Bound by an old lease? And a few questions.

 

Anybody out there dealing with a "new" gas co. that has your lease that they purchased from your "old" gas co.? My old lease is in effect, and stays in effect,  because I have producing shallow wells. It seems there's not much for me to negotiate? I'm bound to the terms of this existing lease, right? That's what the landman says. He's got my gas.

He wants to "amend" my lease to include unitizing, and to separate deep/shallow gas, so I get to keep my shallow's production and my free gas.

Can I get anything out of this guy, like upfront $$ per acre, or any of the other negotiations others do? My guy tells me things that aren't necessarily lease worthy, but I want to hold him to. How can you get the landman to write down his promises and stick to them? Things like,"this well is only between you and your neighbor", even though our acreage doesn't add up to the unit size. We have about 350 acres between us, and the unit he proposes in the amendment is the standard 640 acres. That would be great if just two of us were involved, but, I think he's feeding me some BS.

I'm sure there are many people in this position (not just leasing from scratch). I have allot of questions, and will appreciate any input.

 

Thanks,

 

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Permalink Reply by gasoholic on April 8, 2011 at 4:40pm

Why would he need to amend your old lease if you are already bound by it ?

He wants something, what would you like in return ?

Time to see a good O & G Lawyer !!!

Permalink Reply by J.R. on April 9, 2011 at 5:23am

I couldn't agree more with "gasoholic". The new company has something up their sleeve and when dealing with these people you MUST have an attorney looking out for your best interest.  I wouldn't do it any other way.

 

You said you think he is feeding you some BS........he is!    How do you get the landman to write down his promises and stick to them? That's where the attorney comes in.

Permalink Reply by craig on April 9, 2011 at 6:11am
If he wants to amend your lease, then you should be able to receive at least some money per acre for the changes that he wants. When dealing with the shale plays it seems the gas companies want/need the flexibility to unitize how they seem fit. Whatever it is they want you can be rest assured it is mostly for their benefit, however proper unitization may also help the landowner in the long run.
Permalink Reply by Frank Walker on April 9, 2011 at 6:24am

Your situation is not at all uncommon.  They have you . . . but they don't.  They have you tied to a lease which lacks critical (from the gasco's operating standpoint) unitization rights.

 

It's funny, really.  Years ago many landowners signed leases less than favorable to themselves.  These are sometimes referred to as "boilerplate" leases.  But in this modern age of horizontal drilling, even many of these gasco-favoring "boilerplate" leases are inadequate to their needs.

 

I don't know how much you can extract from the gasco in return for signing a new lease with the unitization terms they require.  Only a really good O&G "legal eagle" can tell you that.  But I do know this:  no land man and no gasco is going to reveal to you how badly they need your land (on good unitization terms).  That's just not gonna happen, and you can take that to the bank.

 

So you can guess, or you can speak with a lawyer.  It's up to you.  

Permalink Reply by Nancy Mosley on April 9, 2011 at 6:47am
Which state?
Permalink Reply by redbank on April 9, 2011 at 9:24am

I'm in PA.

 

Thanks for the replies so far.

Permalink Reply by Angie on April 12, 2011 at 3:35pm

Anyone have a recommendation for a good O&G attorney? Ive seen the Clark law firm mentioned...anyone have thoughts on them?  We have an old lease and the landman called and wants to "extend" the lease by two years(top lease). This is after they proposed a larger unit size and we declined. We are also in PA. Any advise?

 

Permalink Reply by Bill anders on April 14, 2011 at 7:36am
if you don't agree to ammend it they will have to pay you some sort of consideration to do so.
Permalink Reply by Angie on April 14, 2011 at 8:26am
They have offered a bonus per acre...says it is negotiable. But we have heard of Much higher per acre amounts on new 5 year leases. I dont understand why he thinks we would want to extend our current lease for two years rather than waiting a few months to just renegotiate a new lease. (other than it is very beneficial to THEM) We signed one of the early leases and the terms are very much in favor of the o&g company.  From his own words...they will not be here for a few years and we only have a few months until expiration. We are planning on waiting for a completely new lease, but we are going to need some legal advise for sure. We'll have to see what he has to say when we meet him and we'll know more on where we stand.
Permalink Reply by John Stamos on April 15, 2011 at 8:09am

The landman wants to ammend your lease because the old one probably doesn't have provisions to unitize, which has to be done if you want to be part of a Marcellus shale unit.  This is a good thing for you because you want to get a marcellus well for sure.

 

I wouldn't go chargning full speed at this guy/gal.  I've found that if you work on the negotiations in a respectful manner that it is easy to get favorable outcomes for both sides.

 

You might want to start by asking if they have well unit map in the works?  Or some type of document to show you that a unit is being formed.  This will help you understand what is  going on.

Permalink Reply by Angie on April 15, 2011 at 8:38am

We have several wells near us but are not in a unit. (they had proposed ammending our unit size in our lease, but we did not do so and did not get put in any units) The landman says they are at least a few years out on getting to our area and that was why they wanted an extension. We expire soon, and I would prefer renegotiating our lease since we have one of the early "boilerplate" leases. If they are interested in extending by 2 years, I assume they plan to have us locked in within that time. So they are interested in keeping us leased. I cant see the advantage for US in extending instead of getting a new lease in a couple months. We are meeting him tonight, so we will see what he has to say. I agree that we need to go about this respectfully and we are certainly in no hurry to make any decisions. We will need some legal counsel before we decide anything.

 

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