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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It could have an impact, anytime you carve up an asset that has a total value of "X" and sell it off in pieces you risk selling the individual pieces for value that adds up to be less than "X".  Plus you have the potential for conflicts in the use of the surface for purposes of siting pads and other production related equipment.  I would counsel against it, but you would need to assess whether or not you even have the potential to lease your deep rights... I have no clue where your land is and there may be absolutely no potential for deep production.

Thanks for the reply Jim.

We have had offers in the $2,000 range for our deep rights but they wanted the shallow rights included.  I  know I'm trying to double dip here but it might end up biting me in the rear.

Rex, the most important factor is your royalty percentage and terms. Get the highest percentage offered in your area and make sure it is gross royalty. That is the best way to maximize your proceeds. The bonus $500 per acre will not be as important once you accomplish the royalty terms.

separate shallow from deep with a depth-restricted lease.  First lease 0-2500', second lease 2501' and deeper.  Why give the shale companies everything when all they want is the shale gas?  You'll be leaving money in the ground.

That's one possible scenario... assuming nothing negative in the way of a nearby well getting drilled into the shale with less than good results. If that happens, nobody will give you squat for your shale rights.  It's always a crap shoot until areas get drilled out and de-risked.

and that's always a big "when and if"....................

Yes it is Jasper... which is why you can't make unequivocal statements that suggest there is a right way or a wrong way to go about the leasing game.  When there are so many unknowns you can't always make an intelligent decision.  This poster may not be leaving money in the ground as you stated... he may be like the hundreds of people in Columbia County, PA that got paid nearly $3,000/acre in lease bonus monies for acreage that turned out to be virtually worthless in terms of Marcellus Shale productivity.  Not all Shale is created equal.

I've got news for you: if someone is paying $500/acre for shallow rights they're after a shallow shale.  There's a Devonian shale here in Ohio that has huge potential for gas production if the price is right.  I know less about it in Rex's neighborhood, but I'll bet even money that whomever is trying to lease him at that price has a shallow shale formation in mind.

sorry all..................I'm referring to Venango / Crawford Co., PA.  We have no "shallow" productive shales here that lie that shallow of a depth.  Formations (i.e. sands) less than 3000' here have the potential of conventional natural gas and oil.

Along the Crawford/Venago border lies the Rhinestreet formation, Upper Devonian. Not sure of the total organic carbon nor thermal maturity, but it may be a very productive play based upon total thickness of the black shale. Just north in NY it looks to be in the oil phase and plenty of thickness and carbon content.

those formations do not lie above the shallow venango & mississippian sands, they lie below them, and are considered "lower devonian" - check this out with a geologic/formation chart that is redaily available from the PADEP Bureau of topo. and Geo.


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