Has anyone signed a marcullus lease with Synder Brothers? How did you make out? Are they paying the upfront payment fairly quickly ?

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Good morning E Bilgus,
I was contacted by them (Snyder Brothers) this past March 1 time. I called them back after 2 months to see if they were still interested in my land and after another month there rep called me and a month later I did get a copy of there lease dropped off and only been called one time after that for them to come back and talk to me.
Sorry to say I can not help you any more than that. I am still waiting on them. But I am glad there has been this time to look up things and most of all time to have found this group and get a lot of very good info that has changed my mind a lot on there offer.
Please read "Is a 10 year lease too long?". I would be interested in what you were offered and what you asked for and got.
Thank you,
E Bilgus,

I have had talks with MDS (Snyder) - from what I have read on this board some individuals don't quite understand how this deal works. They started this deal with firm commitments for 300,000 acres to be put on the world market January 1, 2011. MDS/Knapp are acting as brokers in the deal -- somewhat like a Realtor selling your house. Their fee is 15% of whatever the world market offers with a bottom number of $5,000 per acre. Although the $5,000 per acre is listed as their bottom number they anticipate that with such a large acreage (it is probably well over the 300,000 by now - they wouldn't give me a number on this since it is changing daily) they seem confident that it will be much more than their $5,000 bottom number based on similar sales of much less acreage in the past 12 months. These large acreage sales (and none of these listed are even close to the acreage they have) have ranged from $8,000 - $14,000 - they have a chart listing company names etc on their website. In addition their could be up to a 5% additional fee for whoever purchases this - so the most the fee would be would be 20%. The 20% concerns me but they currently own most of the land around mine and their are no landowner groups in my area since they have the majority of the acreage. They told me the $5,000 number was put in just so landowners know they aren't just going to give this away. I am assuming they have land in this deal and of course they want as much as they can as well as the individuals who sign on to the sale

So, on January 1, 2011 - they will put the "FOR SALE" sign up to the world through the Royal Bank of Canada and entertain offers until June 30, 2011 -- I guess it could really be sold anytime in that time frame if they received a pretty lucrative offer. I asked them why a Canadian Bank and not an American Bank - I was told that this bank specializes in this type of large transaction in energy items. I am considering the offer because with all I have read the price per acre for the lease even with a 20% fee will be more than I could probably negotiate on my own if I include my acreage in as part of the 300,000 - 400,000 large acreage sale. I have looked on the Internet and I haven't been able to find this out but it might be the largest acreage sale in Pennsylvania.

As for your "paying upfront quickly" - the way I read this - you wouldn't receive the payment until next summer once the deal is complete and I guess your check would be from whatever large company purchases these rights--and not really from MDS/Knapp--just a guess. You would receive one check lump sum less any applicable income/state taxes.

Someone on this board asked if whoever gets this large acreage would they just "sit on it" - Although I am no gas expert I have a degree in accounting and if I am investing this amount of money - I want a return on my investment ASAP!!

Hope this information was informative
Thanks for the great info. I did not know that they are the same company, I have leases from MDS and this other Synder Subsidiary out of Bradford which is offering $2000/AC by December.

First - let me preface my comments - I do not work for any of these companies - I am just a landowner like most of you who are looking at all angles before we make any commitments-- I don't make any recommendations - whatever you do is up to you - just providing my thoughts in this matter-- on the Internet you really never know who is behind a post -- I am a computer instructor at a nearby university and I have learned and tell my students "never trust everything you see/read on the Internet"-- I know this is an important decision for me as well as you--this is the future for my grandchildren --not for me--and I want to make sure it is right before I make a definite commitment

MDS and Knapp are working together and are located in the Kittanning area in Armstrong County. They both have websites with more information than I can post here:


Each of these sites have contact information - but I really recommend that you setup an appointment for a one-to-one meeting. Before you go to any meeting - write down all the questions you have-- have parcel numbers etc - MDS has a computer system to bring up your parcel so they can see where it is and how it relates to other properties they have committed to the sale - if you don't write down your questions you will probably miss something during the meeting and on the way home you will say "Gee - wish I had ask about???". I have had several meetings with no pressure to sign. The individual I met with was very nice and answered all of my questions satisfactorily. Take some time to go over your questions prior to any meeting - don't get in a hurry although they have set a date of October 31 for accepting individuals into this large acreage sale. I was told by their representative that since this is such a large acreage sale - you really don't have much to negotiate or make changes to the lease -- (there is a copy on Knapp website) I can see their point here. When they drop this on the world market -- whatever big company purchases this can't have 500 leases with one request and another 1000 with another request - they all have to be uniform -- It probably isn't the best lease for the landowner but the enormity of the sale should over come any of this with the higher per acre amount than we can do on our own from whatever "big" company jumps on this large amount of acreage.

