What about people who have current leases (pre-"Shale rush")

My neighbor, unfortunately, signed a lease in 2006.  I haven't seen the lease, but it is with Equity Oil & Gas Funds, Inc., PC Exploration, Inc., and Reserve Energy Exploration Co..  I believe the lease is for 10 years, and they get $5/acre/year (~$700/140+ acres).  There is no well on their property.  Is it possible to "get out" of such a lease?  I feel so bad for them.

Views: 9323

Replies to This Discussion

Permalink Reply by Finnbear on September 24, 2011 at 4:49pm
Those companies that only paid $5 an acre can probably afford to lose a few hundred $ here and there on leases they don't get to before they expire. The ones where they are paying thousands per acre now for the lease are where you will see all sorts of crazy maneuvering toward the end of the lease terms as they try to hold on to their investments. Its a lot easier for a company to stomach losing a  $500 investment from 5 years ago on a 100 acre parcel than will be to lose a half-million dollar investment on that same 100 acre parcel 5 years from now.
1feawc4f7m9v7Permalink Reply by 1feawc4f7m9v7 on September 27, 2011 at 6:43am

Elise,

This is John at Northeast, My company deals with these situations all the time. Usually what happens is these companies have no intentions in drilling they just sign up landowners to sell the lease to a bigger company and make a profit. It's not impossible to get out of a lease depending on how it is written. If your neighbor is interested we can take a look at the lease to see if anything can be done. There is no fee for us to review the lease. Have your neighbor give us a call at 724-359-5035,ask for John or Jarett

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on September 27, 2011 at 9:47am

John, What is your fee if you think you can do something?

1feawc4f7m9v7Permalink Reply by 1feawc4f7m9v7 on September 27, 2011 at 10:36am
Tom, If we are able to get you out of a bad lease our fee is 15% of the signing bonus. This covers our time attorney fees and renegotiating a new lease. You don't pay us anything until you receive a check for your signing bonus then you write us a check. If we can't get you out of the lease you owe us nothing.
Permalink Reply by Finnbear on September 28, 2011 at 3:05am

Tom,

Something to think about. If you hire a lawyer and he gets you get out of the old lease you now have an oil and gas lease related expense. If you sign a new lease, you can take that expense directly off of the tax liability incurred by the new lease bonus payment. I'm not sure if the 15% fee mentioned by John falls into that same category - consult your tax adviser before you do anything.

Permalink Reply by Matt on September 30, 2011 at 2:46pm
They are pretty good scam artists. Our lease was from 1990. Along came a check in the mail one day in 2006. My dad calls the company and asks what its for they said it had to do with the old well. He cashes it. What he didnt know that from 1990 until 2006 no money was paid to my grandpap for the lease he signed in 1990. My pap died and one of the above companies sent the check somehow when you cash the check it renews you lease???? Is any of this possible.
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on September 30, 2011 at 5:25pm
They have to pay you. Just cashing the check 16 years later isn't normally enough to hold it. Call an attorney.
Permalink Reply by RJ Morgan on October 5, 2011 at 3:30pm

East Richland Friends Church had signed with someone (not sure which co) about five years ago for $5/acre. Things certainly have changed now.

Permalink Reply by Corvette on October 7, 2011 at 12:26pm
I have 14 months till my lease expires with Range. There is no renewal clause-had that taken out. Wondering how long it takes to get a permit to drill? Range keeps telling me nothing is going to happen, no plans to develop my land. May sound crazy But I've asked them about selling me back my lease, waiting on a reply.
Permalink Reply by RJ Morgan on October 7, 2011 at 12:43pm
Where in general are you located? Are there any pads near you, or new leases?
Permalink Reply by Corvette on October 7, 2011 at 12:46pm
I'm in Jefferson county Ohio. There are no pads, but alot of new leases.
Permalink Reply by RJ Morgan on October 7, 2011 at 12:57pm
Yes, the Monday after we signed, which was about two months ago, Marquette signed $130M in new leases up your way at $3700. I certainly wouldn't give up, regardless of what Range does or does not do. I recommend researching how close Hess, Chesapeake, etc. is to your area. It works in your favor as time passes simple because the amounts keep going up and up. Exxon purportedly signed people at just under $5K/19% a mere 50 days or so after us. From what I am reading about the Bakken and Eagle Ford, if the oil here is as prolific as I am reading and hearing, people are definitely getting low-balled. Considering my family had no extra income a few months ago, I am not complaining. The real money is in the royalties, and almost everyone is up in the 16-19% range now due to competition. Jefferson, Harrion, Carroll and Belmont are the counties to be in.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service