Chevron Offer

My brother in law was visited Friday (1/12/18) by a Chevron land man with a contract for his 2.5 acres.  I suspect a new lateral is going in from the existing ROSA well near Smock/Perryopolis PA.  He was offered 1K per acre and 14% royalty.  Any thoughts?? 

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Permalink Reply by WV Mineral Owner on January 14, 2018 at 6:13am

Obviously there are MANY other factors to take into consideration, but given what you have stated, I believe the offer is extremely low.  2.5 NMA being a small piece, you are not able to demand as much as if you / he owned 250 NMA, but the offer seems low to me.

Permalink Reply by Terrance Livingston on January 14, 2018 at 7:00am

The current going rate is a bonus of $3,000-$5,000 per acre and a royalty of 15-20 % in your area and  make sure you get a legitimate oil and gas attorney to negotiate your lease. 

Permalink Reply by RJWITT1 on January 15, 2018 at 7:57am

Well you should be happy Chevron is doing anything.  I don't buy the $3000-5000/acre you have been told.  The most recent Lierle lease report says $750 - $1000 and 14%.  I leased in 2013 for $1500 to the south (Nicholson Twp) of you but in similar position to your property.  I hope they come back and lease me again this fall!  The problem here is that Chevron has a lot of HBP property obtained from Atlas so there is not much competition for leasing the scattered open tracts.  Good luck and with 2.5 acres you really won't find a good attorney that you can afford.  Ask for $1500 and 15% and see how it goes.

Permalink Reply by Jason on January 15, 2018 at 9:49am
It’s encouraging to hear something going on in SW Pa. Our lease with Chevron expired this past fall. I’m hoping to see someone show up again soon.
Permalink Reply by RJWITT1 on January 15, 2018 at 10:21am

Jason - what township are you in? 

Permalink Reply by James T Monyak on January 17, 2018 at 7:51am

Will Chevron just drill around your property if you don't accept their terms?  I know there are people who didn't sign and now they receive 0 dollars monthly royalties while their next door neighbor is receiving a 14% royalties.  You can't do anything thing about it.

Permalink Reply by Jonathan H on January 22, 2018 at 8:00am

While I agree that the offer is lower than I would expect, in line with what offers were at the bottom of the market in 2015/ 2016, with 2.5 acres he isn't going to end up with a huge amount, so for him the details are more important than the money - if I were in his shoes, the most important factor to me would be surface access and the clauses dealing with how far away they keep pipelines, access roads, and other disruptions.

I don't know what Chevron leases include, but here in Ohio the leases I have seen recently had language keeping these disruptions a minimum number of feet away, starting at 250 and going up from there; check to see what disruptions are included - some leases cover wells and pipelines but not access roads or seismic testing.

Permalink Reply by Jim Litwinowicz on January 23, 2018 at 4:45am

If he has only 2.5 acres and a house on it, any reasonable setback would mean no surface activity at all. They may be willing to stipulate in the lease that there be no surface activity on that small a parcel.

With that small a piece of property I wouldn't argue much over the signing bonus.  I would try to get the biggest royalty I could.  They would not be negotiating with him on a parcel that small unless they are planing on putting in well/unit there.

All just my opinion.

Permalink Reply by Tusc-county-man on January 23, 2018 at 8:25am

if they NEED the parcel....all the more reason to ask for/hold out for larger bonus

Tell em, sure I'll sign......see how fast they get to you...the faster they get there...the higher you hold out for.

Permalink Reply by James T Monyak on January 23, 2018 at 11:35am

Don't hold out.  They will just drill around your property.

Permalink Reply by Tusc-county-man on January 24, 2018 at 10:43am

I doubt they would drill around to save 3K

Permalink Reply by Freestar on January 25, 2018 at 12:06pm
They care much less about the unleased tracts than the shape of the Unit. All of the newer units are very long and skinny to accommodate for the longer laterals being used.

More and more people will be left out or have partial acreage in a unit based on how narrow the units are formed. Trust me, if they wanted you leased you would be.

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