Lease Offers in Harrison County

Updated November 8, 2011

This webpage is a little over a year old. During this time frame oil and gas leasing
offers have increased significantly.

As of November 8, 2011 the signing bonus has increased to $5350-$5800 with the royalty percentage at 20 % gross. Leases are being signed by several companies. The best lease terms are being realized by the landowner groups that offer their acreage through a competitive bidding process. I personally believe the money offers will continue to increase with time. The highest offers occur when landowners pool their land into contiguous units.

Presumably, all are aware that Chesapeake recently leveraged 25% of their leaseholds in

Eastern Ohio for $15,000 per acre by forming a JV with an undisclosed oil major.

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Replies to This Discussion

Permalink Reply by Jim Harber on September 15, 2011 at 6:40pm
I too spoke too soon before I got the lease and studied it more in-depth. It is not good for the landowner, no matter what the price. If anyone is interested in getting a more landowner friendly lease, I would say wait. Actually, it would be better if you did not wait for the oil and gas companies to contact you, but you contact them, going down  the list. That was the strategy that the group did in Carroll County and it worked for them. They may not have gotten this high of a price, but all in all, they crafted a good lease for themselves with $3,500. lease bonus and 20% royalty, with the kicker of it all, that is a 6 month drilling commitment, which by the way starts in December. In case you don't know, they signed with Rex Energy of Butler, PA maybe not the biggest dog on the block, but still overall they did well for themselves.
Permalink Reply by Doc on September 13, 2011 at 3:01pm

Disclaimer: I am not an attorney, so please read the lease and discuss with your atttorney.

 

We just reviewed the lease and addendum with our contract attorney. We compared it to leases and addendums from others in the area. The lease itself is typical of other OG leases. In some ways more direct than others in stating the intended purpose of the clauses. The addendum addresses the major issues that have been discussed in this and other forums, making it appear more landowner friendly.

 

$4950 and 19% gross production on both gas and liquids. The addendum describes in detail the various scenarios by which the value of the components would be measured. I have to admit that a lot of this is over my head, but it appears to cover all of the ways that a product could be moved/sold/prepared by companies with or without a relationship to the parent OG company with a goal of getting the best price. I would appreciate any feedback on this section.

 

Shutin and Force Majeure are in the lease but limited to specific time frames in the addendum.

 

The lease has a 3 year renewal option rather than the standard 5. The payment for the 3 years is reduced to $4500/A. Please read the language about this being the total payment for the period. We had a discussion about whether this excludes a royalty payment in the extended period, but believe other sections of the contract would prevail. I would ask this question before signing.

 

We had 2 related concerns about this and other leases: 1 is that the lease doesn't reference the addendum. CHK has a good statement in their lease that makes the addendum part of the agreement. Although the addendum references the lease in reverse, unless both are filed together, there may be a dispute about prevailing terms. This is not unsual and is the case in most of the other leases I have reviewed.

The second issue is what will actually be filed, the complete lease or a memorandum. We have decided one solution would be to file the entire lease and addendum ourselves and pay the fees associated with them. This would insure that they are recorded together.

 

Permalink Reply by Josh on September 14, 2011 at 12:24am
What about payment period?  120 days total or does it start after they do a mineral search?
Permalink Reply by Jim Harber on September 14, 2011 at 12:37am
Josh, the oil and gas companies only filed the memorandum and the clock on getting paid starts from the day you sign the lease and it is notarized.
Permalink Reply by Josh on September 14, 2011 at 1:02am

I am in a bit of a situation and would like to have anyones advice.  I have a small tract of land in archer left to lease.  However most of my neighbors are with chk and immediate neighbors are in question who they are with.  When the dust settles I would hate to be the black sheep and be left out of a drilling unit.  Am I reading to far into this or should I follow the majority of my neighbors.  This xto offer is enticing, granted the piece I have left is small and would probably never have a well directly on it.

Permalink Reply by Doc on September 14, 2011 at 12:43am
An order of payment shall be made within 5 business days of the execution of the agreement. Payment of the order within 90 days of the execution, pending title verification and approval. And any payment is not refundable except in the instance of fraud.
Permalink Reply by Dan on September 14, 2011 at 2:05am
Their bonus consideration clause is attached.
Attachments:
Permalink Reply by AT on September 10, 2011 at 4:48am
I know of lots of acreage still unleased in Harrison county, which includes mine. There are also many more acres about to come off of Oxford and Eric Petroleum leases over the next few months.
Permalink Reply by Jim Harber on September 13, 2011 at 1:13am
You know these prices are very, very good because it took 4 years before lease bonus prices ot this high in NE PA in the heart of the Marcellus Shale play. I know because I was there from 2008-2009 and we never saw that kind of pricing bumps, so if that doesn't tell you the mother lode that you are sitting on here in Eastern OH, whether Se OH or NE OH, it is here and that is why you need to just make sure you get in on the leasing efforts and the coming economic boom. Things are at a trickle now, but this time next year you'll see 15-20 rigs drilling and within 36-48 months, things will really kick into gear. this is the 7th boom that I have been in in my lifetime, every time I get just as excited as the first one.
Permalink Reply by Mark Allen on September 13, 2011 at 2:34am

We have all worked this to a frenzy,it is a great time to own mineral rights in Eastern Ohio.

 

Education has been the key and the togetherness of our heritage to stick together has been paying off.  My hat is off to those who have made the sacrifice to educate and organize landowners,if it were not for those folks we all would have signed with the brokers and flippers for peanuts.

 

Great job Harrison and Belmont folks

Permalink Reply by Josh on September 13, 2011 at 2:45am

Jim, I stand corrected,  4950 and 19 is a great bit more than what we are at.  Could you forward lease to my email if you get one.  Also is this land group accepting new members, I assume they are.  Please let me know as soon as you can as our group is getting there pens out.

Permalink Reply by Jim Harber on September 14, 2011 at 1:00am
give me a email address

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