Hello!

We are new to this gas and oil leasing siutation and had a few questions on how to figure out if we are getting the most we can out of our lease before we sign anything.

Located in Belmont County, Ohio Zip code is 43950. We only own 2 acres in a little cul-de-sac area. They have recently established a well pad about 1 mile from our home and are expected to go directly underneath our house.  The name of the wells (that i can see they have permits for on the GIS map) are they SKYHAWK 2,4,6,8,10 and 12 wells. 

Rice Energy orginially offered us 3500 and acre and we didn't really get back to them after they mailed us that lease document. They called us back this week and offered 4500 an acre.  He was a little pushy about us agreeing this time around because he said Rice Energy is merging with another company next month and he is concerned they are going to stop leasing new land and because we are in this wells path they may just force us to sign something.  Also sounded like he was worried he may not have a job after this merger so maybe he just trying to get everything wrapped up so they don't get rid of him after the merger?

Does this seem like a reasonable offer considering we are directly in the path and they are going under us? As far as we know, the neighbors beside us have not signed anything and have no plans on signing anything so it is hard to us to get comps....This land was previously leased for around the same amount. I know prices are down but i also know things are supposed to be picking back up around here

any and all help is appreciated!

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also i was wondering if its normal for them to call numerous times in a week...like they are in a hurry

I think if they are being pressured to wrap up all voluntary leasing activity prior to pursuing the forced pooling option they may contact you several times in a week particularly if they feel you may be close to signing.  Remember the person you are talking to is a broker working for Range.  They get paid based on leases that get signed not on those that get force pooled.  I think you get the picture............ strike while the iron is hot so to speak.  I would say $4,500 is a fair number from what I've heard and will you might get a little more I don't think you're leaving alot on the table at this point.  If you do decide to proceed I would lead with something a little higher than their last offer........  say $500/acre more and just see what they say.  The percentage of royalty is really important going forward as well as deducts and potential depth clause.  Stay focused on the long term not the short term although it's not to think about the immediate payout.

So Daryl, Why is Range involved?   And for Samantha - I highly recommend Larry Piergallini in Tiltonsville as an attorney to look at the lease.   He is very reasonable, a farmer by trade and not a slick scumbag type of attorney.   If you want to go that route; it never hurts to have it looked over.  

I just recently returned back to this site. Always enjoyed the fantastic friends I have made over the years on this site with net-working of our knowledge and experiences with each other. Thank you Keith, for bringing back our old resource center.

Lot of good advice from others on this post. I feel Samantha is in the drivers seat on this one. It has been a few years and laws could have changed from the past.  Forced Pooling is an option and generally used as the last resort. In the past, I remember it was quite

expensive and restricted by the ODNR,  (2) per year, per company. If laws and regulations have not changed, I think she could do better with Bonus and the lease verbiage is most important.

Gary L

thanks! i was reading over the lease and really the only numbers it mentions are the bonus and the royalty percentage which is 20%..

I have a copy of the lease...is there anyone on this forum that could look at it for me that actually knows what the language mean? i really don't know if its necessary to get lawyers involved for 1.77 acres

Be happy to read it for you and give you my opinion.  I'm not an attorney but I have negotiated several leases for myself and my siblings, aunt and uncle.  Been in the industry all my life but again......NOT an attorney.

Thanks...this is the first offer...they have recently upped it to 4500 per acre without us even asking really but they havent sent a physical copy of it yet because we said we would get back with them.

Attachments:

Got it printed let me take a look once things slow down today.

Thanks! from what i have read, i need to try to get the royalties with no deductions but other than that im not sure lol

samantha,

I am not an attorney, although I have played one on TV. The following are just my opinions.

My first suggestion is this, if you are going to change wording in this lease I would consult an attorney.

Some things I would discuss with the attorney are as follows:

The Royalty clause is contradictory. On the one hand it states that the royalty is without cost and later states in,   Item 2, a list of deductions.

The Market Enhancement clause contradicts the "without cost" language of the Royalty clause.

You may want to have better language limiting the term and reason for shutin, plus a tad higher payment.

Title and interest clause, If it were me I would ask the attorney about striking this clause.

In the Exhibit A - Addendum, ask the attorney about striking all clauses that allow for the use of the surface of your property. Yours should be a "Non-Surface Lease". Again, there is language that you will warrant title, I wouldn't.

Again, I am not an attorney and offer this as my opinion and is provided for free and provided for what it's worth I suggest you work with a qualified oil and gas attorney.

Renee,  

My error.  Not Range....... Should have said Rice.  Too many R names

Appologies

You can also call Potomac Minerals (Pittsburgh, PA) and see if they want to buy you out in the form of a mineral rights sale.  They will write you one check and then they get the monthly royalty checks.  I sold them 2.5 acres of Marcellus for $12,000.  The royalty checks were about $100 per month as the pad is far into the decline curve.  You should do a lot better than my $12,000 as your Utica wells will be cranking out gas and oil for a while before hitting the decline curve's bottom.  You can also ask Rice if they want to buy you out.  

Also see what your neighbors got.  Try and get the deductions minimized or eliminated.  Contrary to what the landman says, deduction language is not part of a "standard agreement".  Whatever the hell a standard agreement is.  

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