Will leasing shallow have impact on leasing deep rights?

Have a company interested in our shallow rights above 2500 ft. on our land that sits between Crawford and Venango County.   The offer was for $500 an acre.  

Will this have an impact on what we can get for our deep rights?

Anyone have experience with this?

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Permalink Reply by Jack Straw on June 25, 2012 at 5:23pm

I will offer an opinion (tinged with guess).

The small time operators who drill the shallow sands are one group.

The large operators who drill the deep unconventional horizontal shale wells are another group.

There are a few mid-sized operators who have "moved up" from drilling shallow wells to now also drill deep unconventional horizontal shale wells - a group that overlaps both of the above.

The danger in leasing both the shallow and deep in one lease is that the operators drills a marginal shallow well in order to hold the acreage by production - intending to sit on the deep until some indeterminate time passes.

I would only consider leasing both shallow and deep in one lease IF there is a vertical Pugh Clause inserted to protect you.

My inclination would be to separate the shallow from deep, leasing to two operators. But, that is my prejudice.

Whatever you consider doing - do not sign anything without first having it reviewed by an atttorney with O&G experience.

 

All IMHO,

                        JS

3uq96odaochmjPermalink Reply by 3uq96odaochmj on June 25, 2012 at 5:45pm

very well put!

Permalink Reply by rex roae on June 25, 2012 at 7:25pm

Appreciate all the replies.  Forgive me for not saying much but I've learned it's sometimes better to keep your mouth shut and just listen.*grin*

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