Lastly - this is a golden opportunity for many of you. Whether you go with this sale or not - from what I read if you have 50, 100, 200 or more acres - somewhere in the future you will probably be very wealthy from this pocket of gas beneath your property - maybe we finally happened to be "at the right place at the right time" I have read articles on Internet about farmers who struggled for years and now are reaping the benefits of their farmland --

Hope this helps some of you out - you make your own decision concerning this - just providing my "two bits"--have "ramble enough" time to watch some of the baseball playoffs. Best of luck to all of you in this important decision--Maybe we can all meet in the Bahamas in a year or so.
you might want to consider the answers before you sign

• If I lease my “minerals”, what does that include? Would I be leasing more than just natural gas?
Can I lease only my natural gas? Only in certain formations, say excluding Marcellus?
• Once I sign a lease, when do the terms of my lease expire? Isn’t a 5-year lease that can
automatically extended by the gas company, really a ten-year lease?
• If the gas company chooses not to produce the gas in this well for market reasons, or any
other, will that automatically extend the term of the lease?
• Does the lease specify which layer or formation, or does it give access to all
underground layers?
• Can the gas company drill wells into each of the geologic formations beneath my property?
• Don’t the terms of the lease mean that the lease can be held in perpetuity, so long as any
company leasing any one of the layers is searching for or producing gas, or storing it on my
• Can the gas company drill a second well on my property before the original one plays out,
and thereby extend the lease indefinitely?
• If the company is out of compliance with the terms of the lease, how will I enforce it? Has the
company put money in escrow? Will they pay for my legal expenses or will I pay for theirs?
• If a spill occurs, and the company is sued but evades liability, will I become liable? Do I have
an adequate insurance policy in place?
• Signing a lease now may mean the lease will be active for generations. How do my children
feel about my leasing the land?
• Do I have a plan for how I will monitor the company and how I will enforce the lease? If I don’t
have the time and expertise, will I have to hire a consultant? If the gas company goes
bankrupt, will its insurance clean up open pits, partially drilled wells, land in development or
partial reclamation? Has my local governments been bonded against that eventuality?
• If the production of this well ceases for a period of time, will the well be capped and the pad
site restored? What period of non-production will trigger capping and restoration?
• As the mineral owner, am I protected from legal action in case of an accident?
• Is there a “hold harmless” clause in my contract? How do I enforce it?
• Would I be responsible for the loss of my neighbors’ water wells? Do my neighbors have the
right to sue me, the landowner, for the loss of their water?
• Will my leasing affect my neighbors who choose not to lease? Can you give me a copy of the
DEC Program Policy DMN-1: Public Hearing Processes for Oil and Gas Well Spacing and
Compulsory Integration?
• Doesn’t ECL § 23-1303 (Authority to acquire property) mean that if gas is stored on my
property, that the company can use Eminent Domain to put a pipeline through my land?
• Is it true that any signing bonus and royalty checks would subject to regular federal income
and state income taxes, and not the lower capital gains tax?
• If I become a non-participating operator, will I also have to pay both the employer’s and
employee’s share of the Self-Employment Tax (15.3%) on any bonuses and royalties?
• Would I be taxed annually on the potential value of my minerals, through property and school
• Would I be obligated to pay this tax even if the gas company decides to curtail production
from a well on my property?
• If my Town taxes gas infrastructure/equipment on my property the same as any other
“improvement”, will the gas company reimburse me for those higher assessments?
• In Franklin and Clinton counties, mechanics liens totaling more than $10 million have recently
been filed against property owners who hosted industrial wind turbines, when the operator,
Noble Environmental Power, defaulted on payments. How will my gas lease protect me from
such an outcome?
• I may be responsible for fees associated with my mortgage in the event I sign a lease. Is the
gas company willing to negotiate subrogation fees with my mortgage company?
• Would I be responsible for paying additionally for a title search?
• Would the gaswell’s production costs (legal, transportation, advertising, insurance and other
business-related costs) be taken from the top before I receive my royalty payment? How
about payments to shareholders, and corporate bonuses?
• Are there studies that report the impact on the market value of my home if I am party to a gas
