Replies to This Discussion

Permalink Reply by Charles Klingensmith on April 19, 2011 at 4:11am

I am at the southern edge of Vienna Twp. 9 acres. Chesapeak offered $1200/ acre on a 10 year lease. I am still contemplating the offer. 

Permalink Reply by Gman on April 19, 2011 at 6:34am

Hi! Mr. Klingensmith,

 

Thank you, for sharing your lease information that you received.  My mom received an offer from a company called Kenyon Engergy, LLC for $1,200 per arcer with 1/8th royalty for 10 years.  Her property is located in Newton Falls, Newton Township.  The lease offer does not mention anything about 15% royalty fee that I have seen on other web sites that deal with oil and gas leases.  I believe the 1/8th royalty is for pooling with other land owners that surround your property, but it does not mention what the 1/8th is based on.  There are a lot of other items that I do not like about this lease that my mom received.  I am trying to gather all the information I can for oil and gas leases, to negotiate a better lease for my mom.  The other thing that bothered me about this whole situation is, when I spoke with the landman at Kenyon Engergy, he told me, that they do not negotiate on the up front fee of the lease or the royalty fee.  So, they expect you to take what they offer you without negotiating any parts of the lease.  Also, the lease term of 10 years is not acceptable, the normal length of a lease for oil and gas is 5 years with an option to renew if there is activity on or near your property.  Therefore, I am having my mom hold off from signing any type of lease until I do more research on the oil and gas leases in Trumbull county.  Again, thank you for sharing your information and I hope others will do the same.

 

George

Permalink Reply by Charles Klingensmith on April 19, 2011 at 7:25am

George,

Kenyon reps for Chesapeake. They also offered me 1/8th royalty. I think very few landowners settle for the opening offer. We contacted an attorney, Allen Wenger. He  had a lot of concerns with the lease. He was OK with the signing amount, but did not like the 10 yearsand thought 15% royalty was more customary. He was concerned that the land would be tied up for 10 years with no activity, when the big money is in the royalties. He also felt the lease should restrict them to the Utica and above, not all layers. He was also concerned about protecting the water table and property damage. 

Permalink Reply by fman on April 22, 2011 at 5:16pm

We were contacted a few weeks ago by a landman for Kenyon Energy (who represents Chesapeake).  He started with $1500/acre 15% royalties for a 10 year lease.  We don't like the prospect of tying up our mineral rights for 10 years while waiting for them to drill a well.  Therefore, we expect to have to negotiate before getting to an offer we might accept.

Permalink Reply by Robert J Ellis on June 22, 2011 at 3:17am

I own a property in Braceville township, also contacted by Kenyon with similar offer.  Just this week I got an email stating that Kenyon was pulling out of leasing in Braceville Twp on June 30th.  Not sure about the signficance of this.