Replies to This Discussion

Permalink Reply by Timothy Chilson on March 14, 2010 at 6:38am

I have spoke to East about the $1500/15%/5 and their response is that this is the current market price for Tioga county. My understanding is that East has the largest share of the Tioga county private land leases and there are few other companies willing to compete to jack up the prices. Talisman let my former lease expire and my contact with East claims that they have bought up many of the Chesapeake leases. I have not signed another lease but I am surrounded by East gas leases.

Permalink Reply by Lynn Wigglesworth on March 15, 2010 at 12:49am

Yeah, it's tough to know what to do. If you are near the state lands, Seneca might be interested. If you have (or you and unleased neighbors have) 320 acres, Williams might be interested. If you are near the Bradford county border there are other companies leasing.

But if otherwise, we may all end up being stuck with East. I hear that they are planning a lot of new wells this year, and many will be near me in Delmar Township. They don't have a pipeline yet, so they are drilling and capping...no telling how long it will be before anyone around here sees any royalties.

Permalink Reply by William Ladd on March 25, 2010 at 4:03am

I'd think at this point I'd be happy if I could get a decent and fair lease deal with someone. As it is I could use a few extra dollars now! Dominion needs to be pressured somehow to either pay lease payments more in line with what is being offered by frac drillers. Or else cancel the leases they made 30 years ago for pennies per acre.

Bill L.

Permalink Reply by Mmmarkkk on March 25, 2010 at 4:24am

Uh, Bill, could you tell me how you plan to convince Dominion to "cancel" leases that are valid and binding contracts? I sold someone a house in California many many years ago for $50,000 and now that house and the land are worth $500,000. Maybe I should go over there and tell the owner that I want to "cancel" that sale because its worth more!!

It is called a contract. As long as Dominion adheres to the terms of the contract, then the contract is binding and in force. If they had leased a year ago for $30,000 and now the lands are going for $10,00, would you be willing to "cancel" that lease for them? So why should they cancel a lease because the price was lower than it is now??

"Decent" and "fair" are in the eye of the owner and of the market. Just know what you want and if you don't get an offer that high, either hold off and wait, or lower your expectations.

I'd probably give you $500/acre and 1/8th; that's not "decent" or "fair" to you but its what I'm willing and able to pay. So, I won't be buying much and that's okay with me!

Permalink Reply by William Ladd on March 25, 2010 at 12:40pm

mmmarkkk,

Do you consider $2.00 acre a fair deal to have your acreage locked up for years and years while the lease being offered now for is not less then $1500 per acre?

It is locked up for storage and has been for about about 32 years. The lease will not run out until 2099. There was never any increase in lease payments.

Absolutely nothing has been done. No wells have ever been drilled for storage. No pipelines have been laid across the property.

The two dollars per acre may have been helpful 32 years ago but since then it is laughable.

Your $500 is a couple hundred dollars more then I was offered a couple years ago.. However I mentioned the fact it was already leased for the $2.00 per acre. That outfit backed away. However the marcellus shale deposit was brought to my attention by that land man. It appears as if Dominion or whoever they acquired their holdings from were not exactly stating all the facts that was known at the time to the landowners.

But I am not the only one who is complaining. Many other folks also leased their farmland for the $2.00 about the same time.

The lease was not made by me. It was made by my father. I expect that dominion might sell their $2.00 leases to some other outfit or else just sit on them for many years to come.

The property has been my family since about 1844 and I intend to keep it, if at all possible, for my descendands.

Bill L

Permalink Reply by Mmmarkkk on March 26, 2010 at 4:29am

I fully understand what you are saying about the $2. But at the end of it all, there is a contract in place (the lease) and it is binding so it really doesn't matter what you or I feel is fair.

BTW, did you see where Dominion is selling their holdings to Consol? Don't know if their storage assets are included but these Marcellus rights will be included.

Permalink Reply by Mmmarkkk on March 26, 2010 at 4:31am

" It appears as if Dominion or whoever they acquired their holdings from were not exactly stating all the facts that was known at the time to the landowners"

Dominion is not under any obligation to tell the landowner about any of that. BUT, I'm guessing when that lease was made, the Marcellus was not a big deal. It really has come to the fore over the last 2-3 years.

Permalink Reply by Mmmarkkk on March 31, 2010 at 3:04am

I don't know as I'm not a party to the leases. I know the old Columbia assets that were sold and eventually went to CHK were origianlly derived from similar holdings and they had the rights to the gas. So it really depends on the contract/lease.

Permalink Reply by Matt Henderson on March 31, 2010 at 5:43am

There is always a lot of discussion centered around leasing - how much you can get, the royalties, length etc.. While getting $2500/acre vs. $1500/acre can be a significant difference, the "big" money is the royalty checks. Consideration should be make, and the question asked, when will I be drilled on? There are many royalty calculators out there, but an average is $7-$10 per acre per day at 15% royalty and current market price. That takes into account an average producing well, which those who follow the production rates have seen tremendous production rates coming out of the Northern Tier. The royalty figures are also calculate per well per lateral. Most units have multiple laterals on them - let's use 3 as a low average. Doing the math for a 50 acre property translates into $7/day x 50 acres x 3 laterals= $1,050/day or $383,250/year. I would rather sign for $1500/acre and get drilled on this year than get $2500/acre and wait 1-2 years to get drilled on. Drill baby, drill!

On the subject of $2 or $200 leases, the PA Supreme Court just upheld a lot of early leases we in fact valid based on the minimum royalty act. Landowners were basically trying to nulify the low bid leases based on the fact they had signed at 12.5% royalty payment and companies were deducting expenses prior to paying royalty payments reducing the net payment to below the 12.5%.

Permalink Reply by Michael Karpiak on April 1, 2010 at 2:26pm

In most cases its not how much you signed for that dictates when you get a well....its more of are their pipelines in your area. Also a lot of people I know that are getting royalties now are the ones who signed a few years back and the gas co. did not want their lease to expire because they would have to renegotiate at a higher lease payment.

as far as some of the royalty payment, that depends on the lease you signed when and where they deduct. Some contracts are after gas hits the market with expenses deducted and others are at the wellhead........... just be careful what you sign..but I do agree with DRILL BABY DRILL!!! :-0

Permalink Reply by sharon baatz on September 22, 2010 at 3:51pm

Hi Matt-your article is very interesting. Where did you get 7-10.00 an acre per
day? current price and 15% royalty. Another man in Bradford is getting $114.00 a month per acre with a 12.5% in a prime area of Bradford. that is $3.80 per day
Have your received any royalty payments yet? Thanks for your information
I am just curious? Sharon

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