Is a 10 year lease too long?

We live in Jefferson county PA.

Eight years ago was the first time anyone was interesterd in the gas under our land. We entered into a 5 year lease for the shellow gas. There was no talk about Marcellus Shale Gas at that time. In the 5 years that passed only 2 wells were drilled close to my land they did not pan out as planed. So all drilling stoped. After that lease expirded we was asked by a different drilling Co. to lease our land again. We opted to only lease it for 3 years. Again no wells were drilled on our land or on adjoning land.

We now have been asked to lease our land for the next 10 years with a one time lump sum payment, but this time they want the rights for oil, gas and coal bed methane by any means.

 

My question is;

Is 10 years to long for a lease? 

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Permalink Reply by Buddy on October 12, 2010 at 11:21am
Dear Henry,
Very well said. I only know what I have researched and what we have experienced, and although I read everthing I can, pro and con, we will only make decisions that we or our children can live with long after the papers are signed. We have one property that is available to be leased so we are trying to be careful with how and what and who. Our other property's mineral righs have been held hostage for 81 years and are "held by production"... which boils down to only the production that the home owner doesn't use in the summer. This production is so small that the gas company has stopped reporting it to the DCNR although they insist the well is active. I would never sign a ten year lease after experiencing this, plus the lease we sign would definitely have to have protection against this sort of robbery. Thanks for your sensible comments.
Permalink Reply by Henry Edwards on October 13, 2010 at 3:07am
A ten year lease under any circumstances is not a good deal. Well unless they are going to give you 12K per acre Any attorney in this industry will tell you that. You sound like a landman.
Permalink Reply by Al Price on October 13, 2010 at 3:57am
Mike,
I apprecitate your veteran input. What is your synopsis of drilling prospects in South Central Susquehanna County? Thanks. ap
Permalink Reply by Al Price on October 13, 2010 at 5:16am
Mike,
Can you elaborate a litte when you say nepa is a different ballgame? Thanks. ap
Permalink Reply by Henry Edwards on October 13, 2010 at 4:11am
Giving advice under the circumstances of being a landman is self serving. I would suggest all those interested in signing ten year leases talk to attorneys that Do Not represent landmen. It would be in your self interest. Leave it at that.
Permalink Reply by Monty on October 13, 2010 at 4:35am
Good Advice Henry!
Permalink Reply by Larry on October 12, 2010 at 2:04pm
Mike,
Thanks for the info. I am always willing to learn all I can before I get into a lease.
Permalink Reply by JRW on October 13, 2010 at 4:11am
when i first started looking into leasing the landman told me 10 year lease is all he could do, within 30 days he was down to 5 years, 3 times the original dollar offer and 6% more
royalty. you need companies to bid against each other to get the ball rolling.
Permalink Reply by Monty on October 13, 2010 at 4:37am
what county are you in?
0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on October 13, 2010 at 4:59am
I was getting so many email notices about this discussion at gomarcellus that I just had to look!

Hi everyone,
Seems to me that we are all so VERY NEW at all of this marcellus shale process, even the gas/oil companies have went from pioneering in this area to actually coming up with some kind of plan. So bearing in mind that we actually are hearing stories from others about what it is like having a pipeline or a well on their property to what is happening to some unsure of the environmental safety should make one decide on a shorter term of the lease to help become more informed and to be able to really justify what the offer really will compensate the owner with. I say that a five year lease does help everyone...and when the marcellus area is more developed and more understood then a ten year lease might be more satisfying for both parties with the right kind of compensation for the landowner.

The intent of many of the gas/oil companies is to sell the leases at a profit anyway ...sorta like what it used to be like in the mortgage business...the sales of the mortgages bundled together reaped a profit for the banks/investment firms even somewhat moreso than the initial lender fees charged when closing on a property. So when the oil/gas companies have their 'bundled' ten year leases to sell it makes it more profitable for them for assignment. That is why we as landowners tend to want the shorter term cause we want to make sure that we are getting a good size piece of the pie also and since we are not gas leasing experts with mucho knowledge of this new 'gold rush' gas technology in our area then it is much better to stay with the shorter term of lease.
My two bits.

BTW...Hi Larry...quite an active thread!
0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on October 13, 2010 at 5:37am
Hi Mike,

Do you know of the 'top lease' clause? (also referred to as 'Right of First Refusal"). If we as landowners have that clause in our contract and know that the difference between today's per acre price is thousands higher than when we leased....can we call another gas company and see if they want to offer a top lease offer even when we are only halfway thru our five year lease? And if that be possible or we get a match of the offer from the gas company that owns our lease presently (my contract states 15 days for the acknowledgement of the top lease offer) is that a time when the lease would start a brand new term or an extension of the present lease term?
I ask you this as I read in the previous posts that you are involved as a landman yourself.
Permalink Reply by JRW on October 13, 2010 at 11:18am
mike you sound like the first landman i talked to, better sign now this is it for this area.

some areas will get a better lease now, still if a company is serious about your land 5 year max.

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