Would you buy land w/o mineral rights?

Would you buy farm land w/o mineral rights or royalties? and if so what would you pay for it?

The 3 I have found sold the land 57% less than the apprasied value.

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Permalink Reply by Sarah on February 16, 2012 at 8:27am

Most of these are not in the same area or have the same ground. But I do see the difference in price w and w/o mineral rights.

The person does set the asking price and is an issue if the land is not worth what they are asking.

Permalink Reply by Mickgyver on February 16, 2012 at 9:31am

hello all ,many times when coal companies strip coal in ohio, they eventually auction the property off but they hold onto the mineral rights.

there has been people who have built new homes and drilled good wells and live decently on these properties in most situations, and  it is never part of the future to sell any of the minerals under their properties.

This new discovery and the ability to process and recover the oil and gas has changed the outlook on this situation.

This is one of the many questions a pending buyer should question a seller about when attempting to purchase property

The current properties with leases intact are contained in the facts presented  to the buyers through a good title search so they can decide if the inconvenience will be worthwhile in the long run .

500 feet is not a far piece to tolerate the noise and activity if you are not getting some form of compensation but each piece of property must be looked at since there may never be any surface disturbance at all .

if there will only be underground activity then it would not affect your intention with the property as far as surface building and even farming.

Some areas with zoning requirements have limitations as well so property without mineral rights can virtually be no trouble if the proper research is done and the end result will be tolerable to suit your plans for the future use of this property .

As far as the price, if the use of the surface of the land will not be affected and the state does not charge extra taxes for the minerals under the ground at that time , the price may not lose much value over the appraised amount ,especially if it is suitable for the persons needs or could be used for commercial building.

but at the least it would not hurt to try to get the seller to reduce the price based on any limitations that may become an issue at a later date and it may be wise to look into other properties near the same location as to the overall affect of the lack of the mineral rights .

i have often wondered how the placement of sewage drain lines can be disrupted if a property will be drilled in a certain area as well .How does this situation fall into play as far as the distance from a residence according the the lease addendum's if it is a shorter distance in an old lease

Good luck with your endeavors .

Permalink Reply by CL on February 16, 2012 at 10:40am

forget about buying land for a whlie......would anyone ever consider selling their land with mineral rights included in the sale considering the potential o and g royalties that may or may not ever come to fruition?

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on February 16, 2012 at 12:21pm

I think that question is easily answered...   there isn't anywhere to buy land in the marcellus without someone  owning the royalties/mineral rights and there isn't much left where drill rigs don't appear on the terrain.  Yet like you said there are some good deals right now...why? because people are taking their bonus money and getting out of town cause of all the commotion and changes to the community.

http://www.nytimes.com/interactive/2011/12/02/us/oil-and-gas-leases...

In time the value of the property will rise even though there is fracking/drilling in place because most land will have that on it to even out the value as their neighbor also has such.    Example, if one in the past could purchase a farm and there was only one drill site and a pipeline in the county...then most would avoid purchasing the one with the drilling equipment cause of the noise, air pollution, and simply the lack of util. in enjoyment.   But that isn't lasting long...the oil companies have leased a great deal already.

It used to be in a community that the ones that invested in that pretty swimming pool would derive the higher value...but as others added swimming pools and then the pools got older and needed maintenance then the values adjusted.

Now if there isn't a drill rig and it is a big piece of acreage and the mineral owner isn't wanting to have the land exploited (evid. there are some)...then that property because of peace, quiet, and enjoyment may go way up in value...also because the mineral owner may change their mind some day.

Besides, just because you own the land without the mineral rights doesn't mean that you cannot offer to purchase them then or later.

Permalink Reply by Kathleen Elsie Gibbs on February 20, 2012 at 12:32am

My thoughts on this is that as long as the mineral rights do not include a surface right of way and other surface activity if the price was right I would consider the purchase. I also believe that negotiating the personal use of the gas for the surface owner should be protected. If the house or farm is entitled to this "perk" then the new owners should be entitled to this.

Permalink Reply by Jim Litwinowicz on February 20, 2012 at 2:29am

Its nearly impossible to get a lease with such surface activity limits. Companies do not allow it because if they give it to a couple of people then everyone would soon demand the same, making it impossible to drill for and pipeline the gas.

