Replies to This Discussion

Permalink Reply by Finnbear on March 14, 2012 at 4:02pm

Most of the shale leases I have seen in the last 2 years (and I have a collection of them) have offered $1,500 to $3,000 per year in lieu of free gas.

Permalink Reply by 0i7okn54zwbdo on March 15, 2012 at 3:29am

I have answered your question, Gale.  So what is it that YOU do for a living?

Permalink Reply by mbc on March 15, 2012 at 4:15am

To be fair to Marcus, he did state in an earlier post that he is not a landman, nor a shallow well driller.  He said he's a guy on the inside.

Without it actually being said, I can agree with y'all that Marcus can quickly get the landowner's ire up right quick when it comes to leasing dollars.

Marcus, it appears from your posts that you must somehow gain from a landowner's ignorance when it comes to mineral leasing.  Like I say, that's the way it appears.

Obviously, I really don't know, and I don't need to know.  I look forward to your posts as, for me, I find them very informative even if I don't agree with your leasing stance.  An O/G company's greed, is another man's fair price, or something like that!

And, Finnbear, thanks for the Farmer 2 analogy.  That gave me a good and clear picture of how the farmer can be affected.

Permalink Reply by David on March 14, 2012 at 6:28am

I'm from NE pa...My advise is to not get greedy. The numbers you are quote in these posts are fair numbers. Remember 1 thing pigs get slaughtered.

Permalink Reply by NE Richland County landowner on March 14, 2012 at 7:46am

I agree that greed will get ya David. 

No disrespect to anyone here but I know a lot of people in Northern Richland who would welcome an offer for $5000/acre and 20% and probably consider it very fair.  Just my opinion. 

If Marcus is willing to admit he is involved in the industry, we should at least welcome his opinions.  As a landowner, I appreciate that he is willing to share info from the "inside".   Just as I appreciate everyone elses opinions.

My question:  50+ acres parcels of tillable land in our area has sold in the $6500 - $8500 per acre range in the last two months, would that not be a reason to expect a larger spud fee if the surface area of the pad will be unusable for crops.

 

Permalink Reply by Finnbear on March 14, 2012 at 4:07pm

You should expect at least full market value for the acres of the permanent pad in the spud fee. You are effectively losing those acres permanently unless you are very young and your well depletes quickly. The compensation for the temporary additional work area should also be compensated, but at a level that reflects its value per month, year, etc. to you as a landowner, for the time it affects you. If cropland, and taking it out of commission for two months screws up a growing season, then figure the value per acre for the entire season as a minimum compensation.

Permalink Reply by steve keller on March 15, 2012 at 5:46am

we asked them to move well pad or compensate us fairly they replied that they would not relocate because they have already done 6 studys on this location enviro,wet lands,brown bat ,road etc. but wont increase payment this has went on since sept. neighbors are getting upset because we have delayed progress. i still have not seen where chesapeake has paid more than $15,000. but a few miles away another producer paid $40,000 for 6 acre pad. i dont think we are being greedy just think we should be fairly compensated .we aren't farmers ,just bought ground as an investment but this parcel is a 40 acre field that we rent to local farmer ,there are lots of areas around us that are not being farmed that would make more sense to us but maybe not to them.

Permalink Reply by mbc on March 15, 2012 at 7:38am

If an O/G company drills a 150 acre unit which produces 1,000 bbls a day and their lease affords them 75%, are they not making something like $75,000 to $80,000 a day at today's oil prices?  (Carrol County, Harrison County)

Even if oil were $60.00 a barrel, isn't a well producing 1,000 bbls a day making the O/G company  $45,000 a day?

Or, if the well was only producing 100 bbls a day, doesn't that figure to $7-8,000 a day, or around $230,000 a month at today's prices?

Even at 100 bbls a day the well will have paid for itself in three to four years.  No?

Are these figures wrong?

Permalink Reply by steve keller on March 15, 2012 at 3:15pm

shale i have no idea how much acreage is in unit  how would i find this info? well is in stark county oh. lexington twp.

Permalink Reply by steve keller on March 15, 2012 at 4:38pm

thanks for that info thats the first map that I have  seen kinda sucks don't ya think .i still haven't signed even though they did raise  there offer to 23000 today .any one know how long till they would drill other wells some sort of timeline probably wanted me to sign before seeing this map

Permalink Reply by Finnbear on March 16, 2012 at 3:45am

So they applied for a permit and don't even have your land leased yet?

If that is the case, you need to set forth some clear terms under which you are willing to move forward.

1) The spud fee should be a per acre sum for a set number of acres to be used for the permanent pad site at full market value per acre (or some number acceptable to you as compensation for the permanent loss of those acres). This acreage should include all access routes required for the life of the wells. You will need to do some quick research to determine current market value per acre in your neighborhood.

2) Specify a penalty amount/acre for any acreage used for the permanent site over and above that which is specified above.

3) Set a reasonable and acceptable rental rate per acre per month, quarter, or year for the additional acreage used as the temporary work area while drilling and completing the well(s). They are using this acreage temporarily and as such it should be treated as a rental. Specify that this area be reclaimed as closely as possible to its current state within a certain time period (90 days?) after the well(s) are completed. You should be paid the rental amount from the time they start until reclamation is complete. A monthly rent probably works best for both sides involved as you are fairly compensated and they only have to pay for the time the acreage is used. This also gives them an incentive to expediently develop the site.

4) Ask that they include all 37 of your acres in this first drilling unit since only a couple acres on the NE corner of your property are shown in it now. If they won't go for that, ask that the pad site and work area be added to the drilling unit since you will be giving them up but collecting no royalty (for the time being) on them. They probably won't do this but it is an area where you can "give a little" to get the terms above.

5) Have a really good oil and gas attorney help you with this and make sure I haven't missed anything. The wording of these things in the lease contract is very important and you don't want to lose out on a technicality because of a poorly worded contract. 

Good luck and let us know how this turns out - Finnbear

Permalink Reply by steve keller on March 16, 2012 at 4:20am

finnbear  1. land was leased aprox 3 years ago as stated before we have location approval that we haven't signed  2. map  is incorrect when we bought this land there was a home and outbuilding we sold home and 3 acres but we retained mineral rights . after seeing map I checked our deed and it clearly states that sale did not include mineral rights 3. now i'm wondering will  our land be included in unit on any of the 6 wells or will they do all wells the same and exclude my land except for when well reaches the horizontal portion ,if so why would I ever give approval   or do I just not understand map ,looks like we are getting about 2 acres of royaltys and we have all 11 acres tied up                     

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