Replies to This Discussion

Permalink Reply by Tim Tarr on July 24, 2015 at 8:21am

We are in the Franklin District, directly over the Marcellas Shale area.

Marcellus and Utica, probably Upper Devonian too. IF you sell better get a very good price and never look back!  Patience is a virtue.  

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Permalink Reply by Chris Stevenson on July 24, 2015 at 8:31am

Yes, Tim, I've heard about the strike in the Utica, which is not too far from us. I'm just afraid of making the bidders/buyers mad or frustrated from me holding out and comparing prices. I don't even know who the best companies are for buying in that area. I'm in touch with Mineral Auctions, Blake Bergstrom and Chad Dillie of U.S. Capital and Energy. It would save me a lot of time and negotiations if I knew for certain the best buyers for that area. My first bid has been $6,000 per acre, with a low-ball of $5,750 per acre.

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Permalink Reply by Tim Tarr on July 24, 2015 at 9:42am

 First I'll say I'm in Pa. East of Ohio and Brooke Counties. Now I'll just put it this way.

Back in 2008 probably would have been lucky to get $4000/acre for those Rights. Had a lease offer for $1000 and 12.5%. In Early 2009 that Lease offer went to $2000 and 16%. Later got another offer for $2000 and 18% form another Company. Signed with that Company in 2010. Best part was it's a Marcellus only Lease.

  Ink wasn't even dry and first Company acquired that Lease.

  2013 3 wells completed of  a 5 well designed Unit. So with lease Bonus and Royalties now have a gross of ~$7000 acre. No Decline on production because of "Choked" Wells. Yes Royalties are down (>50%) because of low prices.

  So still 2 wells to be drilled to get that 5 but Downspacing looks very probable. So might be 6 more wells to be drilled (9 total). Let's just ignore the downspacing and 2 more wells. So give it 3 more years (2018) and will have grossed $10,000/acre. Which is about what I might have taken to sell Rights in 2008.

  Now along comes Utica and that looks to be "better" than Marcellus. Than under Utica is Trenton waiting to be tested.

  So it will take 10 years to get my $10,000 but those 3 wells will still be producing with 2 left to be drilled, deeper formations waiting and that sweet Upper Devonian.$10,000/acre would have been outright theft. LOL

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Permalink Reply by Chris Stevenson on July 24, 2015 at 9:56am

Very informative. I do know that testing and drilling has dropped off because of low oil/gas prices and that the expected recovery across the board might take from three to five years. I'm in my 60s and I might not live to see it. Just had a crippling pulmonary embolism--a deathly serious one. My sister is deep in dept. So this appears to be the answer. But, I do appreciate your advice about easy does it and wait it out for the best possible results. I'd like some competition for the rights, without putting a gun to anybody's head. Respect for the buyers is very important to me. As well as their patience and reciprocation.

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Permalink Reply by Melissa Chambers on July 27, 2015 at 9:58am

DON'T SELL!

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Permalink Reply by jason irvine on July 25, 2015 at 9:04am

Keep telling yourself...he who has the gold has the power. You are in the drivers seat. We know that there are at least 3 productive layers. Wet Devonian wet marcellus and possible monster dry gas. There may be a 4th. This equates to alot of money. I would say don't sell. Even if i5 takes awhile your family will reap the benefits. But I understand everyone's situation is different. But I wouldn't except cheap. Don't worry about getting someone mad. You have what they want and they need to pay for it.

They paid 4k for marcellus land. 5k for large dry utica in other areas and Devonian should be 3k. This is 12k. Those are signing bonus. I would start at 15k and go from there. Good luck

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Permalink Reply by S S C on July 27, 2015 at 4:27am

Do not be afraid of making the buyers mad. It is just business. They will neither love you nor hate you. If they want the lease and in your area i believe they will, they will pay. You are dealing with landmen/salesmen. The one you talk today may not work for thm in six months. The company you sign with may turn around and sell to another company. Do not worry about any long term relationship with one individual or company. That is not likely. They may be authorized to pay one amount today and another tomorrow. I have had landmen tell me i will miss out on everything if i dont change my lease to suit them (and i didnt) and a month later, my lease was sold to another company who happily released with no changes for another term. I have been lied to by landmen and given all kinds of inaccurate information by them. None of this matters. I have received over $5000 an acre in leases alone for the marcellus only, in marshall county so far. I understand the utica is worth more than the marcellus and i dont even know about the devonian. Learn a lot before you sign. Also learn about things like pugh clauses. This is strictly a business relationship. You are selling, they are buying. Btw,there are multiple companies operating in Marshall County. Have you talked to southwestern?

I would ask for royalties of not less than 18.75 on the gross as well.

Good luck.

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Permalink Reply by 0ym9x5ag7ury2 on July 24, 2015 at 4:48pm

Chris,

     Contact WV Lawyer Jeff Rokisky. Do an internet search and you find his offices and phone numbers. He is licensed in PA, WV and OH. He has the best approach for determining Mineral Values, then selling to the highest bidder of 25 or more companies. This info is 2 years old but probably hasn't changed.

Saturday on AM 1170 Radio at 9 or 10 am you can listen to 2 of his lawyers discuss "Your Money" including Oil & Gas.

All 3 are on TV/Reruns on Channel 9 Steubenville at 10 am or thereabouts, after MEET THE PRESS.

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Permalink Reply by Mike Murphy on July 25, 2015 at 2:44am

just remember those nice sweet landmen are just salesman working for the company that is trying to buy your mineral rights and what they say is all for the good of the company ......NOT YOU   if u must sell remember you are setting on an energy source greater then Saudi Arabia  WITH A POTENTIAL OF MANY YEARS OF INCOME  having 3 plays under you u should not be satisfied for anything less then 10,000 an acre  and hold a percentage of the royalties for future income  and you should have an oil and gas attorney review any documents you sign........and an oil and gas attorney that understands what is going on     also you need to look at the amount of taxes you will be paying on the sale of your mineral rights.....probably 30% or more .....so 10,000 turns into 7,000 right a way...dealing in these large of a sum of money you also should talk to a good  tax accountant to see where u stand on taxes for your windfall    

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Permalink Reply by Chris Stevenson on July 25, 2015 at 5:48am

Mike, I've heard that all but seven states charge tax on an inheritance. WV is not one of them, so I think we're okay there. It's when we invest that money into a venture or business or make a purchase, when those taxes begin to take effect. My sister's and mine biggest roadblock will be keeping our SSI through this whole thing. We could lose it completely. We have to find a way of sheltering this lump sum away from IRS so that we don't lose our benefits, or else we will be bleeding off the total inheritance state. I've heard about a blind trust, but have no idea what this is or how it would work in our favor. Any other ideas? Tax shelters. Signing the money over to a relative? I might goggle that property attorney pronto, and these bids start to come in.

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Permalink Reply by Mike Murphy on July 25, 2015 at 11:21am

if you inherited the mineral rights you now own them the inheriting is over you now have to pay taxes on any money u receive just like any other mineral owner ........you better talk to an attorney ........you will be taxed and a pretty big chunk between the federal and the state ........you need a good accountant so you understand what you have .......that money is not being paid to the estate it is being pated to you and your sister so you 2  will be responsible for the taxes  of 30%  or more     the estate is over you now own the rights

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Permalink Reply by 0ym9x5ag7ury2 on July 27, 2015 at 7:17am

Chris,

   If you get the wrong producer you won't have much to be taxed on.

Some producers have arrangements to allow them to only pay what they want.

When you get $15 to $150 an acre per month, you would have to own a very large chunk of land to have any significant income.

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