The pattern in Encana's "PATTERN of DEALINGS"
The first of the six gas wells on our land was drilled in 1994 by Pan Canadian Petroleum Ltd., but in 2002 Encana took over this company & simply took over the leases that Dad had signed with Pan Canadian.
Over the years Dad had received letters notifying him of his right to a 'compensation review' but had never bothered to respond to these 'form' letters. I think mostly because he dreaded having to deal with these people as his overall experiences rarely resulted in a positive outcome for him or for the farm.
Then one afternoon having coffee with the neighbour Dad was told that all he has to do is write a simple letter in response to their offer for "review of the annual compensation" and as happened to the neighbour, Encana would automatically jack up the pittance for their yearly lease by simply adding a little more to the currently due cheque!
Wow that was easy!
So we did the same for W2 having received the same basic form letter. From the time we got Encana's letter from Ms. Curly Rider dated the end of September to the time we wrote our same basic request of November 8th, to the time it took for Encana's Surface Land Agent, Ms. Somerville to automatically include another $460. to W2's annual cheque only took about 4 months.
Consider the Math...
Both documents below are found with the original lease agreements.
Well 3 - 2001
So, for W3, drilled in 2001 we had been getting $2450. per year for Loss of Use and ADVERSE EFFECT for 5.37 acres of good agricultural land. We can see Loss of Use was calculated at $200. per acre, therefore the figure for ADVERSE EFFECT would be $256.23 per acre per year.
Well 2 - 1996
W2 was drilled in 1996 so that might explain the extra $10 bucks tacked onto Ms. Somerville's November 2005 annual rental increase offer/cheque. Could one conclude this 'pattern of dealings' suggested there is discretionary powers associated to amounts offered? Being new to this part of our business operations I wondered if this was typical of how Encana dealt with requests for compensation reviews.
This posed a few significant questions in our minds:
Why is there a .34 cent difference in daily rental amounts per acre between these 2 well sites? My calculator shows the difference of .34 cents between just these 2 wells, for the next five years, is a loss of $3332.08 [.34 X 365 days = 124.10 /yr X 5.37 acres = $666.41/yr X 5 years = $3,332.08]
Why the difference? Why should the ADVERSE EFFECT on W3 be valued for less than what was offered for W2? Both notifications were received within the same period of time and authorized by the same Encana Surface Land Agent? And both well sites are about the same distance away, in plain sight of our home.
Then we noted that their value for LOSS of USE on both Encana offers had risen only $50. per acre per year - for the next 5 years!
KEEP IN MIND, this train of thought and the math, reflect where we were at going into 2006.