Trying not to get ripped off.

We are almost ready to sign a lease with chevron in Greene county PA. we have 6 acres of leasable property and we will only be about 400 yards from the drill site. Chevron is offering us $3000/acre and 16% gross royalties. I have added an indemnification clause and a no surface operations clause. We are waiting to hear about the depth provisions that I want which are leasing from the bottom of the Tully layer to the top or the Oriskany formation.

What I want to know is does chevron really NEED our land because we are so close or could the just "go around"? Any help would be greatly appreciated!

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 11, 2014 at 1:40pm

Amber,

      A friend just leased in Greene County PA to Rice Energy, $6000 per acre and an 18% Gross Royalty. A good way to not get ripped off is to take a look at Rice Energy before signing for the $3,000 per acre. If you want a copy of the lease and Addendum's, let me know.

Greene County is in the Rome Trough which has a large number of shale plays. The Rome Trough extends down into WV/Kentucky where there are 16 oil and gas plays. It should be the same in Greene County.

Rice Energy just bought the Chesapeake leases so they are drilling.

One other thing, we are all getting ripped off by the producers when they pay us royalties, but the Bonuses were paid honestly to start with. Go for as much money upfront you can get, the royalty won't be anything if the states continue to allow the producers to have their way with the landowners.

Permalink Reply by Amber burkett on September 11, 2014 at 2:59pm
Thanks Ron. If rice is interested in leasing our property I may be contacting you. One question though, chevron is threatening that if we don't sign with them soon they won't lease with us and take our gas anyway.
Permalink Reply by Jack Straw on September 11, 2014 at 3:38pm

RE: "chevron is threatening that if we don't sign with them soon they won't lease with us and take our gas anyway"

That is a rather insidious statement on Chevron's part.

In PA, in order to record a conversation, ALL parties need to be aware that the conversation is being recorded.

I would suggest that you purchase a quality digital tape recorder (I like the Olympus brand ... about $200 for a good, simple to use one) ... and inform Chevron that you intend to record all conversations ... FOR THE RECORD .... with every recording, obtain acknowledgement that all parties are aware that you are recording the conversation.

In my opinion, a digital tape recorder is a cheap insurance policy ... if they are unwilling to speak ON THE RECORD, that indicates that whatever they state, they can later deny.

My guess is that were the conversation being recorded (with all properly aware that the conversation was being recorded) .... the Chevron representative would NEVER have stated "if we don't sign with them soon they won't lease with us and take our gas anyway".

If you have not spoken with an Attorney with legitimate Oil & Gas experience, I strongly recommend that you do so.

As a simple landowner up against Chevron .... you are a minnow swimming around in a shark tank.

All IMHO,

                 JS

 

Permalink Reply by Amber burkett on September 11, 2014 at 3:26pm
Another question if we held out would anyone come and get our gas later?
Permalink Reply by Dexter Green on September 11, 2014 at 4:08pm

Not if CVX builds a unit that surrounds you.  If they leave you out on an island they could easily make it nearly impossible for you to be in anyone else's future development plans.  It really is a matter of how your property sits relative to the proposed unit.  

Permalink Reply by Finnbear on September 11, 2014 at 4:43pm

6 acres? Not enough land to carry much bargaining power in most cases. You could very easily get donut-holed and left out of their drilling plans for good. Production unit sizes for horizontal wells are generally more than a hundred acres and they will just draw their units around you if you don't play ball.

Permalink Reply by bo boboski on September 11, 2014 at 11:39pm

What if the lateral is planned to go right under your house?

Permalink Reply by KAR on September 11, 2014 at 11:48pm

If you are not leased in PA the operator is not allowed to drill under your property. They can drill right up to or around, but cannot cross the unit boundary. However when it comes time to complete the wells and the wellbore runs right beside your property... they will definitely be taking your gas. PA is a capture state... first come first serve.

Permalink Reply by Tom Brian on September 13, 2014 at 3:24pm

Lets say you have 10 deer on your 6 acres, hunting season is on, they drift off your posted land , they get shot on the other side of the line , its bye-bye deer/gas.  the right of capture in the real world and Pa. don't hold tough too long or the gas will be your neighbors freezer.............or royalty check........

By the way why would you not want to be paid for all layers of gas under your land it is going into the unit pool anyway???

Permalink Reply by jason smith on September 12, 2014 at 6:21pm
Hurry up and grab a pen and sign the net lease before your gas gets stolen, the former used car salesman said.
Permalink Reply by jason smith on September 14, 2014 at 6:18pm
Yes, I don't want my gas and unicorns taken away.
Permalink Reply by jason irvine on September 13, 2014 at 1:15am
Is that for all layers? There are 3 formations under greene. You should be getting more. Good luck

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