My family discovered they have 30 acres of mineral rights in Belmont county and XTO would like to lease them. We have a gas and oil attorney.

What can we expect after signing a lease? 

What are royalty checks typically on 30 acres @ 20% in a 300 , 400, 500 yard area?

(if all 30 are within well area)

What are some problems you have experienced that we should worry about?

Can I buy a mansion in in Hollywood? or perhaps a small boat?

How long will they do this for?

$3200 is the offer per acre for 2 year w/ 2 year extension.

James

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Replies to This Discussion

Dennis,

These are the numbers you do not see:

In December, RICE had to sell stock ($33,000,000) to pay back Morgan Stanley.

Active wells have decreased by 62% from their high in 2012. Their is no record how assets keep growing. (By 200% in a year) Mineral leases do not fall under this.

The company is operating at a loss for the past 3 quarters.

I hope they figure out their problems for the people of Belmont county. 

This is why a public company has to make the newspaper and a private company does not want anyone to know what they are doing. 

See for yourself my friend. It does not matter to me either way, I just want you guys to know since I grew up playing in the creeks and mud in Glencoe. Good Luck!

https://prismic-io.s3.amazonaws.com/riceenergy%2F68d3eb66-358d-4334...

http://finance.yahoo.com/q/bs?s=RICE+Balance+Sheet&annual

"Lessee covenants and agrees: 

Deliver to the credit of the lessor, his heirs or assigns, free of costs a royalty of 20% of the native oil produced and saved from the leases premises , with the exception of non-commercial nuisance oil and delivered at the wells or into the pipeline to which the wells maybe connected."

Same statement for natural gases except gross amount words for 20% royalty at the well head. less any incurred taxes and third party charges. Gas sold at the well is 20% of the amount realized by lessee.

Thanks again for the information Dennis , I had none on pricing before these replys.

XTO has not been the most efficient driller in many basins. They are average, perhaps slightly above. They do have deep pockets. But they also have lots of lawyers and you do need to vet the terms very closely. Post-production expenses will eat most of your royalty - especially during low product price times and as the well ages.  Look for the effective royalty to be about 10% except perhaps during the first few weeks of production.

However, once production declines along with your check keep in mind that each drilling unit will support multiple wells. They may be well into the future before you see additional wells drilled so don't think your lease is "worthless" once checks dribble down to a few dollars a month. Sooner or later other wells get drilled and the income jumps up again, and of course, declines accordingly over time.

Thank you for that information also Lerret. I believe we may be the only lease for 20% royalties whereas most other people signed very early on for 12.5%. I am not sure if that makes a significant difference or even works the way I mathematically broke it down. Anyone have any familiarity with that situation?

What if rice energy offers 5000 per acre and xto 4000 per acre? Do you want a company with limited resources oh I would say in the neighborhood of 500-900 mil vs a company backed by Exxon mobile with technology most likely soley owned by that company? When it comes to Royalties, which will have the better technology? Which will stay in business if natural gas price continue to trend downward past 1.50? My family knows from experience what rice is willing to do with the abandon mineral rights law , even if they utilize it incorrectly ! I am not in the fraccing industry though, maybe someone could respond with evidence who knows more on the subject matter.

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