And you cannot use this gas for in house purposes as it burns so hot that it would destroy the burners on your appliances. Plus the pressure is over 2000 PSI instead of the 8 oz in your gas line.

Permalink Reply by Kathleen Elsie Gibbs on February 20, 2012 at 6:50am

Gee maybe I will need to tell my friends that get their gas supplied that their houses might blow up or something. Sorry every house in our area that has a well also has gas for their personal use and the contract can be transferred to another owner.

Permalink Reply by Jim Litwinowicz on February 20, 2012 at 7:14am

Kathleen; with the older shallow wells a house gas provision was very common.  But with these deep wells, while technically possible, it is very difficult to do for reasons I stated above.  What some will do is offer to pay a set fee, for example $1000 per year, instead of giving free gas. And that is just for people that have a well pad on their property which will be a very small percentage of landowners since the units are so much larger than the old days.

Permalink Reply by mbc on February 21, 2012 at 6:10am

I went to one of the meetings conducted by the Ohio Farm Bureau, the speaker was Dale Arnold.  I left that meeting with the impression that anyone who signed a lease could/should include a clause for personal gas usage.  If I recall correctly, he basically said, that the lease should allow for whatever their yearly gas utility bill amounts too, plus a little more for inflation purposes.

So, if on average, my gas bill is $250.00 a month, times 12, that equals $3,000.00.  If that's the case, then I should include a clause that compensates me at the least for $3,000.00 a year, and maybe at the most $5,000.  He said, that that was the common way to negotiate the lease today, rather than going through the process of having the gas connected directly to the home.

He never stated that that was only for the property on which the well would actually be drilled.  It seems, to me, that if I am negotiating a lease with hundreds of other landowners, that it would be hard to know from the onset exactly where a well was going to be located - quite possibly five, or more, years down the road. 

Many of my neighbors who have gas supplied to their homes from the local well do not have the well literally on their property.  Yes, they are the old standard vertical Clinton/Medina wells, but it's my understanding that it is all in the negotiation of the lease, more than where the well is located.

So, logically, if I want the perk of free gas for my home and out buildings, I should, and can, negotiate for the compensation of it, if not for the actual connection to it.  That's how I understand it, anyway.

Permalink Reply by Billy Park Whyde on February 21, 2012 at 7:18am

 Ok here is a new idea! How about a unitized right to gas access. In otherwords a unitized unit could access a well head for free use of gas to their primary residences with the wells owner providing a pressure reducer to say a variable pressure of between 10 to 35 psi.  Surely a unit could form a landowners cooperative agreement to in a way create their own personal gas company.

 But then again if your in the Virgin islands you might be worried a bit more about putting sunscreen, miracle grow or Rogain on your head. lol

Permalink Reply by Mickgyver on February 21, 2012 at 7:33am

Hello MBC , a lot of the new lease's reflect a set amount of gas to be paid for , many lease state that the landowner that has the wells placed on their property shall be compensated for the first 350,000 cu.ft of gas per well up to 4 wells maximum to be paid for .

Any more wells than that you no longer get free gas payments from the deal .

This makes it easier to be compensated for the gas equivalent rather than needing to maintain the right equipment to assure safe gas transportation to your home or bldg.

Remember anything you get as far as addendum's on your lease, the companies will usually offer less of a bonus amount or possibly decrease the royalty offer which is the real profit from any well once that actually begins .

But in the same consideration the lease is the only way you can assure yourself the protection you want for yourself and the future people who may end up with your property ,whether it is family members or someone unrelated .

This will remain for years unless the lease is broken for one reason or another .

If you can ,you may wish to accumulate some of the various leases that have already been signed and accepted by the major oil companies in the area to learn what to ask for in your own lease .

This may be helpful if you are not able to join a larger group with connected acres with  the clout to get a better lease than you can obtain by yourself .

Best of Luck Mick.

Permalink Reply by mbc on February 21, 2012 at 9:35am

Thanks. 

Though, I do hope it's more than luck.  Maybe a little providence. ; )  (That's supposed to be a little wink and a nod.)

Thanks again.

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