belmont county lease bonus prices

Hello!

We are new to this gas and oil leasing siutation and had a few questions on how to figure out if we are getting the most we can out of our lease before we sign anything.

Located in Belmont County, Ohio Zip code is 43950. We only own 2 acres in a little cul-de-sac area. They have recently established a well pad about 1 mile from our home and are expected to go directly underneath our house.  The name of the wells (that i can see they have permits for on the GIS map) are they SKYHAWK 2,4,6,8,10 and 12 wells. 

Rice Energy orginially offered us 3500 and acre and we didn't really get back to them after they mailed us that lease document. They called us back this week and offered 4500 an acre.  He was a little pushy about us agreeing this time around because he said Rice Energy is merging with another company next month and he is concerned they are going to stop leasing new land and because we are in this wells path they may just force us to sign something.  Also sounded like he was worried he may not have a job after this merger so maybe he just trying to get everything wrapped up so they don't get rid of him after the merger?

Does this seem like a reasonable offer considering we are directly in the path and they are going under us? As far as we know, the neighbors beside us have not signed anything and have no plans on signing anything so it is hard to us to get comps....This land was previously leased for around the same amount. I know prices are down but i also know things are supposed to be picking back up around here

any and all help is appreciated!

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Permalink Reply by G.H. on October 27, 2017 at 7:03pm

Certainly, not trying to discount any one else's experience.  That is awesome that you were able to get more for your signing bonus than you were offered to sell.  If you are able to do that then it makes absolutely no sense to even consider selling.  Some of it is having good timing, but you definitely have to be educated and do the best you can in negotiations, and this site is all about being educated.

Permalink Reply by samantha paglialunga on November 3, 2017 at 3:39am

So our rice energy contact got back with us and upped us to 5k bonus with 20 percent market enhancement, non surface, could add a horizontal pugh clause....this is what he came back with after we asked him for 20% gross royalty.....

from what i get he only added a few hundred bucks to the bonus price but didnt change anything else regarding the royalties....my husband made him mad after this so he probably won't be back lol

Permalink Reply by Barry D on November 5, 2017 at 1:49pm

Samantha,

With all due respect, having only 2 acres shouldn't warrant much of your time.

Just decide on a figure that makes it worth you signing the lease.

Would $25,000 do it ? If so then tell them.

Sure, $25,000.00 may sound crazy, then pick your own figure.

Permalink Reply by samantha paglialunga on November 6, 2017 at 6:29am

thanks...i think everyone just had me scared off about the royalty issue saying that it needs to be gross royalty...not sure it matters etiher with such a small amount....he is willing to talk gross royalty now even though he said it was impossible... but with a much lower bonus price so its hard to make that decision...because if it produces nothing we won't get any royalties anyway and we would have taken a lesser sign on bonus...just have to weigh the risk vs the benefit i guess.

Permalink Reply by Pro Geo on November 6, 2017 at 9:25am

I think it is a low offer.  How low, I do not know.  That would take some research on my part as mineral rights value change through time like stocks on the stock market.

Ohio is a forced pooling state so you may want to consider this point as they are not going to "drill around you" like they can in Pennsylvania.  I recommend that you Google "Forced Pooling" and read up on the implications to your family.  If you decide to lease make sure you get "No Deductions" in the lease.  Also if you lease, you should get a oil and gas professional or an attorney to assist you with the lease terms. 

You can also ask for them to BUY your mineral rights and that way you would get significantly more up front but you would not get royalties.  I actually just did this in PA Marcellus.  You may want to call Potomac Minerals LLC and ask them to put a BUY PRICE on your oil and gas rights.  They may make you an offer on the spot.  Don't take it.  Call them back in a day or two and ask for about 20% more than they offered.  Be firm, but very nice to them, as you do not want the deal to escape you by being rude.  I'm guessing that you could get well over $15K per acre in a mineral rights SALE (not a lease).

Rice is being bought by EQT in Pittsburgh so I think that your instinct is spot on with the agent's circumstances.  You may want to call the EQT Land Department and ask for an Owner Relations agent OR a Land Agent for an offer.  Make sure that you have the Ohio Permit Number and the Pad Name when you call.

I have assisted several of my friends in this process as I worked for a PA-based operator in the past.  Drop me a reply on this thread if you want more assistance.

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