$200 Per Acre, 2 Year Lease?
A man dropped off a contract with us, Mike Frizzell says his card. This contract is for Two Hundred dollars an acre, for a two year lease. Does this sound right to anyone? Everyone I know has gotten more like two thousand per acre. He explained about 680-acre-lots and whatnot, and my neighbor (farm land) has already signed. My other neighbor, (woodlands), is between us & the farm, & he has not signed either, & is voicing the same questions as we are. Why only offer 10% as much as what families that live only a mile from here received?
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Replies to This Discussion
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Permalink Reply by George Brown on
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Most bonus payments refer to a 5 year lease. So when you hear $2000 per acre, that's for 5 years so it amounts to $400 per acre per year. In your case, if he means $200 per acre for two years, then that would be $100 per acre per year. Does he mean $200 per acre per year? I can't really tell from your question. In either case, it seems much lower than the "going rate" of about $3000 per acre (i.e. $600 per acre per year for a 5 year lease).
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Permalink Reply by Oliver Perry on
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Who is the company that offered you this, and what township are you located in? Any way you look at it the offer seems very low.
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Permalink Reply by Tim Tarr on
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$200 an acre for what? what is the Royalty rate? Is it just for Marcellus, all formations or some other formation?
I would consider $200 for 1/4 (25%) Royalty but for 1/8 (12.5%) I would want at least 2K for Marcellus only!!
Probably best to wait for better offer in a few years. Natural Gas prices are low and O&G companies are trying to lock up (HBP) current leases. With that 2 Yr lease I'll bet they are trying to form a unit to HBP other Leases around you.
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