Replies to This Discussion

Permalink Reply by JR on May 2, 2012 at 5:37am

An access road maybe?  Pipeline access?   But they'd have to contact you about that stuff, unless it's in your lease.

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Permalink Reply by KLB on May 2, 2012 at 5:40am

Are there laws about how close to homes pipelines (or access roads) can be?  And, if they contact me, can I say "No"?  if I have signed a lease?

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Permalink Reply by Frank Walker on May 2, 2012 at 8:46am

Have you considered a non-surface lease?

My own lease also includes an exclusion zone which extends out from my property over 500 feet.  They can't do squat on my land (i.e., they are not allowed even to trespass my (surface) land for any reason) , and their development activity must stand back over 500 feet from my property lines, as well.

Lease provisions like that might help you to feel more at ease.

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Permalink Reply by KLB on May 2, 2012 at 3:19pm

Thanks for answering!  Did you take significantly less in bonus and royalty to get these clauses?  We are being told that would be the case to get  a"non-surface" lease.  But, if the bonus/ royalties are too low, there is no incentive for us to sign our land anyway.

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Permalink Reply by JDM on May 3, 2012 at 6:21am

I was also told that the bonus and royalties would be different if I wanted a non-surface lease. Any suggestions?

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Permalink Reply by Frank Walker on May 3, 2012 at 6:50am

KLB:

Actually, no.  The financial considerations for my lease were very, very favorable.  Far more so than for much nearby land which was signed into a full surface lease situation.

However, full disclosure:

I benefited from a variety of other circumstances unrelated to matters on point for your specific question.  Leasing has a huge number of facets all of which, taken en toto,  impact bonus, royalty, and lease terms.  I was able to maneuver several of those other things very much to my advantage.  And rather than huge skill or intelligence on my part, this involved pure luck as much as anything else.  To be fair to myself, it would be honest to say I made the most of my situation.  But had my basic situation been less favorable, I likely would not have enjoyed the great outcome I did.

To put it another way entirely:  I sort of fell into a butter tub.

Threats of smaller money for non-surface leases are commonplace.  But remember,  in leasing everything is subject to negotiation.  Their threats are merely their opening negotiating stance.

     

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Permalink Reply by Frank Walker on May 3, 2012 at 7:17am

KLB

Finally, I should add that I've never known a non-surface lease to impinge on royalty fraction.  On bonus, yes.  But not on royalty.  So if they are going after your royalty fraction you would surely be on firm ground to resist.  If they merely want a chunk of your bonus, I would still resist . . . but do so knowing there is precedent for bonus chopping in that situation.  The old (and I do mean old) rule of thumb on that one used to be a 20% hit on the bonus for a non-surface lease, e.g., instead of getting $10,000 you would be paid $8,000.  Only God knows what's going on today.  I surely do not know.  Leasing here where I am pretty much ground to a halt six months, or more, ago.  Most everybody is leased anyway.  And nobody really wants to lease with NG priced down where it is today.  It's a Lessee's market for leases today.  And that's not really great for landowners.

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Permalink Reply by Tom Brian on May 7, 2012 at 1:01pm

No need to worry sign to get royalties, the smallest property i have leased is less than 2 acres , no way they can park any thing bigger than a pickup truck on it.  any thing you get is better than nothing and the gas will over time migrate to your neighbors and to their royalties check,  just sign and relax, what happens will not change if you do or do not sign.

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