No-Surface lease but now they want the surface

Hello, we are new here.  We have a no-surface lease with Range Resources.  Now they have decided they would like to put a well pad on our property after all.  They have not offered us anything in payment, just want us to sign a new agreement that pretty much gives them the right to use our surface as they please.  We will get a lawyer involved if we decide this is worth pursuing, but wondered if anyone here could give current information as to going rates for well pads and the mess associated with it all.   If they don't pay anything, or much at all, we're not interested in going any farther or changing our agreement.  We don't have timber or crops, but our land has a high potential for residential development (we have had offers).  Even though the well wouldn't take up many of our acres, we are sure just having it on the land will affect that development potential.  We'd really appreciate it if anyone with solid info could share it.  Thanks.

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Permalink Reply by Billy Park Whyde on June 19, 2012 at 10:36am

I had seen where someone had posted about the CAUV  tax. I called the Muskingum County Auditors Office today to ask about it. There response was the surface area only. I threw the hypothetical question of say a 4 acre drill pad and their answer was it would change the 4 acres involved only at the time but if the pad was restored (reclaimed) that the CAUV could be restored minus the area that wasn't so if it was only a Christmas tree with a fenced in boundary the surrounding area back into hay, pasture, crop would revert back to the CAUV upon reapplying for the CAUV.     

Permalink Reply by Lance Nimmo on June 19, 2012 at 9:11pm

DO NOT sign it. The pads and access roads are total devastation. Let them frac underneath you. 

Permalink Reply by melissa humphrey on June 21, 2012 at 4:38am

Go for damages, meaning the loss of development value.

Are you in Lycoming or Washingtom county?

Permalink Reply by Feenzis on June 21, 2012 at 11:01am

We are in Washington County, PA.

Permalink Reply by Mary Thorpe on June 21, 2012 at 9:44am

Remember that Marcellus wells may be fracked up to 16 times or more so be sure to factor in all that extra activity over a longer time- it's not like a conventional well that is drilled and then the activity subsides.

Permalink Reply by Feenzis on June 21, 2012 at 11:01am

Thanks - we did not know that!  Everything we are learning makes it less like that we will agree to change our lease.

Permalink Reply by frank sparacino on June 21, 2012 at 10:02am

our lease Susq. cty. (pa) mentions $10,000 for pad, but luckily they (WPX/Williams) are using the larger parcels for pads. i've seen the pads, they can be a MESS, for at least 3-4 months. $10k is NOT worth it.

trucks, compressors, storage containers, ETC.  i guess it also depends on how big the pad is. the one i saw @ Dallas, pa was HUGE!


i'd definitely talk to a lawyer or at first ask for $25,000…

they pretty much "claim" that part of the land. also, w/access & any pipeline ($25 linear ft. presently here).

good luck!!

Permalink Reply by Feenzis on June 21, 2012 at 11:03am

The changes they want to make would give them carte blanche to place "all necessary equipment" which would include pipelines, buildings, etc.  A recent court ruling means that a compressor station could be considered necessary equipment - no way we want one of those on our land.  At this point, we just hope they were simply testing the waters and won't bother coming back!

Permalink Reply by William G. Williams on June 21, 2012 at 11:48am

If in Ohio, CHK pays a nonsurface use/ no development lease versus a regular drilling lease $500 an acre less today if all other terms of the lease remains the same.

Permalink Reply by Feenzis on June 21, 2012 at 1:02pm

Exactly - well, except in our case the difference was even greater. 

Permalink Reply by Kathleen on June 21, 2012 at 7:08pm
I was around two grand less for a no surface.
Permalink Reply by Mary Ann on June 21, 2012 at 6:13pm

After meeting with a couple of O&G attorneys related to our lease decision, here are some things I learned for you to consider:

1.  Once you give the right to drill, most leases will inlcude all of your property and extend for the life of the existing well and beyond.  That grants the Gas Co access to your land in areas in additon to where the inital well is drilled.   They can come back and ask for another well whenever they want.  This limts your ability to sell land for development or other uses in the future for MANY years to come.

2.  The O&G Company will only pay you for "current use" values, not "future use" and not "market value".

3.  Once the O&G Co. approaches you about modifying the lease, it essentially becomes a new lease and you can change ANYTHING you want.  You can stipulate in your modified lease any limits that you want and that agreements need to be made between you & and the Gas Co for location of roads, pipelines, wells,  storage, etc. and ask for more $$ for all of it.  The risks are (1) they may not go for it and (2) with continually changing laws in this area, who knows how much of this will hold up in the future.

4. The largest payments for well royalties usually occur in the first 1-2 years--that is when the well produces the most.  Keep that in mind.

5. If there are damages to your property, you have to sue & the compensation is usually not equivilant to the damage.  Who wants to build a house near to a chemical spill or contaminated ground water?  So, if there is a spill, you probably won't get the "future loss" value for that damage.  They count on most people "not sueing"

6. Things to look for in a lease...(1) time limits on the O&G Co access rights--make them as short as possible--2-3 years if you can, (2) removal of frac water when drilling is done--DON'T agree to burying it (3) specify how disagreements are handled--make sure you can sue if needed--not just rely on their arbitrators (4) specify as many limits as you can on what you allow vs not.  The standard O&G leases are always written to favor the O&G Co. Like most utility companies, they will try to benefit their Co, and most have no problem taking advantage of unknowldgable folks.  This is your time to ask for everything you want.

7. I would definately never allow a Well on your property with getting an experinced O&G Attorney.  If you are serisusly considering a well, look for an attorney that has been involved in & won litigation against O&G Co. in the past.  They are in the best postion to tell you what to watch out for, can help you in re-negotiation, and assure your rights are being met.  The downside is that they may want a sizable payment for an improved lease or cut of the deal.  Talk that up front--before you talk anything else to see if it is worth it.  They may be able to negiate a better deal than you, but want part of it.   You'll have to decide if their help is worth the price.  A good place to look for this is are local Surface Right Owner groups to get advice. 

Hope that is helpful.  Good luck whichever way you decide to go.

 

 

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