Road Right of Way

Hi all, First time for me on discussion. What payment should we be getting for a road rightway across farm land to the pad sight? Jim

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Permalink Reply by Jack Straw on October 11, 2012 at 9:15am

The first thing to note is that the road will be there for the next 40-100+ years.

Property taxes for the land occupied by the road will be your responsibility.

 

How much to ask? That depends upon a number of factors:

 

What is the length of the road portion that will be on your land?

How wide is the Right of Way they will require?

Multiply feet of road length times width of ROW; divide this number by 43,560 square feet/acre to arrive at number of acres that would be occupied by the road.

 

How much will the road impact your property:

What will the visual impact be?

To what degree will it interfere with your ability to use and enjoy your property?

To what degree would it affect the value of your property adjacent to the road?

To what degree can you alter the location of the ROW, such that it is less damaging?

Will you lose crop land?

Will the presence of the road make it more difficult to till fields.

Will you lose timber land?

 

If farm land in your area is worth $x/acre, I would (in my opinion) expect a minimum payment in the range of $4x - $10x/acre – depending upon your answers to the above questions. The lower end of the range would be for a situation in which you will be receiving royalties from the wells to be drilled from the pad and the impact of the ROW is minimal. The higher end of the range may not be sufficient if the impact is great.

 

I would insist upon locked gates; as it enters and leaves your property.

I would insist upon an indemnification clause; in case of accidents/spills/etc.

I would insist upon a clause attending to proper drainage.

I would suggest placing a termination clause, so that the right of way will revert back to the landowner when no longer used (at some distant future date).

I would pay the several hundred dollars to have a qualified Attorney review any agreement prior to signing.

The above is all my opinion, you need to do what you feel comfortable with (regardless of my random opinions). In the end, you have to think about how the ROW will affect the value of your property and how it will affect your ability to enjoy your property. And, then you can come up with a value you feel is more than fair.

 

All IMHO,

                   JS

Permalink Reply by McC. Jim on October 11, 2012 at 10:15am

Hi Jack, Thank you so much for your responce to my question. I'll have to get the measurments off the road. It will be totaly on crop land and the pads will take in some woodland. That was my next question. What should we be getting for the pad sight? I beleave it will be 5 acres. And yes, when it is finished, we will be getting royalty from it. It is a Consol Energy leasse that was allready in place from years ago. So that leaves us with the 12 and 1/2 %.    Thanks, Jim

Permalink Reply by Jack Straw on October 11, 2012 at 1:33pm

Taking woodlands means the potential loose of timber. If it is in mixed hardwoods such as Cherry, Maple and Oak it can be selectively harvested every 20 years or so. You will no longer have this resource available. The 5 acre pad will be kept clear, as there is the potential need to re-frac the wells at a future date. There may be the need to someday bring in a work-over rig to do some well servicing. I would expect a minimum of $4,000/acre for the pad; but, I would really try to get $8,000/acre. I expect that you are in a pool with neighboring property; you are hosting the road and the pad – that should earn you a premium – especially as held by production (HBP) you missed out on bonus and higher royalties.

RE: “It is a Consol Energy lease that was already in place from years ago. So that leaves us with the 12 and 1/2 %.”

I spoke with a friend yesterday who is HBP with Consol Energy in SW PA. He was quite upset. He had just received his monthly royalty check and the statement was in a new format. By his lease, he is supposed to get 12 ½% gross royalties; but, this new statement had deductions that brought him down to about 10% net royalties. It looks like Consol is starting to pull some Chesapeake like tricks. My friend told me that the wells in question had been producing for more than 60 years and there had never been deductions taken out until this month. You may wish to discuss this with Consol, and obtain assurances that your rights to receive 12 ½% gross royalties will be respected (with no deductions). If you need to modify your existing lease to accommodate unitization (or anything else for that matter) you may wish to modify it to improve upon the old lease – both to protect your rights and to obtain some more consideration in exchange for your willingness to modify the lease. This recent action by Consol is quite disturbing, they do not seem to be satisfied in simply drilling in the ground, they now seem to want to drill into Landowners wallets.

 

All IMHO,

                   JS

Permalink Reply by McC. Jim on October 11, 2012 at 3:33pm

Lots of good information here Jack. They should be coming around soon. They paid us for the 2 pipe lines in the spring. One for the gas and one to bring water and they showed me were they want to bring the road in a couple weeks ago, which I agread on, with a small change. After I hear from them, I'll get back to you and let you know how that went. Thanks so much for your help,  Jim

Permalink Reply by Jack Straw on October 11, 2012 at 4:30pm

RE: "After I hear from them, I'll get back to you and let you know how that went."

Please do let me know how it goes.

Trust me when I say that the main reason I am here is to learn.

 

JS

Permalink Reply by McC. Jim on October 4, 2013 at 3:44pm

Just about 1 year later, there back. CNX made a offer of $2500. per acre for the total pad and the working acres, which will be put back when the 5 wells are completed. The map is showing a total of 26 &1/2 acres. Have you ever  of this?

Permalink Reply by farmgas on October 12, 2012 at 12:41pm

Jack...any further news about Consol`s deductions?  I too am concerned about deductions being taken from gas royalties.   I thought that 1/8th royalty minimum in Pennsylvania meant just that...deductions would indeed reduce a royalty payment.   Sounds like a breach in trust to me!

Permalink Reply by Jack Straw on October 13, 2012 at 1:39pm

I was hoping that my comments relating to my friend's recent experience with the "new" manner in which Consol were dealing with royalties might have encouraged others recieving royalties from Consol to check their royalty statements and comment on any changes that they might have noted. We may be in the early days of a disturbing trend.

I intend to listen for others experiences.

When next I have an opportunity, I will encourage my friend to join gomarcellusshale.com and directly post his experience.

 

All IMHO,

                 JS

Permalink Reply by jett on October 14, 2012 at 6:27am

I was told by a guy in the timber business to make sure to be paid by hardwood timber prices and not by firewood prices. Also if you want to save the timber and to use/sell it yourself make sure that it is cut in usable lumber form and not cordwood size.

Sorry - this was meant to go under Jack's comment about the timber.

Permalink Reply by Full Name on October 11, 2012 at 4:44pm

Jack, smart, specific information here and you brought up some great points also.  my comment to James is to plan on the attorney being 3-4x the several hundred dollars, AT LEAST, especially if you have revisions that go back and forth. 

Permalink Reply by Jack Straw on October 12, 2012 at 7:30am

RE: "my comment to James is to plan on the attorney being 3-4x the several hundred dollars, AT LEAST, especially if you have revisions that go back and forth."

Point well taken, the good news in this is that should there be need for back & forth revisions, the Attorney should be providing "value" to the landowner more than commensurate to the additional billing.

 

All IMHO,

                 JS

Permalink Reply by Jack Straw on October 12, 2012 at 7:35am

RE: "I add that a topographical survey also be performed, including pictures and perhaps video."

Requiring the O&G Operator to pay for a topographical survey is an excellent idea.

Where ever there is bulldozer work, there can be issues of drainage (and the alteration of existing drainage). A topographical survey would document the existing situation, but should also suggest potential problems and hopefully suggest possible solutions.

 

All IMHO,

                 JS

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