Recent Offers in the Marcellus Shale

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1. State
2. County
2. Lease Bonus Offer
3. Royalty %
4. Terms (length of the lease)

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Permalink Reply by Jack on August 12, 2009 at 9:31am
Somebody should have told the SWOGG and NWOPA groups!!!!! Guess Hess must have stayed behind....
Permalink Reply by Teresa Copenhaver on September 15, 2009 at 6:09am
Or you might want to check out this article...

Group to Lease Land for Drilling
Chris Burger's Whitney Point Home is far from the noise
of the city...but right on top of the Marcellus Shale, meaning natural gas drilling sites--similar to those out west, could one day be his neighbors.

As chair of the Binghamton Regional Sustainability Coalition, he wants landowners like him to know what to do if the energy companies come calling. He suggests including in lease agreements that companies pay to test water and air quality.

"We really encourage the landowners to hang tight, stick together, and get the best deals that they can," said Burger.

That's what members of The Friendsville Group did.

The Southern Tier and northern Pennsylvania landowners teamed up to negotiate with energy companies.

Many have signed letters of intent to lease their land to Fortuna Energy, Inc., for five years at 55-hundred dollars an acre, but work can't begin in New York until the state Department of Environmental Conservation completes its environmental impact report.

"We have spent in Bradford and Tioga Counties since approximately march or April timeframe of this year about $300 million that might have been spent in New York if it wasn't for the delay in permitting that we're experiencing," said Mark Scheuerman, manager of media and government relations for Fortuna.

Broome County may be missing out on drilling profits, but State Assemblywoman Donna Lupardo says the county could take this time to prepare emergency services for possible accidents and other effects gas wells could have on the community.

"We've seen again in other communities that sometimes the people coming in working in the gas fields will take up some of the available housing, maybe making housing less affordable for local residents," said Lupardo.

Lupardo says the D-E-C has told her it's on schedule with its report, which should be out by the end of the month.
Permalink Reply by Jean Michel LeTennier on July 26, 2010 at 3:04pm
BS, not a single acre traded bought or sold, between companies or investors, in the last 12 months that has been sold for less 12,000$ and that is for land with no infrastructure.. so please get off your high horse..
Permalink Reply by Frank Verret on July 26, 2010 at 4:09pm
Permalink Reply by ROBERT H.DIXON JR. on July 31, 2009 at 2:28am
PENNA. BEAVER COUNTY 50.00 PER ACRE 14% NOT YET SET DISCUSSION TODAT ON TERMS OF A LEASE WITH RANGE
Permalink Reply by ROBERT H.DIXON JR. on July 31, 2009 at 11:00am
thanks terry for your thoughts and opinion i need as much help as i can get we are in negotiations now and undoubtedly be searching for a unbias good inexspenvive lawyer needle in the hay stack
Permalink Reply by ROBERT H.DIXON JR. on July 31, 2009 at 2:37am
WHAT IS THE CURRENT BONUS ON A LEASE IN BEAVER COUNTY DOES ANYBODY KNOW, IM GETTING A HIGHPRESSURE LEASE GUY FROM RANGE SAYING IF I DONT SIGN THE HORIZONTAL WELL WILL COME UP TO THE BOARDER OF PROPERTY AND THEY CAN TAKE GAS OIL WHATEVER AND NO ROYALTY WILL APPLY
Permalink Reply by Craig on July 31, 2009 at 5:27am
In a way, he is right - PA has a "rule of capture" which means that if gas migrates into their frac from your property, then they do not have to pay you.

There are some caveats to this, however. If the well is a conservation well, then it must be placed a certain distance from the nearest property line, which also means the lateral must end that same distance from a non-leased/pooled property line. If the well is not a conservation well, then no limit on location.

Also, some mineral owners/drilling companies rattle their sabres about the fracs themselves - they state that if the frac extends under their property, then they can sue for their portion of the well, which in many cases, is the whole thing for it would be considered a tresspass well. I don't think in any shale well, that would be possible, for we do not know how far the frac goes out - with any real specificity - and the science is not conclusive at this point. They can monitor with sounding devices, the migration of gas if there is a large pull on reservoir, but in the shale, again, I think it would inconclusive due to the tight formation.

A 14% royalty is good, better than many, 50/acre per year is not bas either, but some are offering a lower 1st year and then increasing the amounts in years to come, assuming prices will again begin to creep up. Thus the land owener has less remorse when prices begin to go up.

