Landowner

Any barginning power when you have shallow wells under lease?

So if you have old shallow wells (low producing, but still producing), do you have any bargining power with respect to per acre/bonus/royalties?  If a Marcellus is planned on your property, are you stuck with the 12.5% royalty that was the standard for many years? 

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LandownerPermalink Reply by PI on October 20, 2010 at 5:54am
free house gas was part of the lease and have been receiving this. Will I lose the house gas if I make a big deal about it?

LandownerPermalink Reply by Buddy on October 20, 2010 at 7:03am
What about this situation? The shallow gas wells are old and produce little if anything but rental payments of $25/ well are being paid (although we don't want them and would rather the lease would be broken.) What happens if the gasco leases out or sells the deep gas to another company? Do we get any bonus or roayalty or say in the matter? Can this gasco unitize or pool our land that was leased back in the 20's? What do we do?

LandownerPermalink Reply by Buddy on October 21, 2010 at 7:56am
Can you suggest a good O and G attorney? We have never cashed any of the checks that we have gotten since receiving these mineral rights because we have felt this anxcient lease should be surrendered and the wells plugged. We have 70 acres. From your answer before, the gas co. owns the gas but can't pool it; is that correct? So we do have bargaining power? P.S. there may be a drop or two that is sold during the summer when the home owner doesn't use it, just enough for them to say the well is 'producing.' My biggest concern now though is that they can't do anything with the land/ mineral rights to pool for a large unit unless they bargain with us... right?

LandownerPermalink Reply by paleface on October 21, 2010 at 1:08pm
Landowner I think you are held by production the well is produceing,your best bet would be to have your gas co. sell your lease to the new co.

LandownerPermalink Reply by Buddy on October 21, 2010 at 2:38pm
And then we would get the 12% royalty? Would the old lease be surrendered? No bonus? Thanks for your answer, John.

LandownerPermalink Reply by paleface on October 21, 2010 at 3:36pm
You would be in a marcellus drilling unit the bonus is secondary to the royalty that would bring the big money.If you want a good oil ,gas law firm try calling Stonecipher 412-391-8510 but I think your stuck with the first co. or who ever holds the gas oil rights.
Permalink Reply by Bryan D. Huwar on November 16, 2010 at 5:38pm
You would still get the 12.5% royalty. As far as the old lease being surrendered, it depends on whether an entirely new lease is negotiated or whether just a modification is signed. If it is a modification, then it depends on the language of the modification, which likely will say the new terms supercede the old terms, however, the other old terms are still in full force and effect. No bonus unless you can negotiate one, which isn't as likely with an old lease in place, but it depends on the kind of gas field you're sitting on and how many acres around you have been modified to include unitization language or how many new leases surround you. Also, here's part of what I wrote above to Little Cougar: "I can think of a couple of ways you might have leverage with EQT in negotiating a modification, granted you likely will not have the same leverage you otherwise would if you had no lease at all. First, if EQT has new leases all around you then they really can't go around you in a way they can with a smaller parcel, so they need you if they're going to drill a Marcellus well. With a smaller parcel they could drill up to your property line and capture the gas that migrates off of you shale. With your 100 acres there will be some gas migration, however, probably not enough to make a huge dent into your pool. Second, which pretty much piggy-backs on the first, and as Jim touched upon, if there's no unitization language in your lease then EQT needs you to sign a modification that contains a unitization clause so they can put you into a bigger pool. Of course you should try and get the best bonus payment and royalties that you can, but I would really try to also get at least payment of royalties without any deductions for costs, service fees, et cetera and vertical and horizontal Pugh clauses (and maybe even require them to put - and keep - all of your acreage in the unit so that you maximize your royalty payments)." The other leverage that you might have relates your geographic location in the unit. If you're in the middle you're going to have more leverage or if you have the best or only realistic place to site a well then you can take it up a notch or two.
Permalink Reply by Bryan D. Huwar on November 16, 2010 at 5:46pm
The lawyerly answer: It depends. While this is clearly a breach of the lease, courts generally will not declare the lease breached and clear your title if the company is willing to pay you all of the back royalties and interest. Courts generally will permit the company to "cure". However, if they don't do this, then you might be in business. Also, if there's some other breach, such as failure to provide free gas, that accompanies the failure to pay royalties, then you've got a much better case. Finally, if the well isn't "producing" then you obviously have the best case with those facts.

LandownerPermalink Reply by PI on October 22, 2010 at 12:50am
Mike,

My mother in law, brother in law, neighbor and I have about 180 acres we are looking to lease.

LandownerPermalink Reply by Gunner Ostergard on November 29, 2011 at 4:02am

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