starting a land unit with our neighbor
How do we get together a land unit toegether; knock on neighbors doors, have them sign something and we all work together to get the better lease or am i just needing to take chill pill and relax.. I wil do anything we need in order to get that happening...what cah thinki :)
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Permalink Reply by Oil and Gas nightmare on
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Ok maybe I am not being very clear..I want to see about a land unit because Greene county is one of the besy areas, yet i dont see really high siging bonuses for people, I have seen like 3 that look good, other than that its all pretty low considering we are one of the highest producing areas. Now I know working with people can be taxing...however a united front can force these companies to start paying what its worth. I dont mean we have to be greedy mean people but they are paying way more in other areas that dont have favorable reports that greene county has FROM the state as well as companies...
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Jackson township and I think addtional property in gilmore...sorry some has not be cleared up but or lawyer is finalizing that....
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Permalink Reply by Lease Expert on
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Greene county is the highest paying area... Are you aware of what the going rate is? Also for the thousandth time, lease bonuses are based on supply, demand, competition, price of Gas, New state taxes, how much land the company already has under lease, and I can name a million more factors..
So in fact, the price you are offered IS the going rate from the company making the offer. Its more important to get a good lease and skip the bonus than a crappy AB resources lease and 10k an acre...
So when you state "start paying what its worth" its worth what someone is willing to pay and what someone is willing to accept...
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Permalink Reply by Richard Clark on -
Kudos to you Lease expert.........most people cannot wrap their mind around how much money they stand to make MONTHLY, year after year from a producing well.
Hard to understand sometimes how they get so hung up over bonus money when you are talking about hundreds of thousands of dollars over the lifetime of the well.
IMO the landowner is in a win.....win....situtation and the company buying the lease takes all of the risk!!
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yes...I have actally learned and thought of that but didnt post ...I do KNOW that getting a commitment to drill is way more important than the bonus, although the bonus is nice. I feel however that both should reflect what they are getting from these wells..and the bonus being worth it is important in the sense that, if they are not going to drill for two years or until they aquire enough land to drill. And that is why I feel a land unit may help, becaue you are bringing together the amount they need to drill and from what i am reading that is decided by the state. So if they say, yes(correct me if I am wrong) yes we will drill your 80 acres, then you have to see what the state geologist say is good enough for them to drill on. So if the state says 300 acres then you might as well try and get that together to get the monthly amount coming in after the bonus. And i am not talking about a fee to do that, i personally would do the work to get my neighbors involved, if they want to do it, and then have it presented to companies. Signing bonuses are great and they should reflect the value of the land..much like when you are buying a house, yes people will only pay what they are willing to pay for it...HOWEVER, yo cant got into a neighborhood where everything was worth $300,000.00 appraisal value and say its only worth $1000.00, so there. Value does matter, having said that if the owner of the $300,000.00 home is happy with $1000.00 then it is what it is.... but most people selling a house like that realize that is a ridiculious offer and would KNOW that its worth more than that and only except offers that where reasonable based on the value. If people come together and KNOW that the value is far more than they are offering, they could affect the going rate. AND you have to research that and research it agian and make an educated guesstimate of the value. FOR example Greene county(agian just researching my area, I do not know about others) is producing way more, triple what they thought it would, so that has to be considerd. These reports are provided by the state and the gas companies themselves. screaming that from the montain tops, so why not expect your compensation to be to reflect the fact they they are going to make 100's of millions for themselves on you. Yes its unrealistic to expect 10 million if they are getting 100 million. You can be fair and reasonable, but just dont accept really crappy offers once you have gained the knowledge of your area.
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Maam,
You are correct, getting a 300-600 acre group together is better than your 80 but it depends on who is leased around you and with whom they are leased as well as many other factors. Also like many have stated I would rarely represent a "group" because they seem to never be able to make a decision and sign, and I have worked with many groups.
You state "Signing bonuses should reflect the value of the land" That simply has nothing to do with the value of a lease.
With all due respect, the true values are yet to be determined, there are only a handful of Marcellus Horizontals drilled and we are all wildcatters at this point in the game. Also the state keeps adding taxes, and threats of moratoriums etc. that only drops the value of all our work.
I agree a fair deal should be arranged between the landowner and energy companies but most people are too focused on bonus and royalty and get screwed in the end with a bad lease.
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dang it..yes...i meant the value of the mineral rights not land..sorry about that... And yep with more people comes more headaches...and man if they are demanding people then you cant work it out to make everyone happy. maybe you should start with ..whats our goal? which should be a commitment to drill, bonuses are naturally coming with that... and when you get lost in the this and that discussions, and you come back to ..ok what was our goal again? but your right about the fact that getting everyone to agree about the rest is hard..and the fear i have is if you are leasing to a company that is really looking to flip the land and not drill, they dont tell you that upfront...so my figuring is prehaps if you have what is required, then hopefully you can get a company that wants just that so they can drill...trouble is you never really know. i tell you what is very help..reading the website(like ours) called gohaynesvillesha;e.com. they have be at it longer and it does identify people and companies that had leases with companies that flipped the land(minerals) to a bigger company...plus other valuable info from people that are in a more proven area...:)
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Lynn.
Well it sounds as if you are interested in learning and you are smart for being an informed land owner and not being lured by the large bonus into signing away.