lease? Or if there is a wellpad near my house on a neighbor’s leased property?
• I expect a rise in homeowner’s insurance if my home is near a gas pad site. Is the gas
company willing to defray that increased cost?
• Where will the pad site be?
• How big will the pad site be?
• Is there potential for additional pad sites on my property?
• Will the company agree to limit the # of pads on my property to the spacings allowed by law
at the time the lease is signed?
• Have I seen drilling operations similar to the largest ones allowed by my lease, or only those
shown by the gas company?
• Will the gas company grant more than the 100' set-back from homes required by current law?
• Besides the “Christmas tree,” what other equipment will be permanently installed on the pad
• Will there be a compression station associated with this pad site? Will there be a compression
station within one mile of my home?
• Is there an existing pipeline associated with this pad site? Will the Right-of-Way be over 66’
wide? Can I put limits on the pipeline company’s access to my surface property?
• Is the anticipated life term for pad sites in the Marcellus shale really 30-50 years?
• When will the pad site be restored to its original condition?
• Fresh (potable) water be trucked in and wastewater trucked out from this pad site. How many
trucks will access the pad site during the drilling and the fracking each day, and for how many
• Does the lease offered include water-supply pre-testing done by an agreed-upon third party,
and paid for by the driller? Will they be required to pay for a retest by the same company if I
think my water is polluted?
• Where can I find a reliable report that illustrates how much water is used during drilling and
• Where can I find a third-party report that estimates the number of times, and how often, the
gas wells on my property will require fracturing?
• Does drilling production stop during drought conditions?
• Is the gas company willing to exempt water withdrawals on my property from the lease?
• Do energy companies pay for water usage?
• How is water usage metered when it is taken directly from rivers, ponds, and wetlands?
• Are drill sites exempt from the storm water run-off ordinance in my town?
• How are watercourses protected from storm water runoff on sites with reserve pits?
• Will the company agree to more than the 50’ setback from watercourses required by current
• Is wastewater regulated as a toxic by-product?
• Can I get a lease to require that drilling muds and “produced” fluids coming up from the
boreholes be removed from my property?
• Will the lease guarantee that deep well injection of wastewater will not be carried out on my
• Where can I find a government report that shows the effects of gas drilling on quality of air?
• Does my town have air quality standards for ozone that gasdrillers are required to meet?
• Who monitors drill sites for air pollution violations?
• What is flaring and how does it affect air quality in my neighborhood?
• Has there been a study to gauge how the impact of increased truck traffic will affect my air
• Is there a county infrastructure impact study for the gas drilling planned by the company?
• How will the county and town measure the impacts on infrastructure?
• Who bears the financial burden of road repair? Wastewater treatment plant expansions and
maintainance? Increased use of emergency services?
• How is soil surrounding the drill pad site protected from contaminants used during drilling? From
herbicides used to keep pads weedfree?
• Who monitors reserve pits at a drill pad site? How?
• How is the soil protected from reserve pit run-off, leaks or spills?
• How are reserve pits cleaned up?
• Are companies required to submit a soil remediation plan for a drill site in the event of soil
• How is contaminated soil disposed of?
• Will there be a reserve pit associated with this pad site?
• How many gas wells are planned for this pad?
• Have you talked to your neighbors? How do they feel about gas development in your
community? On your property? On theirs?
• How has the [village, town, city, county] prepared for a drilling accident?
• Is there an evacuation plan available for the neighborhood in case of accident?
• Has my [village, town, city, county] fire and police departments trained for disasters related to
gas drilling, possibly in an urban environment?
• What is a typical blast radius for a gas well explosion?
• What training, protocols and resources are in place to protect medical first responders, as well
as secondary responders such as ER staffs, from the drilling/fracking chemicals that the gas
company will not reveal?
• Does my town have a fully-functioning, quickly-responsive ambulance service?
• Who is responsible for damage to my property in case of an accident involving gas wells?
• How do neighbors contact the company with complaints of excessive noise, obtrusive lights
and dangerous truck activity?
• What are my legal rights to preserve a reasonable quality of life during the life of the well?

You have a lot of good questions.

First remember good things come to him[her] who waits.

