Fair rate for seismic lease?

What do you all think is the going rate for seismic testing? DAS offered me 5 bucks an acre. Isnt it worth more to them to get valuable information? The wire they use to connect the explosives cost more than that.

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Permalink Reply by bret rothwell on August 24, 2012 at 11:14am

I really hesitated to reply to this post. By now,  Rick,  you may have already signed a document...Was the agreement 1) a seismic option to shoot and lease agreement, 2) seismic permit allowing a third Party to shoot seismic, 3) an easement for seismic use, 4) a seimisc permit with option to purchase, or other???  The  seismic acquuisition parameters are significantly different  for 2D or  3D seimsic programs. In either case the agreement should include a pre-shoot inventory of the surface properties, outbuildings, wells, creeks, gates, timber, crops, etc. depending on the land use. This pre-shoot evaluation will serve as a bench mark for assessing and being compensated for damages and restoration after the shoot. The agreement should include certain stipulations as to access, equipment placement, storage, and a timeline for exercising the permit. Further, stipulations should include compensation if the property is occuppied, for a term when the hazards of the shoot  preclude other person than the crew from being on the property. This includes costs of temporary removal of any livestock on the property. The value of the seismic full cycle to usuable interpretation product is nominally $120,000 per square mile.....and the cost to an operator to license more (how much more depending on program underwriting). Depending on the regional activity and the deep pockets of local players you should expect $50-$80/ac minimum to sign, plus compensation for loss and compensation.

 

I don't advise anyone sign a seismic acquistion agreement that includes an option to lease. The strategy is used to tie up acreage for "no" cost, for 2-3 years, giving the agent time to flip the option.  By the time the seismic is shot and processed, area leasing will heat up, just for having modern 3D shot...

--------- Political Statement--------------

....and the minerals owner will have given away his interests in a "race to signup to join the challenge towards US energy independence" when later the Operator does a JV with foreign interests, on a 70% carry, that is the IDC tax credit the foreign investor claims. Sounds familiar doesn't it?

 

Permalink Reply by Frank Nesmith on August 26, 2012 at 5:26pm

That is what I wanted to say, but didn't have the expertise that you obviously have. This is a long term marriage with a company. Don't start it off on a cheap arrangement with hopes of benefiting later. Get the going rate and it's much more than Mike Knapp stated earlier. You have to understand that he's probably not a bad guy, but he makes more profit if the prices are kept down. Never trust a land man!

Permalink Reply by Rick on August 27, 2012 at 2:58am

Hi Bret, No I havent signed an agreement, and wont. The document is called a "seismic permit request". There are four different companies mentioned on the request, none of them are well drillers or gas production companies. A field agent came to try and get me to sign. And as is everyone else in this business, he is very clever with the words he uses and also the words he doesnt use. Example: I asked if i could have a copy of the seismic survey, and he said "you would not be able to read it.. its a bunch of highly technical images" I said " I know a professor of geology at Carnegie Mellon". Then he said I could "request a viewing of it". I thought for a few seconds and then said I could request a viewing, but would it be granted? He said he couldnt answer that... Clever? Has a viewing ever been granted? He didnt know. All beside the point. He pointed out sentences on the permit request saying that their companies hold me harmless against all lawsuits and actions that may arise from their work. He said that is what holds them responsible for damages to my property... bull. And if damages occur to my neighbors home as a result of me giving them permission to work on my property, they cannot say who my neighbor can sue. That would be up to a judge. What I am saying is that a charming master of words can make you feel like you have heard what you want while you are actually getting nothing that you wanted. Thanks for the reply.

Permalink Reply by Janice L. Hancharick on August 27, 2012 at 3:20am

Super response Rick!  Anything verbally hinted at or even "promised" that can't be produced in writing for  landowners to study must be steered clear of.  Personally it burns me to have it said "Oh, you wouldn't understand it."  Landowners and rights holders didn't just fall off the proverbial Turnip Truck!!!  Yet that is just how they have been treated in lease offers and seismic "deals". 

This has been a wonderful thread on a very timely topic.  Hopefully it will be scrutinized by many and wise decisions made before all the Aces are in the hands of big business.  When will "equal" become an everyday term to describe the opportunities our unconventiional shale presents?

Permalink Reply by Tom Brian on August 27, 2012 at 8:23am

Gee some of you are so up tight, in Tioga co Pa they went through with hardly any fanfare, they set out recorders between the side walk and street in Wellsboro it did not seem to cause a second look by most people and this was during tourist season ......... last week the town signed a gas lease for a million +not hard to take for a small town . If they had not liked what they saw would that have happened? after doing thousands of acres with a few more to go have not heard any complaints did see a few hay fields where the farmers  mowed around the battery packs and recorders. 

 maybe a big thing was last year shell held Q&A presentations open to the local interested landowners in the local high schools a made every one aware of how the seismic works and why....... 

Permalink Reply by Kathleen on August 27, 2012 at 9:18am
I agree. We are now done with the process and I found it nothing but informative and fun chasing what helicopters dropped on the ground off long cables, talking to the GPS works, being stuck (i could have gotten around :0) ) behind 3 thumper trucks. I'm very rural and everything goes out here since there is zero zoning and I found these testers and the process better than some neighbors. No complaints, no issues, and I want them to drill with accuracy and I'm happy I signed.
Permalink Reply by farmgas on August 27, 2012 at 12:15am

Are there any risks to water supplies, either a spring or water well from 3D testing?   I`m pretty confident there aren`t but just asking if there might be.   I understand the charges are pretty mild.

Permalink Reply by Janice L. Hancharick on August 27, 2012 at 3:35am

Please look back to Bret's response last Friday.  If your understanding comes from a conversation you've had with a company man, it may well be the latest version of a "grim" fairy tale that you ultimately want no part of.  Bret and Rick totally "get it" and are doing readers a service by sharing their knowledge.

Permalink Reply by Jack Straw on August 27, 2012 at 8:44am

As a caution, I would inform them of any springs or water wells present - and require that no shot holes located nearby (250 feet). Again this is simply cautionary, as no problems likely. 

Frankly, the worst that I would anticipate possible would be some turbidity (a bit of existing fine silt shaken loose) in the water for a day or two - until it settles back out.

 

All IMHO,

                 JS

Permalink Reply by Janice L. Hancharick on August 28, 2012 at 5:35am

Problems likely or not, simple  protective clauses like the one suggested by Jack ... and others earlier in this thread, need to be in writing.  If a landowner is concerned about maintainng high-quality well water, let the same Tier 3 water testing be mandated in a seismic lease just as it is in a good drilling lease.  Seriously, how many people know the components of their well water and/or the quality of the pipe used when it was drilled ... and how long ago was that, you say?  Taste and color are simple indicators of "sweet" water but they certainly don't begin to tell the whole story.

LIABILITY issues should not be focused on water alone when it comes to seismic testing.  Keep learning.  Google seismic testing.  THEN when satisfied ... SIGN a lease for the testing to commence if you believe you're being as well taken care of as the company(ies) involved.

Permalink Reply by Josh on August 27, 2012 at 3:40am

How about this:  Are the seimic comnpanies going to drill your land?  Are they going to extract something from your land?  Then how come we dont recieve a royalty when they sell what has come from our land?  I say keep your $5 or $10 and rather pay me when the information is sold to all the different companies they are going to make money from.  Is that not fair?  Just a thought...

Permalink Reply by Rick on August 27, 2012 at 4:24am

Right Josh. And if the seismic companies have to raise the cost of their information sold to their customers by a few hundred dollars an acre, so be it. Its a small price to pay for the tens or hundreds of millions of dollars that can be produced from a 640 acre unit.

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