When Is It The Right Time To Start Shopping For Another Gas Company ?

 

I have an Old Lease, due to expire in less than 7 months. The gas Company contacted me Dec of 2010, wanting to keep the existing lease enforce by offering an extension for an additional 3 years and a new bonus and royalty amount.

I met with a land man the  first of Feb, then the first of March I found out he is not my land man any more. I contacted the gas company myself, and no one has any idea who my land man is /will be. Here it is mid to end of April and still no more contact from the gas company. I feel like they have left me hanging in limbo. I would like to lease or sell the surface land but this is also hanging in limbo too due to not knowing how things are going to go with leasing the Mineral Rights.

 

So my question, Should I start shopping for another Gas Company ? If so when ? Do I have to wait out the less than 7 months until this lease expires or can/should I start shopping for another company now ?

 

Would appreciate any thoughts and help with this matter.

Sarah

 

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Permalink Reply by Frank Walker on April 18, 2011 at 6:25pm

Sounds to me like you need to shop for the best O&G lawyer you can find.  And they are not easy to locate.  Many lawyers claim to be expert in O&G work . . few really are.

 

If you use all the time you have remaining to locate the right lawyer, you might end up OK.  If you place your fate into the hands of a land man, any land man . . well . . God help you.

 

The lawyer works for you.  The land man does not work for you.  It's not the same thing.  It makes a positive difference having somebody working for you!

Permalink Reply by Mike Flor on April 18, 2011 at 8:36pm
Sarah, the gas company may be doing you a favor.  let the lease run out.  Then ask for a surrender of lease to be filed in the courthouse.  Then start shopping for a new gas company.  I would not resign unless terms/bonus are competative in todays market.  Not sure where your location..however it has been best to shop around for a good deal.
0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 18, 2011 at 10:01pm

Hi Sarah....

Look and see if your addendum /and or contract has a 'right of first refusal' clause.   If it does...go shopping and let the other company know you have that clause.

 

Here is what the clause states on my lease contract (the addendum)

"If , at any time within the primary term of this lease or any continuation thereof, or within six months thereafter, Lessor receives any bona fide offer, acceptable to Lessor, to grant an additional lease (top lease) covering all or part of the afore described lands, Lessee (the gas company such as Chief) shall have the continuing option, by meeting any such offer, to acquire such a lease. Any offer must be in writing and must set forth the proposed Lessee's name, bonus consideration and royalty consideration to be paid for such lease, and include a copy of the lease form to be utilized reflecting all pertinent and relevant terms and conditions of the top lease. Lessee shall have fifteen (15) days after receipt from Lessor of a complete copy of any such offer to advise Lessor in writing of its election to enter into an oil and gas lease with Lessor on equivalent terms and conditions. If Lessee fails to notify Lessor within the aforesaid fifteen (15) days period of its election to meet any such bona fide offer, Lessor shall have the right to accept said offer. Any top lease granted by Lessor in violation of this provision shall be null and void."

I had heard that Chesapeake doesn't have that clause and this one is on a Chief lease.  But with only seven months left I would say that if you do have the clause then go shopping.

Know this is you do have the clause and the new company wants to negotiate...they will only offer you some upfront monies and will give the rest at the end of your primary lease...so make sure you negotiate the best you can...of course the primary leaseholder may indeed want to match the offer.

Permalink Reply by Bill anders on April 20, 2011 at 12:48pm
This situation definitely does not require the use of an attorney.  Talk to your neighbors, and get into contact with the companies in the area that are currently leasing.  They will do all this research for you, get you a copy of your original lease, and you have successfully begun shopping your acreage all by yourself.  Compare offers, leases, and sign with the company who gives you the best deal...not that difficult actually.  You will not have your own personal landman the rest of your life, not how that works.
Permalink Reply by Susan Lynne on April 22, 2011 at 9:47am
I am new to this entire process but I am eagerly and busily learning as much as I can.  I recently inherited land from my father which came with a lease with Chesapeake which expires this October 2011.  I own 25 acres in Bradford County, Sheshequin Township.  I had been contacted last year for a seismic study, which was completed.  I do not live in the area, the land is not developed and I am not certain where I stand in the larger picture.  Can anyone suggest an attorny whom they have found success in dealing with for their lease?  My father signed for what has been explained to me as the least the company was required to offer by law.  It was 5 years ago.  Do you think I should visit the area?  It's about a 5 hour drive.  Thanks for all the advise you can offer!  This site rocks!   
Permalink Reply by Ann Ticopa on April 22, 2011 at 11:04am

Afaik there is no minimum bonus payment required by law. There is a minimum 1/8 (12.5%) royalty requirement.  One thing to confirm - if you haven't already done so - is that Chesapeake has your name/address on their records as the current owner of the property. 

 

I suggest joining the Bradford County group and asking there about the activity in the locality where your property is located.

 

 

0jw0dsu4txfuvPermalink Reply by 0jw0dsu4txfuv on April 22, 2011 at 11:46am
If there are wells in your area talk to the landowners. Go to PA DEP Oil&Gas and check out your area activity. Not all land in PA has marcellus shale. The Operators drill wells and do sesmic testing to figure out how the shale runs. Now you can wait for the Operator to get back with you are just hold off. If It was me I would get them to give up your acerage and make sure it is filed. Sometimes being to fast to get the cash hurts you.
Permalink Reply by Mike Flor on April 22, 2011 at 2:49pm
Susan, I would use Lester Greevy out of the williamsport area for legal advice.  It probably wouldnt be bad idea to visit the area after you talk with lester and get a sense of what going on in that township.  See if any of the local papers around there are on line and stay connected.  Good luck, Mike
Permalink Reply by Ann Ticopa on April 22, 2011 at 3:27pm

Towanda Newspaper
http://www.thedailyreview.com/

 

Permalink Reply by Susan Lynne on April 28, 2011 at 10:58am
Thank you for the reference. I appreciate it and will look him up.
Permalink Reply by Susan Lynne on April 28, 2011 at 12:08pm
I will visit the site and contact you with questions. Thank you too!
Permalink Reply by Henry J. Cittone on April 28, 2011 at 11:01pm
you should get well more than the 1/8 royalty.  Bonus should be in the mid thousands per acre.  20% pus for royalty.

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