Just received an offer from antero to lease 12.5 net acres in tyler county wv meade district. $3000 signing bonus and 18% Any thoughts? I own 59ac there, leased 35 to them last year. $1800 and 15% I still thinking this offer might be low....

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Any way I could get you to look over the lease when I get that far? Give me some pointers??

I'd be happy to look it over.

Mark,  I am also negotiating with Antero on a top lease for my farm.  I have been offered 4000 an acre and they have been unwilling to do any negotiations on pugh clauses and deductions  I believe its 18%   I am located in Lincoln district.

'deductions' as in port production costs?  

Those can be painful depending on what they hit you with, if you think about it, they can charge pretty much anything under the sun (or at least along/attached to their pipeline).  CHK was notorious for hitting mineral owners with post production costs, where the lease was a net lease or a market enhancement lease.

A previous posted noted that a variety of rulings in Texas affirmed that (for gas) pretty much any activity performed, enhances value and therefore can be charged to the mineral owner under a market enhancement clause.  

I think I saw where the one judge that was on the TX case went on to a federal appointment and ruled similar at the court of appeals.  Also, I believe there were some recent rulings in PA where due to 'market enhancement' language a mineral owner had sued b/c their payments were below the statutory minimal royalty, but the court found for the operator b/c the cost were permitted under the concept of being a contractual negotiation.

Google "Market Enhancement Clause in gas lease" and your screen will light up with discussions about lawsuits, and a bunch of fun stuff.

a good read is the May 2013 PENN ROAR - magazine associated with the Pennsylvania Royalty Owners Association  - see the attachment

Attachments:
When you say top lease do you mean a certain depth?

a top lease, is a lease where some other company already has a lease in place.  Antero is making the bet that the current leaseholder will not be able to meet the drilling commitment and essentially goes in and makes an offer/lease that is contingent on the other lease expiring by its terms.  One the existing lease expires, Antero's lease becomes effective.

There are a couple fo companies active in places like WV (Antero's main focus for Marcellus) that are unhedged,and  essentially have slowed or stopped drilling (see CEO of Magnum Hunter's comments earlier this year). 

Thanks for all the info. It's very much appreciated!

Check out the other Antero discussion in Top Content.  Good info there too!

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