What should I expect, per acre, on a re-lease of my property in Middlebury Center?

We live in Middlebury Center - have 12 acres on a 5-year lease that just expired a week ago. Shell just contacted us today to come out and discuss re-leasing our land. I thought Middlebury Center was a dead zone for re-leases, but I guess not? What would the approximate expectations be, in dollar figures, per acre of re-leased land here?

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Permalink Reply by Trapper on July 5, 2013 at 1:53pm
Gringo I am the last person you should call a "gas lander". I just don't believe the Gasco holds all the cards. If a landowner feels he is being ripped off he has the right to hold out , that's all. But it would take guts to do so. I thought I stated that clearly the first time.
Permalink Reply by Gringo on July 5, 2013 at 11:30pm

Glenn, as with a gas lease one word can change the meaning of a sentence IF. The problem is, in the northern half of TC Shell does hold all the cards. I totally agree you have the right to hold out. Feeling that you are being ripped off is not good enough, everyone needs to be educated. If the landowners don't know what they have, how can they know what is a fair offer. Each county/township/parcel is going to be different and have different values.

Permalink Reply by Michael Reid on July 6, 2013 at 12:04am

Well, everyone - I much appreciate all the feedback received through this post. Learned a lot, actually. Tentatively, we have a meeting schedualed here in Middlebury Center, Tioga County PA with the Shell representative (Drill Site Title Agent / Independent Landman - as they are now called, I guess) on Tuesday. I'll let everyone know the offering / details, as to keep the information flowing.

Permalink Reply by NANCY A THOMAS on July 6, 2013 at 12:30am

where is this meeting going to be held?   wish you all the best of luck.  Thank you

Permalink Reply by Michael Reid on July 6, 2013 at 12:46am

This is not a public meeting - rather a standard one-on-one re-lease meeting at our home here in Middlebury Center.  Our original lease with East Resources expired on June 27th.

Permalink Reply by NANCY A THOMAS on July 6, 2013 at 1:21am

thank you. I wish you the best.

Permalink Reply by Trapper on July 6, 2013 at 3:17am
Thanks Michael. Please do keep us posted as many of us may be in the same shoes in the next few years.
Best of luck!
Permalink Reply by Brian Day on July 7, 2013 at 12:59pm

Here are some questions I would ask at such a meeting:

  Am I recieving the same lease, word-forword, that I have had for the last five years?  Can i take the new leease and my old lease to a lawyer to compare them before i sign?

  Is there a restriction on the unit size i am to be included in?  Is it larger, the same, or smaller?

   Are you primarily interested in the Marcellus, or the Utica, or the Black River Trenton, or any other formation?

   What is my royalty percent?  Will production costs be taken out of that amount?

   Can i be held by production?  Isthere a definite definition spelled out of held by production in this lease?

   Will a pipeline right-of-way be a seperate lease?

I am sure others will suggest other questions abour storage etc.

    Way back in the beginning of this whole deal, we were told the companies were interested in the Blackriver/Trenton and the Marcellus was barely mentioned,if at all.  Now the leases are to extend rights for the Marcellus and probably the Utica or other formations will hardly be discussed.  I think the Utica will really be the cash cow in the future.  That future may be decades away, so is $300 an acre for the Utica worth the hassle these crooked landmen dish out?  I guess that is an individual decision as each person's lease expires.  $300 an acre might be alright for dry gas Marcellus alone right now.  Ask for a depth pugh clause limiting drilling to the bottom of the Marcellus and see what expression crosses their faces.

   Remember, the pooling or unitization of the Utica will fall under the DEP's jurisdiction if they choose to stick an oar in the kettle.  Any unitization language is very critical and worth a look-see from a lawyer.  In the West, units are sometimes combined into larger conglomerations and landowners find themselves held by production from a well many, many miles away and they receive no royalty from that distant well pinning them down indefinitely.

   the stat minimum of 12.5% royalty with no transportation and production costs is being reexamined.  there is no telling how that will turn out.  i would rather have a 12.5% royalty clearly defined as totaly exempt from transportation and production costs on my lease, than trust the politicians to decide in my favor in the future.  i would rather have such careful wording in my lease than a 15% royalty with the unprotected possibility of that royalty vastly whittled down by production costs.  If your lease states such deductions are allowed, your 15% may not be protected to even the state minimum of 12.5%.

  If none of these major points are not addressed and you can afford to back away and wait for more leases to be surrendered as the Utica play in the area developes, I would tel them thanks, but no thanks.

   Lastly, i do think landowner groups, as painful as they may be, should be formed again in the next year or so.

Permalink Reply by Thomas Lilli on July 7, 2013 at 1:06pm
Good advice, and have a G&O attorney review it as well.

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