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Permalink Reply by PA Joe on December 2, 2013 at 1:24am

There is neither Marcellus nor Utica in Lawrence County, KY (sorry). If someone is offering to lease you then it is likely for a conventional target (Berea, Big Injun, Oriskany, etc). Even if they are trying to do a horizontal well in one of these targets that concept is still in its infancy. I would take $5-10/acre; that really is fair as these wells in these targets don't make a whole lot and if you're really worried about it you can reserve these horizons via a pugh clause. What you want to negotiate is the percentage of your royalty. If they're doing a vertical an eighth is fair. Even if doing a horizontal in a conventional 1/8th is fair but I would make them put language in that ratchets up your % the more the well makes. Hope that helps.

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