PetroEdge prospective lease ... I was told their signing offer was $1500/acre and when I asked about the rental payment if they don't drill - I was told the $1500/acre price was for five year lease (paid up)- so basically it's $300/acre per year for five years... is that standard?  I've ready so many things about being sure the rental payment is in the lease, in case they don't drill... maybe I just wasn't understanding what I was reading, I don't know.  But no where have I read that $300/acre was a reasonable offer!  

Other question is about pooling - he said they won't drill on our property, it will be a horizontal well.  How will I know when drilling happens and how do they pay those royalties when the lease doesn't specify where the drilling will take place that will impact our minerals?

I would appreciate it if someone could please help me understand this!



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Comment by Kathleen on April 20, 2012 at 1:52am
Ive seen this broken down like this in an alov lease. When we think of a bonus we think of that one time upfront payment but the oil co. can look at it as a per year per acre lease which for you would 300 per year for five years being paid upfront. If the lease has the extension option of 3 years with the same paid up lease monies than in that section it could word the lease as 500 per acre for three additional years. Still gives you the 1500 per acre.
Please do not go by any verbal promise. If it does not say they will not drill on your property in the lease than they could.
Our lease states they have to tell us when we are in a unit before they start drilling. They could have the pad up and everything proposed but they only need to tell us I think when they submit the production unit acres to the odnr. We found out earlier since we got our water testing papers with a named well on them, and I called Chesapeake with my parcel number and well name.
I would think adding notifications into a lease wouldn't be too hard but who knows.
Comment by Finnbear on April 19, 2012 at 5:25pm

If it is a "Paid Up" lease then you get the whole $1500/acre, even if they drill the first year. There is no "Delay Rental" in the primary term of a "Paid Up" oil and gas lease.

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