe not?
Read this article of interest. – The Marcellus Shale
Open/Close All
