Can anyone tell me recent amounts of $igning Bonus/Consideration per acre in Tioga County, PA?
I've been offered $500/acre + 15% royalty for a five (5) year lease on two parcels I own in Tioga County, PA. It seems low to me but I don't know the going rate of late and would love to. Can anyone share with me any recent amounts of $igning Bonus/Consideration rates per acre in Tioga County, PA? Thanks in advance.
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Permalink Reply by James Young on -
Kevin Howe.
Did that include the Utica shale also, or just the Marcellus?? Another sticking point,especially in Northern Tioga County......
Always a crap shoot, Swepi sems to be the only Company leasing anything in Tioga County now. With all the Held by (non-) production wells they currently have, yet to be actually drilled, I'm not sure they really need any more land in the first place...
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Permalink Reply by Kevin Howe on
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Yes that included the Utica.
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Permalink Reply by Adam Martin on
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When negotiating, look out for "Enhancement Clause" statements in your lease as these can reduce your royalty payment. Producers are getting creative and are willing to not include Production Costs as part of the lease but are adding in the surprise of an Enhancement Clause to pass along more costs to the royalty owner. As for lease terms, start at 5k per acre, 18-20% and no production costs.
Your negotiating power will be determined by the overall amount of acreage you have. You will also want to make sure your total acreage is included in the production unit(usually 640 acres). Some folks have been signing a lease, receiving the full acreage bonus only to find out that only a few acres are included in the production unit, which will drastically reduce a royalty payment.
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Forgot to mention, the terms I've mentioned above will include all strata, Marcellus and Utica. I think Shell just drilled into Utica in Tioga which is mainly a dry shale play and at nearly a depth of 10,000 feet, the wells thus far have been very productive. These were exploratory wells so not sure if they will be financially viable or if other producers will follow the trend and drill for Utica in North Central PA.
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Permalink Reply by Monte Zane on
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Thank you so much for this Adam and for your followup post on the next page here. So informative! What do you think of my suspicions re: special value of my parcels due to their years long passage through two different court actions, both decided in our favor (so far). The operator is actually desirous of re-leasing a parcel which they already have under lease by virtue of a swap between operators. That and both parcels location suggests to me the new operator places a high value on that parcel and its neighbor.
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It would definitely appear there is something suspecious going on. Did your offer come from a land man company or directly from Shell? These Land Companies are working on contract to go after select properties or they will put together a cluster of parcels and then sell to the larger operator. Obviously, the cheaper they get them, the more money they make. So they may be given a price range of what the operator will pay, and then try to low ball you in order collect the remainder of the money as comission.
Listen, I've been been given 3 different answers from the same landman company and producer during lease negotiations so my advice is to find as much information you can before you sign and then be comfortable with the decision you've made. These operators / landmen are trying to get your property for as cheap as possible because that direclty impacts their bottom line. Try to find a decent lawyer who is not looking at you with dollar signs in his eyes and talk to as many people as you can. Look at the state DEP websites, I live in PGH but my families acreage is in WV, so I'm familiar with both PA and WV. And don't sign the first, second or third offer. Their threats that they will move on and produce the parcles around you are just that, threats. Be upfront and let them you know you are interested in negotiating, but that you will do your own research and need to feel comfortable with terms of the lease. Also ask to see a drilling plan from the operator (plats that they would submit to DEP for approval) before you sign. Or go to your local court house and ask to see tax maps so you can see if there are current leases for the parcles around you. And lastly, talk to neighbors, folks in the community or even the gas company folks on the ground. Those folks can provide you with most of the information you need.
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Your generosity does you and your family credit and I look forward to passing it on. The offer came from a land man working for a big operator but he's moved on to leasing pipeline access up there and I got passed around but, on my own, I recently made contact with someone in the Houston office of a major operator (not Shell). I don't know what and what not I can say here about who is talking to us without stirring up a hornets' nest. We have a nationally recognized expert law firm, locally based. I learned as much from your posts as I have in the five years I've been researching our holdings. Many thanks!
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Thanks for the kind words and good luck with your negotiations. I'd be interested to hear how that law firm works out for you as I've not been able to find a lawyer or firm who has enough experience or who is not closely aligned with the large Operators and will take us on as a client. Don't even get me started on how to police these large companies to make sure they are paying the royalty out correctly and honorably. We currently have 2 wells drilled and producing for over a year and have only been payed for dry gas although we are in an area that should expect some liquids to be produced. Talking with other lease holders of this operator, they've been told the operator doesn't pay royalties on liquids although there is nothing in the lease that would indicate they would not pay for liquids. When the operator was contacted, they indicated the only option was to sue them.
Like I said previously, these operators are doing whatever they can to maximize their bottom line, whether it be dishonest or not.
If you'd like to discuss further outside of this forum, I'm sure we could exchange phone numbers.
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That would work for me. How does that work withing the rules and regs of this website, the exchange of phone numbers, I mean? I'd be happy to share the name of our attorneys, though now I'm wary that you, in your extensive experience, might reveal to us that our attorneys are aligned with other interests. Oh what a tangle web we're entering.
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I've seen phone numbers shared / posted in the past but just to make sure, I emailed the admin. I'll give it a day or so and see what they say, if they don't come back with a response, I'll post my phone number.
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If you haven't done so already, feel completely free to share your phone numbers with one another, just within a private message. Happy when members build community here on GMS!
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Permalink Reply by frank schell md on
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attn michelle obrien in scranton area did well when she took on chesapeake within the last several years, spends a lot of time at conferences on o and g issues. you might want to call her and see if there is anything she can offer.
f schell md
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