Is a 10 year lease too long?

We live in Jefferson county PA.

Eight years ago was the first time anyone was interesterd in the gas under our land. We entered into a 5 year lease for the shellow gas. There was no talk about Marcellus Shale Gas at that time. In the 5 years that passed only 2 wells were drilled close to my land they did not pan out as planed. So all drilling stoped. After that lease expirded we was asked by a different drilling Co. to lease our land again. We opted to only lease it for 3 years. Again no wells were drilled on our land or on adjoning land.

We now have been asked to lease our land for the next 10 years with a one time lump sum payment, but this time they want the rights for oil, gas and coal bed methane by any means.

 

My question is;

Is 10 years to long for a lease? 

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Permalink Reply by DP on October 13, 2010 at 2:45pm
Mike, Theres another 5000 plus acre group of properties, and growing in Clarion County that will sonn be put out for bid again. . Any advice or suggestions on getting the same or better deal than Stone offered?
Permalink Reply by Buddy on October 13, 2010 at 2:58pm
DH.
What area does this group cover? Has it been 'advertised?'
Permalink Reply by DP on October 13, 2010 at 3:27pm
Northern to central clarion down to Monroe and Clarion and licking Twp, Twp. Still in the works not being advertised yet. More the better. I am a small landowner and geologst and have been helping out a little.
Permalink Reply by Buddy on October 13, 2010 at 4:13pm
DH... do you think this Clarion group will go public? Would like to know more about it...
Permalink Reply by DP on October 13, 2010 at 4:43pm
I would be open to discus if you have contact info. The key is to form a group so you have negotiation power to get the best bonus, royalty, and terms. While the bonus is important, the royalty and terms (like pugh clauses, top end leases, reserving deeper right, and other things discussed on this forum...) are even more important. Some companies, like Atlas who have big bank accounts are interested in large group offerings as long as the land is in their area of interest. This saves time and avoids paying numerous landmen to lease one tract at a time. Some land aquisition companies, are aquiring leases to pass on to others by putting out to bid just like a land owners group would do, but at a larger scale and perhaps with the assistance of marketing companies. I have found that these lease terms are not as landowner friendly and are more driller friendly which may get you a higher bonus and royalty but limited say in the other terms. You may also have to wait 6-18 months to find out if they successfully bid your leases and if they dont will get nothing but a lease that becomes null and void and have to start over. It seems like some companies like EQT, Stone (now that they aquired 40,000 acres)Rex, Range and a few others prefer may have enough land leased to keep their drilling rigs running and prefer to aquire more acreage one tract at a time. I think Mr Knapp is right in that 10 years may be the best bet for a better bonus royalty and terms since quite a bit of acreage is already leased and needs to be drilled first. Of course if you are a hold out and the company is next door with a permit to drill and needs to add to their unit, they may make a short term offer that is too good to pass up.
Permalink Reply by Monty on October 13, 2010 at 11:03pm
DP,
Could you give me some information on this landowners group? Who we need to contact? We have over 500 acres. Thanks!
Permalink Reply by DP on October 14, 2010 at 11:25am
Monty send me an email at mogulknees@yahoo.com to discus. Thanks
Permalink Reply by Monty on October 14, 2010 at 8:04am
Just heard a group with 5000 acres from Marienville, Pa signed for $5000 an acre, that is alot better than the Fryburg group!
Permalink Reply by Tom F on October 13, 2010 at 4:07pm
Mike, Took your advise and chcked out your web site. Saw that your interest is only located in Clearfield, Jefferson, Indiana, and Cambria counties. Any interest in Elk Co.?
Permalink Reply by Al Price on October 14, 2010 at 5:06am
Mike,
Do you know anything about the Alder Run Wells in Clearfield County? How many wells will be drilled, etc. Thanks. ap
Permalink Reply by Brian on October 15, 2010 at 1:25am
Al,

go to the PA DEP website. They have all the information you need about permitted wells. I believe Williams is drilling the Alder Run wells, and I think right now they have 5 permitted. I didn't check, but you can check the DEP website and find out. Its under Oil and Gas on the menu on the right.
Permalink Reply by Al Price on October 15, 2010 at 3:19am
Thanks Brian. ap

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