Updated November 8, 2011
This webpage is a little over a year old. During this time frame oil and gas leasing
offers have increased significantly.
As of November 8, 2011 the signing bonus has increased to $5350-$5800 with the royalty percentage at 20 % gross. Leases are being signed by several companies. The best lease terms are being realized by the landowner groups that offer their acreage through a competitive bidding process. I personally believe the money offers will continue to increase with time. The highest offers occur when landowners pool their land into contiguous units.
Presumably, all are aware that Chesapeake recently leveraged 25% of their leaseholds in
Eastern Ohio for $15,000 per acre by forming a JV with an undisclosed oil major.
Disclaimer: I am not an attorney, so please read the lease and discuss with your atttorney.
We just reviewed the lease and addendum with our contract attorney. We compared it to leases and addendums from others in the area. The lease itself is typical of other OG leases. In some ways more direct than others in stating the intended purpose of the clauses. The addendum addresses the major issues that have been discussed in this and other forums, making it appear more landowner friendly.
$4950 and 19% gross production on both gas and liquids. The addendum describes in detail the various scenarios by which the value of the components would be measured. I have to admit that a lot of this is over my head, but it appears to cover all of the ways that a product could be moved/sold/prepared by companies with or without a relationship to the parent OG company with a goal of getting the best price. I would appreciate any feedback on this section.
Shutin and Force Majeure are in the lease but limited to specific time frames in the addendum.
The lease has a 3 year renewal option rather than the standard 5. The payment for the 3 years is reduced to $4500/A. Please read the language about this being the total payment for the period. We had a discussion about whether this excludes a royalty payment in the extended period, but believe other sections of the contract would prevail. I would ask this question before signing.
We had 2 related concerns about this and other leases: 1 is that the lease doesn't reference the addendum. CHK has a good statement in their lease that makes the addendum part of the agreement. Although the addendum references the lease in reverse, unless both are filed together, there may be a dispute about prevailing terms. This is not unsual and is the case in most of the other leases I have reviewed.
The second issue is what will actually be filed, the complete lease or a memorandum. We have decided one solution would be to file the entire lease and addendum ourselves and pay the fees associated with them. This would insure that they are recorded together.
I am in a bit of a situation and would like to have anyones advice. I have a small tract of land in archer left to lease. However most of my neighbors are with chk and immediate neighbors are in question who they are with. When the dust settles I would hate to be the black sheep and be left out of a drilling unit. Am I reading to far into this or should I follow the majority of my neighbors. This xto offer is enticing, granted the piece I have left is small and would probably never have a well directly on it.
We have all worked this to a frenzy,it is a great time to own mineral rights in Eastern Ohio.
Education has been the key and the togetherness of our heritage to stick together has been paying off. My hat is off to those who have made the sacrifice to educate and organize landowners,if it were not for those folks we all would have signed with the brokers and flippers for peanuts.
Great job Harrison and Belmont folks
Jim, I stand corrected, 4950 and 19 is a great bit more than what we are at. Could you forward lease to my email if you get one. Also is this land group accepting new members, I assume they are. Please let me know as soon as you can as our group is getting there pens out.