Replies to This Discussion

Permalink Reply by Sam Douglass on February 24, 2010 at 3:35pm

Be patient. 10 acres is likely to block access to other acreage.

Permalink Reply by Sam Douglass on February 19, 2010 at 3:49pm

Chesapeake has a good rep as far as I know. Leases come more close to being fair but still require review and attention. Chesapeake's enhancement clause is particularly helpful to landowners. Holdings are so large the question may be - When will Chesapeake get to your property?

Last I looked, I think Chesapeake was averaging above 4 million cubic feet [4000 mcf] a day on initial production.

Its leases in Wyoming County Pa were at $5750 acre bonus and 20% royalty

Permalink Reply by Bill on February 20, 2010 at 2:46am

Even though Dale offered more, I am leaning towards Western and Rex. They seem ready to move in Forward and we are only a few miles as the crow flies from the compressor station in Connoquenessing... Plus, they just seem to be more forthcoming with info...

Permalink Reply by Sam Douglass on February 20, 2010 at 8:50am

May be OK but do not go by personalities and land man promises. At the end of every O&G lease there is the "Do not believe a word I told you" clause. Basically, if it is not in writing it does not count, and every work in the document is important to the Lessee or it would not be there.

Ask the Chesapeake guy to explain the "market enhancement" clause and see if there is something similar in the other leases.

There is unlikely to be any rush. Some day next week or 30 years from now they will have to have your property. But if you need the money now so be it.

sam

Permalink Reply by SHELLY OSWALD on February 22, 2010 at 2:42am

The gal my mom is working with in West Deer alleg co has been very forthcoming.

Permalink Reply by Sam Douglass on February 20, 2010 at 9:22am

I like the line: "we will just suck the gas out from under you anyway"

It's not so easy with the Marcellus to suck from the property next door. You probably know about fracking by now. In order to get any gas from the Marcellus it has to be fracked to open up crevices that the gas can come through. The shale is not porous like sand formations that allow the gas to travel considerable distances.

The underground horizontal wells are typically drilled in parallel lines only 500' to 600' feet apart. This suggests that even with fracking the drillers can only effectively produce gas for a distance of 300' or so from their horizontal lines. That makes it tough to take much gas from a neighbor's property.

In my experience, the producers want every piece of land leased - even the small ones.

It is best not to be in a hurry. There is every reason to believe offers will improve over time.

Sam Douglass

Permalink Reply by SHELLY OSWALD on February 20, 2010 at 9:54am

My mom is in west deer twp in Alleg co and just received an offer from Chesapeake for $3000/ac 5 yrs and 18% with only the marcellus layers leased - the upper layers are realeased ... she has about 36 acres. They are working to get a unit together.

We are in forward twp and the Rex rep said he was trying to get $2000/acre for our 12 acres ... I would consider $3000/ac, but not $2000 ...

Anyone going to Penn State meeting on mon?

Permalink Reply by Sam Douglass on February 20, 2010 at 11:42am

Wait for at least $5000/acre [maybe $6000] bonus and 20% royalty with a market enhancement clause that will restrict deductions before applying percentage.

Unless you need the bonus money now to stay out of jail.

Permalink Reply by SHELLY OSWALD on February 22, 2010 at 2:39am

no ... no need for money to bail out of jail!! With only 12 acres, I don't feel like I am in much of a position to negotiate hard ...

Permalink Reply by Sam Douglass on February 24, 2010 at 3:31pm

12 acres is likely to be a problem if they do not get it. Be patient

Permalink Reply by Jon on January 3, 2011 at 4:18pm

Hi, I just joined this group and am trying to figure out what to expect from a lease. I have property in cherry twp. It sounds like $2500/acre with 15% commission and $80/acre a month. Is this  close?

 

Also, I saw someone mention that they give you a certain amount of money every year that they renew a lease. Is this true? If so, what should you expect per year?

 

 

Permalink Reply by Sam Douglass on January 4, 2011 at 5:07pm

Does not sound like much to me - on the cheap side.  In time the offers should get much better.  And no doubt, it is a form of lease that is far less than fair.  By the way, it makes a lot of difference what the 15% is measured against, the imaginary price at the well head or the price at which the stuff is actually sold.  At least one big operator tried to get out of paying royalty on the valuable liquids milked out of the gas and sold separately.

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