RE: Procedure to be followed when initially receiving the letter FROM Land Management Company

As SOMEONE who is UNFAMILIAR, or should I say that this is the FIRST question that I have that needs an answer.  I received a letter from one of the land management companies.  This was about 6 months ago.  AFTER FINDING so much VALUABLE INSIGHT and INFORMATION regarding Marcellus Shale from YOUR Website, I OPTED to WAIT for a WHILE.  NOW, I see that some of my NEIGHBORS have SIGNED on with these Land Managment companies.  I know this as I have LOOKED through the DEEDED properties in my area.  MY FIRST QUESTION IS:  As my neighbors have signed about 5 months ago, it does NOT NECESSARILY MEAN that a WELL is to be DRILLED in our AREA.  Can I assume that these neighbors have NOT RECEIVED any compensation AT THIS TIME even though they have SIGNED a LEASE?  Is my understanding correct, :The lease only holds the PROPERTY for that company whether it's Rex or Phillips or whomever for a period of 5 years but does NOT involve COMPENSATION?  Also, it is my IMPRESSION that waiting ONLY ENHANCES my bargaining POWER.  I will MOST ASSUREDLY go to an attorney to have the CONTRACT CHANGED to benefit me.  That goes without saying.  BUT in ESSENCE, NO DRILLING, NO MONEY.  Am I RIGHT about THIS??  

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Permalink Reply by craig on July 25, 2011 at 1:19pm
If it has been 120 days from their signing they most likely have received there up front bonus money for signing. Around here it is a one time payment of $1500-$2000 per acre for a 5 yr lease.
Permalink Reply by Robin Jackson on July 25, 2011 at 2:29pm

We signed last yr. for 2,500 an acre..my friends recently signed for more in the Morris/Liberty area.

 

Permalink Reply by Robin Jackson on July 25, 2011 at 2:29pm

You do get original lease dollars per acre..after that who knows...................

 

Permalink Reply by Bill anders on July 25, 2011 at 2:51pm
if they signed they more than likely got paid.  some who hold out get more, some miss the boat.   Depends on how bad you want the money, more than likely they will be back if they leave but you never know when.
Permalink Reply by Jim Litwinowicz on July 25, 2011 at 3:43pm

Not sure what "land management company" means.  If it means a company that flips leases after getting a large acreage under lease, it is possible that the landowners got no upfront payment since there a few companies that act that way. But they rarely place a memorandum on the deeds so you are probably talking about drilling companies or maybe a company that actually paid an amount below what they expect to get.

How much was paid? Hard to say as there are many factors that come in to play like location, number of parcels already under lease, size of parcel, availability of infrastructure, competition in area and more. And depends on how much your neighbors knew before signing or how long ago they signed.

There are many ways for a lease to work. You need to read up as the price range can be from $5/acre to $5000/acre for a five year lease.  It can be paid all within 60 days or maybe in payments spread out over the whole five years. And a lease can be for ten years or more.

Where are you located?

Ask around. See what people are getting. Talk to as many people as you can.  Ask local government officials what they have heard. Ask the local newspaper if they are following it. Local radio even.

Don't be in a hurry. The more you know the better off you will be.

Permalink Reply by Mackenzie Malone on July 27, 2011 at 11:02am
Thank you All for your VERY informative Dialogue.  Since there are SO many things that can be important regarding THIS decision to sign over control of EVEN a piece of your property, there are MANY questions that come to mind.  As many property owners are in this SAME situation, I want to make sure that I understand and follow Good ADVICE as is located at THIS SITE.  I have an additional question DUE to reading the Department of Environmental Planning's Website regarding Marcellus Shale.  If my NEIGHBOR whose property is ADJOINING mine is SIGNED over to one of the energy companies, SHOULD I be CONCERNED about DRAFTING.  In other words, I am a HOLD OUT.  I am WAITING for one of the intermediaries (I refer to these companies as Land Management) for the Energy Company to stop by and offer me an additional  percentage.  Does the law AFFORD the Energy Company the RIGHT to DRAFT or TAKE any Natural Gas from my PROPERTY.  That is what I thought I had read at the DEP Website.  I had ASSUMED that I would be compensated.  That may NOT be TRUE NOW.  What do any of you know or think about this?  I guess I should attend some of the meetings to find out.  Right???
Permalink Reply by Robin Jackson on July 27, 2011 at 11:40am

Please see a lawyer..People aren't getting compensated as should be and if we dont' watch out for ourselves, who will? Being informed, involved and getting assistance can mean the difference between right and wrong, poorly compensated or rightly compensated..REally think about it..call the lawyer.

