SIESMIC STUDY- What are the pro's and con's to allowing them to test your land?

Does any one know what the risk is to allow a gas company to do a study on your ground of which they do NOT have a lease on?  Like many people in my area, we received a notice that East wants to do siesmic testing on our unleased land.... what's the down side of letting them?  Tioga County

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Permalink Reply by Brian on February 2, 2010 at 4:19am
The biggest downside if you are not already leased is that they may find out your property is not a good location for them to drill. That doesn't mean that your neighbors property won't be ideal, and more than likely you will still be included in their production unit. My area is undergoing seismic testing as we speak. They already know that the wells in the area will produce (there are at least 5 already.) If they didn't know then they wouldn't be spending a couple hundred thousand dollars on the seismic study. They are just looking for the best possible places to put them. My land was under permit for seismic studies before I purchased it, so I had no real say about it. I was concerned at first, but then after thinking about it, I realized there is no way they would be spending all of that money if they didn't know there was something good under there.

The study could potentially show that they were wrong and there are good spots to drill in the area, but like I said, they wouldn't be spending all that money if they weren't already pretty sure.

By doing the seismic study and coming up with the best locations for well plats they can minimize the risk of coming up dry. In my opinon, it is to our advantage to let them do the testing. If anything, it will only increase the value of our property to them.
Permalink Reply by Brian on February 2, 2010 at 2:06pm
I can see your point...but like I said, if we are in the marcellus shale area, the gas is under all of us. They already know that. Some spots are better for well sites than others, but that doesn't mean you won't be included in a unit.

These are business negotiations and there has to be some sort of ethics involved. Keeping with the theme of analogies-How would you feel if you went to a used car lot to buy a car and the salesman said you cannot test drive it, and you cannot look under the hood. You would go somewhere else. Why would an OG co. want to pay you top dollar for your property before they are allowed to look under the hood? Doesn't seem fair to them. We try to fight for every last nickel from these companies and without them our property is only worth its surface value.

Please don't take this the wrong way, I feel they should pay us a fair market value for leasing our property I just think people take it too far and let greed get in the way. I only own peanuts compare to some of these landowners here and what I can potentially make from royalties is plenty for me to live comfortably in addition to what I already make.

For now I am still unleased, I am talking with a company right now. They have been very professional and so far I haven't experienced any of the horror stories I have read on the internet.
Permalink Reply by terry hazlett on February 3, 2010 at 1:37am
So ,from my understanding they did the seismic before your lease ran out ? FOR ME NO LEASE NO SEISMIC!
Permalink Reply by Carol A on February 3, 2010 at 3:40am
Thanks for the responses. We tend to agree with Terry. We aren't going to allow them on our land, although they probably will be able to know anyway from everyone who is allowing them to do it so close to us.

QUESTION:Does any one know if doing a siesmic study on leased property (that is about to expire in a few months) constitutes as action started to hold that lease in place from expiring?

This seems to be the case of many people close to me --- all the leases are expiring this year with Fortuna, but east is the one moving forward with the siesmic study... Makes me think that Fortuna flipped those leases to East.
Permalink Reply by FXEF on February 3, 2010 at 8:43am
Seismic test can not hold an oil & gas company lease. Most seismic companies pay a small fee per acre to do the test on you land, then sell the data to the oil & gas company. Is East an oil & gas company or seismic company?
Permalink Reply by Carol A on February 3, 2010 at 10:59am
East is the O & G company who sent us a letter telling us that they hired a survey company who would then be contacting us to get permission to enter our property. We received the package from the siesmic survey company (don't remember the name off hand). We do not currently have a lease on the property that they sent the letter and packet on. We are subject to a lease that existed and was signed just before our purchase of an adjoining parcel, that lease is set to expire in July. We do not have copies of that lease and we haven't received notification that testing is being done on that piece either. East does not hold the lease on that property.
Permalink Reply by Bob Thomer on February 3, 2010 at 1:22pm
Don't be surprised if they just show up one day on your adjoining parcel. They did on my property. They don't always have updated subdivisions or property owners on there maps.
Permalink Reply by FXEF on February 4, 2010 at 8:10am
You should have separate lease with the seismic company (in addition to the O & G lease) that will allow them to access your property and run the test. Well, that's the way it is in Louisiana. We leased our land to the O & G company, then later leased the same acreage to the seismic company. Don't expect to get much from the seismic lease, probably around $25 per acre (maybe more if they drill and shoot on your land).
Permalink Reply by David Wheelis on February 4, 2010 at 2:07pm
You do not sign a "lease" with a seismic company. It is a permit. There is a huge difference.
Permalink Reply by David Wheelis on February 4, 2010 at 2:06pm
This would only be in the event the geophysical survey is a speculative shoot with underwriters. If the company is doing a proprietary shoot, the data goes straight to the client.
Permalink Reply by Bob Thomer on February 6, 2010 at 9:00am
Yes they need permits. When you show up at your property one day and find them doing surveys you will understand my previous comment. I was told that they get there maps from the courthouse. In my case the map was 4 year old and I had owned my property for 2 years. They did get permission from me afterwards, but were not happy that they were on someones property without the proper consent.
Permalink Reply by Brian on February 3, 2010 at 5:28am
As of right now, I am negotiating my lease as an individual. Its modeled off the Friendsville lease, and Wyoming County group lease, but I am in Westmoreland County. There are no 'open' groups in my area right now to join. No one will even talk to each other about their offers. I know a group would be in my best interest, but time is not on my side, nor are any of my neighbors. I am on the boarder of 600 acres (3 properties) that have already signed. If I get left out of the production unit I risk 1. not being included in it ever, 2. I will miss out on a lot of money until I am included in another. 3. how long would it take to recoup the money I missed out on??? too long.

Say they finish a couple wells this year....which is very likely. I get included in the production unit. Just for ease of calculation, say my royalties are 10,000 a month. So roughly 120,000 a year. If I do not sign now, and I have to wait and hope they put me in another production unit, what happens if that does not happen for 5 more years??? I just lost out on 600,000 NOW. Say I wait, go with a group, get a better lease for 20%, using the same numbers I used to get 10,000 a month, 20% would give 14,000 a month. 14,000 a month sounds great! but I have to wait until they drill.

what about the 600,000 I didn't make in the last five years? It would take 150 months to make that up.

My property had a seismic testing permit on it for 18 months when I bought it. The previous owners had already signed it. So I had no choice there, but in my situation, I am glad they did. Like I said I know a group would be best, but there is simply not enough time or acreage left around me to wait any longer and risk being left out completely. So I am simply coming up with the best possibly lease I can as an individual. So far they have accepted everything I have proposed. Even some things I knew were a stretch, but they said ok.

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