Replies to This Discussion

Permalink Reply by Finnbear on November 4, 2011 at 11:14am

No experience with them but I do know they recently became interested in Ohio's Utica shale.What have you seen?

Permalink Reply by Inquisitive on November 4, 2011 at 11:29am

Received a letter this week. We are one of the few remaining near flushing that hasn't signed. We requested a copy of the lease agreement. They did send that but we wanted to get more info, if possible, before talking with them.

Permalink Reply by Finnbear on November 4, 2011 at 11:49am

Is it a decent offer? What are the terms of the lease? Does it offer the landowner protections that a landowner group would command?

Permalink Reply by Inquisitive on November 4, 2011 at 12:06pm

it is 5000 per acre with 12% royalties. 5 years with a 5 year option. we are new to this-new as in wednesday- so understanding the lease with regards to protection, i have no idea?

what do the landowner groups command?

Permalink Reply by Inquisitive on November 4, 2011 at 1:12pm

It is 17% royalties, I'm sorry

Permalink Reply by Finnbear on November 5, 2011 at 8:13am

Landowner groups are able to demand numerous protections be written into the lease. There are a myriad of things you don't want to allow the oil and gas company to be able to do with your land under the oil and gas lease contract. You don't want them to be able to use a well on your land as a disposal well. You don't want them to be able to convert a well on your land as a storage well under the original lease. You don't want the oil and gas company to be able to put a pipeline across your property that transports gas from other wells. You don't want to allow compression stations to be placed on your land under the original lease. These things are all OK to do but should require a separate contract and compensation to be negotiated between you and the oil and gas company and should not be allowed under the original lease. Most oil and gas company standard (boiler plate) leases allow all these things and they will do them if you sign a standard lease. Beyond this are all sorts of things that you as a landowner will find out down the road that you should have included in your lease. Things like well location (who decides), surface use (how much will they compensate you for the acreage used temporarily and permanently due to oil and gas production), are you paid a gross or net royalty (always want paid on the gross, never allow them to pass on production costs), water usage, water testing, impoundment pond location and restoration, unitization/pooling specifications, renewal clauses (what exactly does their renewal clause mean), etc., etc., etc..

Don't sign anything unless you fully understand the ramifications of EVERY clause in the lease. Don't get blinded by the "easy money" presented in the signing bonus. You will live with the contents of that contract for the rest of your life if they drill and you don't want to regret it every day for the rest of your life. If you don't completely understand the lease by reading it through, pay a good oil and gas attorney (NOT a general practice attorney) to explain it to you. It will be money well spent. Landowner groups can get all these protections agreed to in a lease because they present tens of thousands of acres to the oil and gas companies in one negotiation. Hundreds of landowners can bring to light all the considerations that need to be made in the lease due to the different perspectives and thought processes they all bring to the table.

If you sign a standard oil and gas company lease as they wrote it, you are begging to be abused by the oil and gas company and they will gladly oblige you. It is imperative that you use good legal counsel to help you avoid the pitfalls included there. You can have some of these things written into a lease as an individual but your legal fees will be considerable and the oil and gas company will likely offer less because of the time their legal dept has to spend on your individual lease.

Permalink Reply by Finnbear on November 7, 2011 at 4:51am

What area (township) of Belmont county are you located in?

Finnbear

Permalink Reply by 2s72s0k9mm8gd on November 5, 2011 at 12:51pm

Hilcorp leased up something like 20,000 acres here in Lawrence County PA recently for $3000 /acre and 17% royalty (no deductions). They did this through an outfit called Co-Xprise who represented the group. Co-Xprise fees were 8% of bonus (240.00/acre) and 5% of royalty (.85%) for the 1st 5 years of royalties.

Would be interested to know if C0-Xprise is down your way AND has Shell been leasing yet in your area yet?