 

Permalink Reply by Jim Litwinowicz on July 27, 2011 at 3:28pm

In Pa there is what is called the "Rule of Capture" which means that the gas company has the right to whatever gas comes into the wellbore. That means that they can drill right along the property boundary and take what gas migrates from your property.  In shale gas, very little gas migrates which why they have to frack the shale. But it happens a lot in vertical wells drilled into porous strata.

However, they can drill along side the boundary and frac across the boundary line and take whatever gas they capture with out compensating the landowner from a neighboring, unleased property. Thye can do this because the current laws were written before fracking was developed.  They cannot drill onto property that is not leased.


If you are asking about forced pooling, that is a different issue. They cannot force anyone into a unit without them signing a lease if you are talking about the Marcellus or shallower strata. But, from what I have been told a couple of times, they can do forced pooling in Pa for the layers deeper than the Marcellus such as the Utica or Trenton Black river. I don't know if its ever been done or the procedure for doing so.

 

Both instances, forced pooling and the Rule of Capture, are being discussed in Harrisburg, along with many other issues. Everyone needs to be vigilant of all proposed laws and regulations and to keep in touch with legislators on these issues.

 

Permalink Reply by Mackenzie Malone on July 27, 2011 at 4:12pm
Thank you, Jim.  You really provided EXACTLY the information that I was concerned about.  I hope that this may help others with their concerns also.   I do hope that the townships in PA decide to place some type of fee on the impact of the trucks causing damage to our roads.  We have this quite a bit in our township.  I have read in many articles that this natural gas is being sold to China.  Consquently, Americans are not receiving the benefits of Natural Gas being discovered here.  It is my distinct impression that Americans should receive a better rate as the gas is our resource.
Permalink Reply by craig on July 27, 2011 at 6:07pm

No, this gas is NOT being sold to China. It is not being sold anywhere except where the pipelines can carry it.....ie North America. There is only one company, Cheniere Energy, which just got a permit to allow it to export. I don't believe they have the plant even finished yet.

With respect to all .....    It really makes me mad that so many people unknowingly read false stories/statements and take them as truth....everyone really needs to check out anything they read nowadays.

And why would it be bad to sell this gas to China anyhow? The only reason we would not want to sell it to whoever is because we wouldn't have enough for ourselves....which we obviously do.

Permalink Reply by Mackenzie Malone on July 28, 2011 at 10:19am
Thank you for point of view.  I regret making a comment without having FULL knowledge about where the natural resources are going.  I guess I will have to read MUCH MORE to be SURE of WHERE OF I am speaking.  I should not have made a political statement in the first place.  As far as selling gas to China, the only concern I have is having that SAME GAS sold back to US at QUADRUPLE the price, in essence RAMMING OUR OWN NATURAl resource  down our throats. HOW IRONIC!! It is  similar to our STUPID idea to BORROW from China. 
Permalink Reply by Henry J. Cittone on July 27, 2011 at 6:10pm

The other money you need to be concered about is the royalty from an actual well - not the initial bonus payment (this is the big money not the bonus, everyone is roaring about bonuses these days, but you need to think long term).  It is highly advisable for all your neighbors to lease to the same company, AND to have a pooling clause in the lease so that if you do not end up in a well unit for some reason then the gas co. has to flip your lease to some gas company that will actually drill and create a unit. (units are also called pools) (units and pools are the group of acreage that surrounds a well and from which the fracked well draws gas)

Bottom line you do not want to be an island in the middle of some other company's leased acreage as they can simply draw the well unit around you.  This has happened to some small property owners already where you see "bite marks" on the pooling unit declarations filed with the county, where a land owner was not signed with the well drilling gas co. 

 

My opinion is land owners groups are better than holding out, but that's just an opinion.  (if we had not had the wyoming county land owner group folks adjacent to us we would have been up a creek).

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