No-Surface lease but now they want the surface

Hello, we are new here.  We have a no-surface lease with Range Resources.  Now they have decided they would like to put a well pad on our property after all.  They have not offered us anything in payment, just want us to sign a new agreement that pretty much gives them the right to use our surface as they please.  We will get a lawyer involved if we decide this is worth pursuing, but wondered if anyone here could give current information as to going rates for well pads and the mess associated with it all.   If they don't pay anything, or much at all, we're not interested in going any farther or changing our agreement.  We don't have timber or crops, but our land has a high potential for residential development (we have had offers).  Even though the well wouldn't take up many of our acres, we are sure just having it on the land will affect that development potential.  We'd really appreciate it if anyone with solid info could share it.  Thanks.

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Permalink Reply by Schnoozie on June 18, 2012 at 5:39am

What did you get for your no-surface lease back then? Also what township and County?

 

Permalink Reply by JR on June 18, 2012 at 5:45am
Our driller pays $2000/acre for site disturbance, only for affected acreage, not the whole property. Access and pipeline are separate.
Permalink Reply by joe pierson on June 18, 2012 at 6:00am

a pad doesn't due much to affect the price of a farm (a couple thousand an acre), but it will do a lot of damage, real or otherwise, to a residential development, nobody wants any industrial activity near any residental site, you have to figure out what your loss would be and ask at least that for compensation

Permalink Reply by Clinton44 on June 18, 2012 at 6:19am

How many acres of your land will be in the drilling unit??

Years of royalties may outweigh the money you will get from a developer for building. 

Also keep in mind  you can retain the mineral rights and still sell for developement.

I have a friend in Tioga that has an old lease prior to the marcellus gas rush, Anadarko paid them just shy of $20,000.00 for a pad/spud fee.

As far as the mess associated with a pad and drilling there will be a lot of activity noise etc. untill the wells are drilled and fraced but after that all you will have are the well heads and associated equipment..    

Permalink Reply by Jack Straw on June 18, 2012 at 6:36am

Just a few thoughts:

The size of the pad needs to be taken into consideration - a four well pad, or a larger 6 well pad, or a yet larger 8 well pad?

In addition to the pad, there will be need for a (relatively wide) permanent access road.

And, there will be a (again permanent) pipeline (or pipelines).

If it is in a wet gas area there might be the need for additional equipment.

Try to learn as much as you can about Range's ultimate intentions, so that you will have an idea of the potential future impact.

 

JS

 

Permalink Reply by mark o on June 18, 2012 at 6:41am

i have a farm with same potential and they did drill on it.  be careful and think years down the road.  its nice to have a well pad but there are ALOT of negatives also.  you need to do a lot of research and talk to people who have gone through this..  good luck

 

Permalink Reply by Schnoozie on June 18, 2012 at 7:38am

My thoughts exactly, just do your homework and be fair with them. If it's sensable they should go for it.

Why not...for both parties.

Jim ShoosPermalink Reply by Jim Shoos on June 18, 2012 at 7:45am

Also you should take into consideration the fact that there may be an extremely good reason why Range elected to approach you for a well pad since they know your lease provides for no surface disturbance.  It would be difficult to conceive that the path of least resistance would not have been to simply use one of your neighbors surface for such a pad...presumably they did not also receive no surface use leases.  Perhaps using your surface is a last resort, and if they are declined the right to do so, you end up with no well being drilled at all.  Maybe all your neighbors have wetlands issues, or a lack of highway/road access...whatever the reason may be.  Range should be willing to tell you why they chose you over your neighbors surface. 

Permalink Reply by Feenzis on June 18, 2012 at 8:36am

Thanks for all the ideas.  We are trying to get as much information as possible but it is difficult.  They said they "don't know" about unit size, how many of our acres would be in the unit, or even where the pipelines will go.  We don't know any other landowners who had a well drilled on their property.  We are in a wet gas area in Washington County.  We think they want our land because it is virtually level and with loads of township road frontage, and it's a high point in the area.  As far as we know we are the only parcel with a no-surface clause but folks around here can be a little tight-lipped so who knows for sure.  Part of our concern is that the proposed well site would effectively block off about 10 acres so that while they would not technically be "disturbed" they would be made almost inaccessible to us, and they don't seem to think that's a valid concern at all.  We understand completely about the potential money to be made and would like to cooperate with them but know that potential future profits are no sure thing, while losing control of our land right away IS a sure thing.  We want some consideration from them as well.   We talked to the land man today and said it was a no-go as presented and he seemed shocked.  He said we'd get all kinds of compensation and future input, that this agreement they want us to sign is just preliminary - but my attorney taught me how to read O&G ha ha, and when a clause says we give them our approval to do this that and the other thing, then that is what is done.  The landman said he'd get back to us.  I told him to bring back something that is worth spending lawyer fees on, because this agreement certainly wasn't. 

Jim ShoosPermalink Reply by Jim Shoos on June 18, 2012 at 8:59am

If Range, or their representative can't comprehend that the same things that make your property attractive to them (access road frontage and topography) also makes your property attractive for either residential or commercial development then they are either being coy or stupid.  If they claim to have no better understanding of what their unit might resemble, where pipelines might be situated, or where laterals might extend, then I would tell them to come back when they do have a clearer idea.  You are signing a blank check by signing an access agreement that let's them make those kinds of decisions unilaterally down the road. 

Permalink Reply by frank sparacino on June 21, 2012 at 3:05am

"wet gas" is supposed to be worth a lot more than dry!

"bring back something that is worth spending lawyer fees on, because this agreement certainly wasn't."

i like that!!

Permalink Reply by NY Gas Rights on June 27, 2012 at 8:57am

If you and they agreed to a No Surface Use Contract then they may have paid you less per acre. What was the difference offered? How many acres is your total parcel?  Ask for the dfference back to  you and add an addendum for $2,000 per acre damage reimbursement ( a spud FEE is taxable, Damages reimbursed are not). A well on your property will be at most 12 acres cleared to create a 5 acre working pad regardless of the "stories" about how many well bores. A well on your property also means MOST of your acres will be in your drilling unit. Do not allow Foreign Pipelines in this contract. Do not believe any stories of future contracts and agreements. All your value is on the table in front of you at signing.

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