A guy from Halo Land approached me and said that they was working for Ascent. He offered me $700 per acre, each year up to 10 years, and said that they wouldn't pay it up front. I guess they pay me every year the $700 per acre, and they can cancel any time? He called it a delay rentals.
Is Ascent the only ones out here offering a crazy delay payment. I wanted to see if anyone else was getting approached with the same nonsense? This seems like a bad deal because the price could go up and I am stuck with the $700 for 10 years!!
Its crappy. Take a lower dollar amount but paid up front.
You'd have to be crazy to accept that for 10 years. 10 years is way too long to be locked into something that they have the option to stop paying any time they want, but you can't cancel. Whether $700/ac/yr is enough for you and for your area is another story.
Yeah, that's what I was thinking about the time. I'd maybe take 3 years at that price but not 10. The money seems about what they are offering for all of my neighbors. I also heard that they are offering up to $1500 an acre in the next township over, but that could be for a lot of reasons. They might be trying to drill soon and are under the gun or it just might be a better area.
Unfortunately, as cash reserves dry up, this is becoming more common and I suspect many more companies will make that transition. That said, I have seen one lease in which interest was to be paid on all outstanding monies owed.
If Ascent is in existence 2 years from now, I'll be shocked.
Never sign a lease for more than 3 years.
Never accept a draft, demand a certified check at signing for the entire amount due.
Never agree to arbitration---tell them you never waive rights.
A request for a 10 year lease is a very bad sign and indicates you are dealing with sketchy people who should be avoided.
Thanks, Paul. I felt pretty uneasy about it. The guy was pretty pushy and I am not a fan of someone coming onto my farm and trying to tell me whats good for me and mine. Handing my land over to them for 10 years is out of the question. Heck even 3 years is to long for me.
You are right ,Paul, but you know what? there are people in eastern Ohio who are signing on to this deal, and the more of them that do, makes the value of everyone else's minerals go down. The smart ones are holding out, but the deal they get when their current leases expire, may not be what it should be because of their neighbors taking these crappy deals. Ascent ,if they want to keep the minerals they have leased at $5000 per acre and 20% for 5 years will have to do the same deal before they expire. Maybe they figure the more they can get a few to accept their lowball offer, that will save them some of that $$. They get by with $700. p/a, then if they drill for those minerals,then they wont have to pay any more of the delayed rentals. "sketchy", maybe, but Smart, Yes!
The first lease I was offered was $10 an acre. They signed all the landowners they could and then upped the price again and again signed all they could at the new offer amount.
This scenario played out over and over, I remember people freaking when it got to $5000, which is where I jumped in. Fortunately Carrizo backed out on us after promising for eight months to pay and I signed with Antero for a larger amount.
I cannot count the number of leases that I have signed and been paid in FULL in advance. For most companies, that is the norm, at least in the appalachian play.
If requested, all legitimate Oil & Gas Exploration Companies pay at signing or use a 3 or 7 day draft.
You're an expert? It's been straight up for you ever since you graduated from Harvard Law School, huh?
You're a dim witted stooge, with no expertise, hoping some of the local stooges might throw you a little business.
You can barely read and write.
On behalf of my clients, I, personally, have been paying, by certified Bank Check, at signing for over 30 years and so have all my colleagues. Probably around 5,000 individual leases.
You nailed it Paul. right on the stooges head.