Dormant Mineral Act/leacing prices for Carroll County

A land man from Chesapeake just came to my door and told me that under the Dormant Mineral Act, I may have 5 acre of mineral rights in Augusta township, Carroll County. From what I understand, the lower court ruled in my favor but the other party is appealing it to a higher court. Chesapeake is offering me $1,000 to sign with them if the higher court upholds the lower courts decision. Chesapeake will then give me $4,000 a acre @ 17% to lease my miner rights. If the higher court reverses the lower court decision I keep the $1000 and it is over. Is this a good deal or should I ask for more? Should I contact another oil company?

I can't find no record of this property anywhere. They said it was in my mother in law will for us but she sold the property. That is all they will tell me. I have done a search under Carroll County and nothing comes up. How do I find this property so I can negotiate with another oil company?

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Permalink Reply by Dexter Green on June 20, 2014 at 3:46am

Call a lawyer.  Immediately.  One who does oil and gas and who's dealt with CHK.  The offer doesn't sound like a bad one, but you should spring for the money to make sure the lease you get is solid.  

Permalink Reply by evan on June 20, 2014 at 11:35am

Stay clear ,  I had the same thing happen but the tables were turned.  If the lower court already decided something you would have been involved back then. Their trying to pay you 1000 when they probably already paid a bunch more who legally own the mineral rights now.  Messy situation and you may have already lost them through the Dormant Mineral Act.  Get advice from an attorney but don't lease for 1000, 

Permalink Reply by Alan Bowers on June 20, 2014 at 11:44am

Engaging an attorney to aid in your negotiation is good advice.  Speaking from past experience in dealing with Chesapeake and DPS Penn (CHK's preferred agent for obtaining leases) you will be better off using an attorney when dealing with them (better lease terms and more money).

Also, selling the Real Estate DOES NOT mean that the Mineral Rights went with the Land.  Getting a copy of the land transfer from the Recorder's Office in the county where the property is located should answer that question. Why does the Landman think you have the rights?.....read on.....

To answer your question about where to look for the documentation you need:  You need to find out where your mother-in-law died.  More specifically, the County and State where her Estate went through Probate to be settled.

If you are unsure about this find a Library near where she lived.  They should have archives of Newspaper that contain the area Obituaries.  From the information in the Obituary you can locate where she died. The next step is to where they record the Death Certificates for the city/town where she died.

Get a copy of the Death Certificate.

With a copy of the Death Certificate and the Newspaper Obituary you want to go to the Probate Court located in the County and State where her Estate was settled.

The information from the Death Certificate and Newspaper Obituary will help you locate the Case of her Estate in the Probate Records. When reviewing the records of the Case look to see if a copy of her Will was recorded.  For the CHK Landman to know the Mineral Rights had transferred he would have had to find a copy of the Will.  It is more likely that he found the information out in Probate Court Records rather than a Family Member showing him a copy of the Will.

Locating the information yourself and bringing it with you when you go to an attorney will be less $$$ out of your pocket because the Attorney will just have a member of his staff do the same thing and then bill you his standard hourly rate for the staff members time & for copying costs of the documents.

Permalink Reply by Alan Bowers on June 20, 2014 at 12:05pm

As to the value of a Lease, if the land is in Carroll County, it is now considered an area of Proven Ground. Which means it should command a higher price.

In April 2011 Chesapeake paid $2250/acre bonus and 17.5% Royalty on Gross production (at the well head) for acreage in Carroll County Ohio.  In Sept/Oct 2011 Chesapeake paid $5825/acre and 20% Royalty on Gross production (at the well head) for acreage in Carroll County Ohio.  Chesapeake paid this on thousands of leases.  This was when the ground was NOT Proven.

If the Chesapeake Landman comes back or you speak to him tell him you want an ALOV Lease with $5825/acre and 20% Royalty on Gross Production.  If the Landman has worked for CHK or DPS Penn for 3yrs or more he will know exactly what you are asking for.  If he replies that he "couldn't possibly do that" tell him that CHK did it back in 2011 multiple times with out a problem for the same ground when it wasn't proven and ask Why can't he do it now that the ground is Proven?  Post back and let us know what he says.

Permalink Reply by Alan Bowers on June 20, 2014 at 12:27pm

To Chesapeake's credit, if they really want the acreage, I have watched them first hand, on hundreds of leases, bend over backwards to make the deal happen for/with the landowner/mineral rights owner. 

It is up to each individual landowner/mineral rights owner to decide whether they would prefer to sign the initial Lease with Chesapeake or with a different Oil & Gas company.

You should also keep in mind that if CHK needs the acreage you own for a drill unit and you sign with some other company CHK will either buy the lease from that company or make a trade for other acreage they have that the other company may want, to make the well happen.

Permalink Reply by Tom Driscoll on June 23, 2014 at 3:18am

Permalink Reply by Tom Driscoll on June 23, 2014 at 3:20am

Thanks to everyone for all the great advice. I was lost but now have a good idea where to start. You guys are the best.

Mike MurphyPermalink Reply by Mike Murphy on June 23, 2014 at 4:53am

YOU SHOULD BE ABLE TO GET 3500 AND 18%.......I WOULDNT TAKE ANY LESS.......my family leased to chesepeake 2 years ago and got 2700 and 17.5% in rose township near magnolia ......remember the landman is nothing more then a salesman carpetbagger looking out for the oil company not for u .....if u have land to lease get u an attorney to look ar any and all offers .......and so u know companies are looking to horizanol drill the clinton in carroll county so u have possible a double play .....also there are the marcellus and upper devonian that have possiblities ......remember once you sign a lease u are locked in for life 

Permalink Reply by Booger on June 23, 2014 at 7:16am

$4,000 and 17% is probably a good offer if you are in the northwestern half of Augusta twp.........anything in the southeastern half you should be able to get more.

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