I saw Rice's lease contract last year offered to a friend of mine. It included a clause that the landowner could not talk about how much he was paid or details of the lease. Why would any company include this clause in their leases? Something to hide more than likely.
There were several paragraphs that would keep a knowledgeable landowner from signing this bad deal. I posted examples on this website of why I wouldn't sign with this company.
Interesting. I would think all boiler plate leases would have some type of wording stating not to talk about the bonus/% that was negotiated? Could you please point me in the direction of your examples? I rarely see anything about G.C. or Rice so looking to learn all I can.
To Trusting Souls,
Below are the paragraphs that were in this companies lease to my friend. I added a note below each paragraph explaining what the O&G company was more than likely trying to accomplish by writing these paragraphs. I left out the paragraph that silences the landowner from warning a neighbor or friend not to sign this bad lease.
Most people are trusting souls. That's a great way to live until someone who has no Ethics destroys your ability to trust others. I learned that lesson very early in my life when the cost was less than $20. I saw a Trusting Soul busted by Chesapeake in 2014, it's not a pretty sight. The lesson all of you will learn will potentially be in the Millions.
Do what you want. Like the State Of Ohio tells it's landowners: "This is not my problem".
---------------------------------------------------------------------------------- The Contract--------------------------
LEASE DEVELOPMENT. There is no implied covenant to drill, prevent drainage, further develop or market production within the primary term or any extension of term of this Lease. There are no covenants implied or otherwise. Provisions herein constitute full compensation for the privileges herein granted.
This being a contract, you will have signed away your future wealth for $5,000 an acre. The courts will more than likely not be able to break this contract once signed. Normally a lease is signed for Drilling and Well production. If the company doesn't "produce in paying quantities" the lease ends after the primary term. State laws and courts uphold this to protect landowners who didn't intend to sell their minerals, and only lease them for potential development. I've never seen a paragraph like this. The O&G companies are getting smarter as the courts take action to stop their attempted theft.
Along with the above, all of these paragraphs have to go:
CONVERSION TO STORAGE. Lessee is hereby granted the right to convert the Leasehold or lands pooled/unitized therewith to gas storage.
Columbia Gas has a large underground storage field East Of Lisbon that they have paid very little or nothing to the landowners for the storage rights. Now they are trying to claim the fields as their personal Oil & Gas fields even though they have no real claim to the minerals. This went to court.
DISPOSAL AND INJECTION WELLS. Lessor hereby grants to Lessee the right to drill wells and/or re-enter existing wells, including necessary location, roadway and pipeline easements and rights of way, on any part of the Leasehold or lands pooled or unitized therewith for the disposal and/or injection into any subsurface strata, other than a potable water strata, of air, gas, brine, completion and production fluids, waste water and any hydrocarbon related substances from any source, including, but not limited to wells on the Leasehold or lands pooled or unitized therewith or from properties and lands outside the Leasehold or lands pooled or unitized therewith, and to conduct all operations as may be required, for so long as necessary.....
Once a producer starts injecting waste products into the ground they won't drill in that area for Well Products for fear of drilling contaminated areas.
TITLE AND INTERESTS. Lessor hereby warrants generally and agrees to defend title to the Leasehold and covenants that Lessee shall have quiet enjoyment hereunder and shall have benefit of the doctrine of after acquired title. Should any person having title to the Leasehold fail to execute this Lease, the Lease shall nevertheless be binding upon all persons who do execute it as Lessor.
Never warrant title, take a look at what this means and why you should never warrant title.
I received an offer last night from a Rice rep "landman" $1000/acre/18% yearly/until production for 5 years (with some kind of renew option. ) Greene County / Wayne twp. but NOT for Utica Only. all depth.
Wondering if anyone else in Greene/Wayne getting offers from Rice or anyone else?
He mentioned Rice has acquired or will acquire Alpha leases in that area.
Also currently have an offer to "BUY" O&G rights at that same Greene/ Wayne TWP for $7500/acre from another company.
.Any advice is greatly appreciated.
See the PPG article I posted today on Rice trying to buy 27,000 Greene County mineral acres, in fee, for $7,500/acre, out of the Alpha Bankruptcy.
That's less than it was recently leased for.
The creditors are going to scream bloody murder and Rice will get its backside handed to them and look badly in the process.
Locals should contact the Bankruptcy Trustee and offer $10,000/acre.
CHK sells leases, akin to ice cubes, for $30,000.00 acre.
Jump on it.
I would be on those minerals like a duck on a June Bug, but I'm tied up with industry dead beats, blow-hards and no accounts in Texas.