Non contiguous land. Appealing or not?

I was just recently asked to join a land group and Iam debating whether it is the right move for us or not.See most of the members have large tracts of property that adjoin here in morgan county, however i only have approximately 60 acreas 2 miles away and iam concerned that the oil and gas companies are going to dismiss my property because of it`s size and location from the adjoining properties.Therefore leaving me stuck in a land group comittment and having to wait the obligation out.

Do they ever consider leasing non contiguous land of this size or do they usuall look else where?

Thanks

Bern

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Permalink Reply by Rich Koehler on October 20, 2011 at 12:45pm
The way leases are traded, bought, sold, etc. etc. etc. I wouldn't worry about it.  Once you sign a lease, the lessor can sell it to anyone, including a driller looking to fill in a drilling unit.  Here in Ohio, the revised drilling law (SB 165) permits the driller to force a holdout into a drilling unit at the price paid for the cheapest lease in the unit.  The concept is called unitization, and is probably more common than most folks would like to believe.
Permalink Reply by Bern on October 20, 2011 at 12:58pm

Rich,

If the land group agrees and accepts a "land friendly lease" with a specific lessor at a negotiated rate per acrea as a sign on bonus are all the members of the group entitled to that sign on lease bonus.Or just the properties within the group that the specific lessor is intrested in.

This is all new to me.

Bern

Permalink Reply by Jim Litwinowicz on October 20, 2011 at 3:22pm
First talk to your adjacent neighbors and see what they are doing.  If they are not leased yet, maybe you can get enough to join that group to make your parcel more enticing.
Permalink Reply by Mike h on October 21, 2011 at 1:54am

You need to speak with the leaders of the landowners group. There may be sub-groups witihin the group depending on when you joined the group. So if you were an early joiner before an agreement was made, the O&G company may be obliged to take your parcel even if it would otherwise not be of interest to them. If you joined the group at a later point then they may have the option of declining. That happened to a neighbor of mine. He got back a letter with the unsigned (by the O&G company) towards the end of the due diligence period which told him they declined because he was not part of group A in the landowners group and not in an area of interest.

We joined the group earlier (before the deal was struck) but signed later yet the company has assured us they are going to take our parcels (which comprise more than the minimum for a drilling unit and are roughly square). My understanding is they are obliged to take our land under the groups agreement.

On the other hand, if they don't want your land I am sure there are ways for them to get out of it (don't complete due diligence on the titlework in the specified timeframe for example). You might be able to sue for specific performance but it probably wouldn't be worth it.

 

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