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!
thanks...we have asked a couple of our neighbors and none of them have even been approached yet. One guy said he won't sell no matter what the offer. We aren't really looking into selling outright...too much of the "what if" would nag at us...especially if it ends up we could have gotten more from royalties than what we sold out for.
The person contacting us originally tried to say the offer was lower than others because they have to include the time in researching the title of the property to make sure we own the mineral rights which was a boldfaced lie...they have to research every property title on their own even if someone has proof of ownership.
As far as i can tell, from what I have read, we want gross royalty and not net...and we want to get rid of the market enhancement clause but thats all i know lol. Also to limit the shut in/delay in market clause and the force majeure length/ time period.
I would ask them to delete everything after the word "hereunder" in the fourth line of the market enhancement clause. I think that specifically precludes you from having deducts of any sort. (Exhibit A)
I would also as that the Shut-in time period be reduced to 18 months. (Exhibit A)
(A) The Delay Rental of $5 per year after it is shut in for 12 months is ridiculous IMHO.
(C) Delay in Marketing - probably needs work as well since it basically gives them the right to shut the well in forever and only be forced to pay you $5 per annum (refers back to Delay Rental).
(D) Shut-In - Again refers back to Delay Rental as penalty for shut-in and at $5 /yr that is not good for you.
Honestly with 2 acres you don't have alot of stroke but I'd ask for the changes to something you feel is equitable.
thanks! the shut in and delay rental are the 2 main things i definitely do not understand
Pro Geo - I have a question about that! I am glad you mentioned it. Define "for a while" in regards to the decline. we've been in production since Nov 2016 and already seeing a dramatic reduction. NOW it is possible they are throttling the well back, but I am not sure. Any input?
One thing about selling your mineral rights is that they are forever out of your control. So your surface property will be sitting above the minerals/coal/oil/gas that belongs to someone else. For the one time amount of money you receive, you will have traded off somebody else deciding what goes on literally under your feet. Something to consider.
As for up front money, the offer made to you is in the ball park.
However, I have "heard" of payments of $7, 500 an acre and more.
I have also heard wild stories of companies paying extremely high
up front money because they had to have the acreage.