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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Replies to This Discussion

Permalink Reply by Steven R. Rothenberger on October 8, 2010 at 3:00am
DH
What County and Twp. are you in and what royalty did you get?

Thanks for the info, I am sure it will help us all.

Steve
Permalink Reply by DP on October 14, 2010 at 1:00pm
Steve you can email me at mogulknees@yahoo.com and I will give you details. Thanks
Permalink Reply by Monty on October 10, 2010 at 7:09am
I still do not see where a 10 year lease is a good thing. Maybe for some people it is, but 10 years is a long time. I personally do not want to wait for them to drill. The royalities are where the money is at. We have been offered $1500 an acre for 5 years, to me that is almost the same as $3500 for 10 years. But that is just my opinion.
Permalink Reply by Oil and Gas nightmare on October 11, 2010 at 4:19am
Hey who did you sign with...and you leased the utica? I thought yo should leave that out and negotiate that later when they start drilling that deep, so you can get more money? or is that not the way to d it?
Permalink Reply by b bz on October 10, 2010 at 6:27am
In the nice sweet spots it was over 600 feet thick, I.e. two football fields thick, stood end up.
The land acreage with 100 feet shale of course, is not worth the same.
Some people become illogical when the sugar plums start dancing in their heads. :-) People just need to take it one step at a time.
Permalink Reply by Monty on October 11, 2010 at 8:16am
So if they need 10 years then the signing bonus needs to be higher. I know leases were going for $5500 an acre for 5 years with an option of 3 more years at $5500 an acre. The $3500 an acre for 10 years isn't a very good deal for the landowner.
Permalink Reply by Monty on October 11, 2010 at 10:01am
Susquehanna and Bradford counties. I also heard a Southern Clarion County group is getting $3000 an acre for 5 years. I do not have proof of this but heard it from a reliable source. It seems to be getting very active in Butler County also, with leases of $2500 an acre for 5 years.
Permalink Reply by Monty on October 11, 2010 at 3:14pm
I am sure once some of these area are proven the amount per acre and the royality will be increasing. If the landowner is willing to wait it could be worth it, but it is also a big risk that some landowners do not want to take.
Permalink Reply by Monty on October 12, 2010 at 4:15am
You aren't telling me anything about the real estate bubble. We live in one of the worst hit areas.
Permalink Reply by Larry on October 11, 2010 at 12:34pm
Mike,
I am having a hard time believing that when I read where 300,000 to 400,000 acres are going to be sold (by Snyder Brothers, MDS and Knapp) to the highest bidder after the first of the year (2011) with nothing less than $5000.00 a acre accepted and anticipating more like $8000.00 or more being paid.
So where did all that land go for those 3 Co’s. to drill on? Won’t they need more land after that?
If a gas Co have to much land leased up it should just stop leasing until it needs more land or let some others have a shot at it.
I also see wells being drilled at a rate 100's a mo. right now and that will go up and more drilling rigs moving in to PA.
I believe the drilling will get better and faster too. Making it cost less per well and increasing the gas Co. Profit even more.
So would that not make land more valuable as each year passes?
I believe a 10 year lease right now is not called for in PA to any land ower!
So how can a landowner make the right choices by saying every thing will be just the same in ten years?
I may be old and thought a fool, but I am not!!!!!!!

Larry
Permalink Reply by Monty on October 11, 2010 at 3:07pm
You can check on the DEP website to see how many wells are being drilled. From the beginning of the year until Sept there were over 900 Marcellus wells drilled.
Permalink Reply by Henry Edwards on October 12, 2010 at 10:13am
FYI-I signed a three year lease just recently for $3200 an acre-in Greene County. Also a three year lease in Monongalia Co. West Va two years ago which expires next year. I would not sign any more than a five year lease for any reason if not offered the terms I wanted.(We prefer three year lease and have gotten them for the same original offer for five years) I would just sit on it. I agree the gas companies have more than they can drill however in time demand will increase, prices will go up and there is no reason to hurry-just be patient. If you have gas they will eventually come and the price will be right as long as you know what you are doing,learn and hire an attorney to negotiate terms. This discussion has gone on too long. A ten year lease is absolutely out of the question. Any one that signs one Maybe giving away the farm "so to speak". We know from experience-we have a non-ending lease from years ago on one of our properties signed by an elderly landowner. Its been "held in production" for 34 years with a small well. Now we don't get paid the big money for Marcellus. However the good news is they are going to drill on the property in 2011. Stop the madness. Don't sign ten year leases and be extremely wary of anyone that suggest that you do. A lot of factors go into the gas companies decisions. Research that first, Like locations of pipelines and infrastructure. If they have it near your property then $$$, if not wait til its there and eventually it will be. BE VERY Close to your neighbors and offers. BE Very aware of existing rights owned in your area.

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