There is a lot of comparative thinking in this group - that if one area gets 2000/acre then all should get 200/acre. Yet, if this were true, then with the hype, Marcellus should get as muchif not more than Barnett. But, in some areas, Barnet Shale was getting 25k/acre. There are many factors to consider when leasing your property. In my opinion, the likelihood of getting a well ASAP is the largest one. SO if the landman is pressuring you with the location of the lateral, ask him questions about where they are planning to spud, what pipeline are they using to get out, when they think they will drill the well, etc.

Then, accept his offer, but in the Lease, add in that if, after a specified period of time, they have not drilled, and the lease is still in effect (say, three years on a 5 year lease, and it is a paid-up Lease) then they must pay a non-conforming penalty, to manitain the lease in effect beyond that period. I worked with a friend in the Barnett for the same deal, and after three years, he gets a 12k penalty if the land is not in a pool with a well, or a Barnett well is not spudded on his place. The company originally came to him asking to buy the minerals for that 12K, and told him not to sale, and to take a yearly with an 18% and the 12K penalty/drilling commitment.

There is more than one way to skin a cat, and he will get 12k next month, for there is no well, and no permit or pooling notice at this point.
Permalink Reply by ROBERT H.DIXON JR. on July 31, 2009 at 11:04am
thanks craig for your input know any good lease lawyers that are fair i dont want to be in law offices and paying astronomical fees and there again all we want is whats fair for all
Permalink Reply by Craig on August 4, 2009 at 7:33pm
Don't know any good lease lawyers. In fact, I didn't know you could use good and lawyer in the same sentence :).

I lot of lawyers understand contract law, and there are some guys out there who are putting together groups that are pretty good negotiators, but the only way they get what they want is by putting together numerous landowners and negotiating on their behalf - then they take/get a cut off the top.

I would think that there would be some unemployed landmen avaialble, since things slowed down, that could assist individuals at this time and be reasonable - for, if they are familiar with field functions - which I can say many of the ones in the business today are not - then they will know how a company is going to use certain clauses in the Lease, they will also be able to tell you why one type of lease is worth more than another, even if the properties are adjoining.

If they have an automatic renewal clause in the lease, then it is worth more - if they can transport third-party gas then it is worth more, if they can transport and it survives the lease term, even if they don't drill, then it is worth more. It all depends on if you want a large up front bonus, or, if, to get the protections you want, and the clauses you want, then you are willing to accept less upfront monies, and will have to probably go with a smaller, independent type of driller/operator. I know some in PA that run upfront, honest ships, and try to work with the landowners, yet got their butts kicked in the recent leasing rush due to crazy prices - the smaller guys were offering less, but with great lease terms, and the landowners all said that is what they wanted, yet, they signed boilerplate leases for more money, and went on.

You just have to decide what you want, much like Jerry did in TX on the land on the edge of the Barnett - he will get some decent monies, and retain ownership of the minerals, but may not get a well - mostly because of location, but once the gas market changes, or infrastructure is more accessible, he will have his shot.
Permalink Reply by Yun Zhou on August 20, 2009 at 8:54am
Craig,

Thank you for sharing some thoughful yet practical ideas for lease negotiation.

As a new "gas landowner", I'd like to know details of your statement of "If they have an automatic renewal clause in the lease, then it is worth more - if they can transport third-party gas then it is worth more, if they can transport and it survives the lease term, even if they don't drill, then it is worth more." Could you please explain why it is worth more, in each case?
Permalink Reply by Craig on September 8, 2009 at 9:10am
It is worht more to the gas company - if they so desire, they can sell the leases out to another company and the more provisions that are advantageous, the more it is worth to them. If there is an automatic renewal, it then makes it their choice as to whether or not they have the lease for additional years, not yours. If they test an area, and find that it has good gas, but no way of getting it out, then they have time to build pipelines before the lease runs out. If they find good gas, but you have a three year lease, and no automatic renewal, then, fine it is worth something, but only as long as they drill on your land, and have a way to get it out.

If they can transport third-party gas, means they can drill on a neighboring property, run as line across your land, not pay you for it, and transport gas from the other leases across your land, without a well on your land. If the provision survives the lease - the lease runs out in three, but they have a pipeline across it transporting third-party gas - then they can continue to run gas through that pipeline across your prpoerty without renewing the lease, or paying you, and you already agreed to it in a contract. It means they have a right of way across your property, as long as they lay the pipeline before the lease term expires, and then it remains after the lease term expires, all with no well.

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