Keep in mind drilling commitments are rare and the only ones I have been able to negotiate are with smaller operators, which that is OK. However along with that commitment comes a lower bonus or none at all.
For example, I recently helped negotiate a 2 year lease with drilling commitment> But the bonus was very low. But as you have figured, the royalty is where its at.
In my opinion the key to getting drilled is a shorter term lease without an extension. However nobody will accept these leases at this time, heck they need time, Ches has over 100,000 acres and less than five years to drill them or HBP them. Atlas is actively leasing but wont commit to anything.
I would suggest you talk with Tanglewood, they are drilling at the current time and offers drilling commitments. However your bonus will be low because they lease to drill not flip or hold.
Oh and last but not least, Dont deal with a Greene County Attorney, honestly I have had some of the funniest experiences with them, they are truly not informed in the oil and gas business and some are well known for attaching themselves with overrides to your land. In fact one Greene County Attorney is in control of some of the largest "land groups" in Greene county and guess what,, they are not leased and nobody will touch them..
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wow thanks for the info...whats your opinion abot cnx/console energy? they seem to be a Large company that I havent read anything bad about CONCERNING leases atleast....anyone deal with them...I would love to know...and thanks again lease expert!!! man seriously tell me everything you know...knowledge is power and I want all i can get!! :)
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Permalink Reply by Tom on -
Lynn,
I have not had any contact or experience with CNX or Console Energy but there are others out there with little or no bad press.
One year ago I experienced the process you are going through at present. On behalf of my family I had an academic interest where the learning curve was nearly straight up. It took six months for us to sort and obtain a contract with a company that had a history from success in the industry. I did not do it alone, it took several individuals to make it happen.
There were several door knockers that peaked my interest so like you, I began studying. I also went to industry resource experts across the country that understood what was going on inside the “Marcellus Box” but not from within.
Same “State of the Art” technology elsewhere is why we are able to develop our mineral rights. Knowing that technique and technology changes and revolutionizes, principles for success do not which is all I had to go on.
I received advice from those that had no ties with any particular gas company in the hunt nor did they have an interest in financial gain for themselves other than wanting to help me learn and make logical decisions.
In short they helped me identify whom of all the contacts I made in PA would best represent our property and mineral rights. My family and neighbors had no experience regarding gas-land leases and royalties. Just as I was helped, I am motivated to help you and others. I love to help people.
After learning from my friends out west, some with 35 years experience in the O&G industry, I returned to listening to several presentations from representatives of companies, attorneys, O&G specific attorneys, and land men in PA which was how I created interest in our property.
I was able to identify with confidence whom would be the optimal choice based on current and most importantly, past professional performance which made our dream of getting a top notch company and contract come true.
We landed a quality contract of which the folks out west thought revolutionary to the industry. They were surprised at first, at the amount of protection to us as landowners the company we signed with agreed to. It was at that point I recognized the heart of the company and that of the consulting firm that represented us. WOW! Good people.
Even though we are pleased with our lease I know that the learning must continue. That is important because “If” in a few years if our property does not get drilled we get it back clear, without extensions as it increases in value. This is only one of several important Items on a Marcellus Gas lease and royalty contract.
Another point of advice is do not compare in exact numbers, offers regarding royalties or down money with that of others. Just as the lease expert stated on this forum there are many variables to be considered regarding location, stratus, transmission lines etc.
Focus on your own first and the rest will be what it is. It’s hilarious when folks say “Well my neighbor said she or he said” some just want to do the power and control trip over neighbors or even spouses and have little understanding themselves. So don’t waste time with the grumpy people unless they ask you for help.
I believe you are correct in wanting to develop a collective unit but maintain focus on your own because one, it is the only thing you have control over, and two, some folks end up in paralysis from over analysis for whatever reason and nothing happens.
Some people simply don’t know or will not admit that they don’t know about how to go about making it happen. I call that behavior ignorance by way of arrogance. :-)
I feel bad for their families because I have observed landowners in the area that still don’t have or may never get a quality lease because of themselves.
Here are a few more points for you to consider; Quality contracts come from companies that give ALL the down money regarding acreage up front. At present, I would request
representatives to reduce their representation time down to six months to find a gas company for you because your county and township is obviously of current focus.
Remember that the timing on all of this is important. Gas company’s focus is like a moving target which is why if you are like me, in need of professional representation from those with the habit of success or if you will, that of winning.
Do not enter into any agreement where an attorney or consultant shares any portion of your royalty, (ZERO) if this is part of a proposal I recommend you show them the door for such inappropriate behavior. I would also make certain there is a hold harmless clause where the gas company must protect you the land owner at he company’s expense not yours.
You want to toss a 17 plus page contract with addendum of give and take that only the person who wrote it understands. 3-7 pages is plenty to insure the highest chance that you get drilled, protected, and developed fairly and optimally.
There is a lot to understand but within a few page contract you can make sure you get a gross versus net royalty, a pugh clause that protects both vertical stratus layers of gas below the Marcellus, and horizontal too, in the case that the whole property is not produced and included in all production.
Other clauses like no foreign pipeline, no compressor stations, and no methane gas beds need to be in there and worded in your favor.
I am certainly not an O&G gas lease expert but I do care that people are treated honorably and with respect. Hope this helps. Best of luck!
Your neighbor, Tom
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Great advise and input Tom!!
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