Replies to This Discussion

Permalink Reply by 0i7okn54zwbdo on March 11, 2012 at 3:51pm

Haven't seen them pay more than that, but $15,000 isn't a bad payday.  Ever since this thing heated up people have lost a sense of reality when it comes to money.  Families making $50,000/yr gross are all of the sudden uninterested in leasing their 10 acres for a paltry $5,000/acre, as if the chance to make a year's worth of money with the signing of one's name is suddenly not a good deal.

Permalink Reply by steve keller on March 11, 2012 at 3:59pm

they offered us this amount but pad takes up 11 acres  we paid more than that for a 40 acre parcel 10 years ago . talking per acre and 11 acres including drive and limits of area

Permalink Reply by ray schmidt on March 11, 2012 at 4:55pm

our contract with them gives 30,000 spud fee and only 5 acres for site check out alov.us

Permalink Reply by steve keller on March 12, 2012 at 12:54am

our lease is 3 years old on this parcel doesn't  list spud fee . pad is only 4 acres but with drive and all its 11 acres

Permalink Reply by Utica Shale on March 12, 2012 at 3:56am

$15,000 IS a bad payday !

 They want to pay you $15,000 for 11acres?

 Are you kidding me?

 $1,363 per acre is a joke.

 And they want posession of your land for up to 60 years or more?

 That is not reasonable.

 

 $5,000 per acre or $55,000 is more realistic.

 Start at $6,000 per acre and then negotiate all the way down to $5,000, if required.

 

 What is your "crop loss" value?

 What is your "timber" value ?

 

Permalink Reply by 0i7okn54zwbdo on March 12, 2012 at 4:35am

You're confusing lease prices with spud fees.  A $15,000 spud fee is paid in addition to the lease payment.  

Permalink Reply by Utica Shale on March 12, 2012 at 7:07am

Marc,

 No, I am not confusing leasing prices with spud fees.

 

 Steve stated ...

 "... they offered us this amount but pad takes up 11 acres ..."

 " ... pad is only 4 acres but with drive and all its 11 acres ..."

 

 They offered him $15,000 for 11 acres to be used for pad & driveway.

 That is 11 acres of surface acreage the driller will take but pay only $15,000.

 That is a ridiculously low price.

 Steve needs compensated for the taking of 11 acres of surface land and $15,000 isn't enough.

 

Permalink Reply by Dan on March 12, 2012 at 9:35am

I'm sure the 11 acres is for the initial drilling and getting the well on line ,  after that it should shrink down to ~1 acre. Either way $15,000 is to low.

Permalink Reply by steve keller on March 12, 2012 at 9:41am

utica you are correct i have location approval in my lease.  i have not signed approval  since  sept. trying to negotiate for larger spud fee .i dont have a problem with location just dont want to give up 11 acres for less than I paid for land chesapeake sent registered letter giving me till last friday to sign approval  i still havent signed i understand i have all ready recieved bonus payment  but my point is that i get all the mess  and royaltys and neighbors  have no mess and royaltys

Permalink Reply by 0i7okn54zwbdo on March 13, 2012 at 3:05am

Were you paid an initial, up front bonus for your lease?  If so then you must price that into the equation.  Strictly speaking, a spud fee is an additional payment made to the landowner at the time of drilling.  How much were you paid per acre on the original lease? If you're under an old lease then you don't need a spud fee, you need to renegotiate the terms.  If you're under a new lease and were paid the big dollars that they're throwing about then an extra $15,000 is simply found money.  

Permalink Reply by Utica Shale on March 13, 2012 at 5:41am

Steve,

 Just make sure that you are reasonable with your requests. Use the "Favored Nation" negotiation tactic - If my neighbor gets an $X Spud Fee then I should, too.  How they argue with that? You are being reasonable.

 

 Keep the negotations going.

 Do not ignore any correspondence.

 Always, reply on time.

 

 Will you get $2,000 per year (variable) in lieu of Free Gas?

 

 Will they continue to use all 11 acres after the Drilling is complete or will it reduce down to 4  to 5 acres?

 

 Are they going to install a Tank Battery ?

 If yes, then they will use alot more than 1 acre when complete.

 

 Will there be a  Compressor Station ?

 Pipeline Right-of-Way ?

 

  At some point you may need to compromise (but do not capitulate) to actually get the well drilled and producing so tha  you will start receiving some royalty income.  $58 per acre per month is WHAT compared to the increase in Spud Fee?  Only you can decide if the future potential Royalties outweighs the current year one-time increase in Spud Fee.

 

 

Permalink Reply by ray schmidt on March 15, 2012 at 2:53am

jeff D,our contract has $30,000 spud fee plus cash equivalent of 350,000 cu.ft gas per year per well,alov lease with chesapeake

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