Replies to This Discussion

Oil/Gas ProPermalink Reply by Craig McConville on October 12, 2011 at 11:08am

Too many variables to answer you accurately.  What township?  What kind of activity is going on around her?  Those two questions would lead to at least a starting point.

Permalink Reply by Industry Watcher on October 21, 2011 at 12:11pm

It really, honestly, depends on the location.  The upfront money pales in comparison to the royalty money.  When talking about 50 acres and using a 12.5% royalty, you could feasibly see over $1 million in royalty over 20 years, possibly much more.  Focus more on a horizontal pugh clause that gives the Lessee 3-5 years after the expiration of the primary term of the lease to include ALL of your Grandmother's acreage in one or more units.  The company has incentive to utilize all of the acreage regardless of that clause, but it's an extra guarantee.  I can guarantee that you will not receive more than 15% net royalty.  There is nearly zero competition in central and western Westmoreland County.  You're either going to sign with Chevron or be undeveloped, really as simple as that.  For a full development, fairly un-burdened lease, expect in the range of $1,200-$1,500/ per acre for a 5 year lease.  If you're willing to go 7-10 years, the bonus will increase some.

LandownerPermalink Reply by Carol on October 31, 2011 at 4:53am

Some people have received more than 15% royalty.  I received more with no deductions.  Not with Chevron, but still in Westmoreland county.   The going rates for Westmoreland County were $2500/acre a little over a year ago.  Maybe they have decreased.  Like you said, it really depends on the location.

 

 

Permalink Reply by Industry Watcher on November 5, 2011 at 1:04pm

Right now you're best hope in Westmoreland would be $2100-2400 for 7 years or $1500 for 5 years.  That is for a full development lease, not a non-surface.  15% net royalty, or if you're lucky 14% gross.  People who aligned themselves with the Dick Landowner's Group a couple years ago got 16% gross, but that was a massive 3000+ acre group.