Suggest that optimum terms are $5000/acre bonus for 5 year lease [$1000/acre/year] signing bonus with some of it paid immediately on signing for your time and trouble.  You may not see any money after that.  Landmen come in waives signing as many as they can at one price - disappearing only to come back again ...  and again.

Every parcel is important to them - large or small.  Some advantages are gained by working with your neighbors - strength in numbers, but a critical small parcel does well.  With tight formations from which they literally have to blast the gas loose, it is not possible to drill holes around an unleased property and get the gas - at most very little of it.

Companies like Range say they already have enough land to keep them drilling for 75 years.

At the end of primary term perhaps only one well will be drilled in a large unit [that may only include a small portion of your land] to hold the lease virtually forever.  It may be a while before serious drilling occurs.  The bonus could be the only serious money you see for a long time.

Environmental concerns appear to be overstated.  Big companies spending millions do not want problems - but occasional mistakes are made.  Any problems are highly published but represent a small percentage of the operations.

Operations during drilling are not fun unless you like lots of noise and traffic problems, but these operations should pass fairly quickly.  However, expect the operation to come back in the future with more drilling into the same formation and other formations.

Rights of way are a matter of concern and could interfere with property use.

The value of your surface property could be adversely affected as well of the marketability as potential buyers worry about what might happen in the future.

Production from wells should more than compensate for any loss of value to the surface.

All leases are negotiable.

Companies can work with reasonable provisions.  Leases vary substantially from company to company and even the same company may have variations in so called "standard" leases.  There is no standard universal lease.

If companies drill horizontal wells costing millions of dollars 500 feet apart, it suggests they can only draw efficiently gas for about 250 feet, even after fracking.  Perhaps this also confirms that the gas is extremely unlikely that the gas will rise from a mile deep horizontal hole to the surface.  You will search in vain for a case where such a thing has been proven to have happened.

Do your homework.  Millions of sites exist for the Marcellus on the Web - and it is useful to Google the Barnett Shale to see what has happened after all the horizontal drilling and fracking in Texas.  Fort Worth, an urban area is cluttered with Barnett drill sites.  Drilling and environmental practices continue to improve.  You obviously have an inquiring mind.  Use it on the Internet.  Penn State site is one with much info and Pitt [particularly as to environmental aspects] and Carnegie Mellon is involved.

It is a fabulous time.  Lots of good and some bad.  In addition to your own extensive research, after you find financial terms that are generally acceptable, finda lawyer who has some knowledge of the subject to help you.  The lease terms are extraordinarily complex and written gbyi and for the producers.

Do not lease minerals or strata that can produce with shallow drilling.  Limit what is leased as much as possible.  Do not include coal bed gas without investigation.  Do not lease storage rights until the the strata for storage are fully produced and agreement is reached as to satisfactory terms.

The word "minerals" does not include oil or gas [with limited exception and subject to the outcome of the Butler case].  Minerals should not be leased as part of a Marcellus, Utica or other lease anticipating horizontal drilling and fracking.  Minerals are the subject of entirely different considerations when they have commercial value.  

and more




If you insist they will. If they don't. don't sign. Otherwise a very competent company!
Thank you for your questions.
Looking at this lease... in the section talking about royalties, it talks about deductions for compression and transportation. What exactly is transportation? How much is this going to affect my royalties?


You only want GROSS royalties and no considerations for their operations logistics.

This means no deductions.

Plus, of course, a good signing bonus per acre and anything over 12.5% as your royalty percentage.



I think the snyder "2011 Sale" is not a good deal. First, 10 years is a long time to hold to a property. 2nd the lease is for minerals and many of us would like to lease just their gas/oil. Also the royalty to the landowner is loaded with too many deductions and appears not very good to the landowner. Lastly the commisson or earnings for snyder seem excessive..considering I dealt with a similar land deal in which the promoters worked on a lot less commission. Just my opinion..but I think we will keep working other options!
The problem with Snyder Brothers and some other locals is that the idea of paying more than the 1/8th they have been paying for years really upsets them -- until they find some Texas or Oklahoma firm to buy their collection of leases and then they want an 8 to 10% override to transfer the leases to the spenders. Optimum royalty is still 29% with a front end bonus of $5000/acre for 5 years. These guys know they are not only getting the Marcellus, they are getting the Utica and another shale that could be just as rich.

When they start saying deal with me because I am local and you can trust me - watch out!


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