Fair rate for seismic lease?

What do you all think is the going rate for seismic testing? DAS offered me 5 bucks an acre. Isnt it worth more to them to get valuable information? The wire they use to connect the explosives cost more than that.

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Permalink Reply by Jack Straw on August 22, 2012 at 2:23pm

Thank you Janice.

I hope that this seminar will ultimately end up as a webinar, for those whose circumstances do not allow them to attend meetings in person.

I have enjoyed (and benefited) from reviewing recorded webinars available on the PSU Extension website.

 

Best Regards,

                      JS

Permalink Reply by Gary L. Ford on August 5, 2012 at 5:54am

In Washington County the seismic crews use the roadways and you get $0.  I actually called the AG's office when I came home from work one day and found the lines all along the road for about 15 miles and asked how the seismic crews had the authority to just run the lines on your property and the response was they are on the right of way and the state gave them permission to do it since they are a "public utility."  I objected saying the seismic companies are not a public utility but was told since they are subcontracting to Range, et al they are.  Didn't agree but would not let them on my land for $0 and so they just used the road right of way.  

Permalink Reply by Tom Brian on August 25, 2012 at 12:20pm

Gary; the wires along the road are the one they use with the thumper trucks in n.e. pa , if that shows promise they will likely drill a few wells . if the are good ones they come back and do the 3d that uses  wireless recorders and small charges , small in that most people have never seen or heard them.  this gives them a view miles deep and wide of exactly what is down there ,from that point they can do a better job for every one, most in this area did not even ask for any thing, payoff comes later . after all whats $5 in the big picture.

Permalink Reply by Rick on August 6, 2012 at 2:33am

Hey Gary, If those lines were on your property, hopefully you didnt run them over with the lawn mower or brush hog... that actually happened to me with a "tempory" phone line at my place. They ran a line through my yard and left it like that for like a year... my father came over and decided to cut some grass one day and chopped it up unknowingly... they came out promptly and put a new one in and hung it on the poles like they should have in the first place.

Permalink Reply by Gary L. Ford on August 6, 2012 at 2:39am

Rick:  I moved the lines when I had to mow next to the road.  Wasn't happy but you do what you gotta do.  Gary

Permalink Reply by Josh Willis on August 6, 2012 at 7:51am

I agree with you Gary, I called the company that was conducting a similar survey in Ohio. I asked him how I was getting paid for this and he told me they had a permit from the state. I countered that the state only had a right of way for transportation and not oil and gas exploration so they had no authority to grant permission on my property. I told him him that I own 1 mile of the property his equipment was on and that is alot of copper and equipment that could end up on Ebay. He got pretty flustered and said no one had ever called wanting paid. He was a really nice guy about it all and I ended up letting him off the hook. But I think land owners should be getting something out of it, after all we are still paying taxes for tha property under the road. 

Permalink Reply by Janice L. Hancharick on August 6, 2012 at 8:22am

First I responded to a point brought up in RICK's July 27th reply, now to the subject of seismic testing.  The companies doing the testing spend little money on the landowner.  Their equipment and analysis of findings costs them a great deal.  Their profit comes from sharing the gleaned information with interested, VERY interested drilling companies.  Whether seismic studies indicate a landowner is sitting atop the Mother Lode or a pile of rubble, seismic studies are worth numbers in the 7 figures to production-minded companies.  The info either indicates they will make a huge profit, or it prevents them from making a huge mistake.  Having accurate seismic studies in hand can make or break a company, keep accounts in the black or pitch them into the red.  So back to your question is $5.00 fair?

If "standard" is the operative word of the day, why have landowner groups strived so hard to steer clear of the "standard" leases folks were being offered in the past few years ... recall $5 - $200 per AC ?  If you aren't leased with a company, DON'T let seismic testing be done on your land.  Companies sending around "bumper-thumper" trucks on roadways already have an idea of geological formations.  Without asking your permission they also use planes, satellites and global positioning systems to provide aerial seismic reports to companies eager to drill, willing to invest millions, and intending to make billions.

People living in an area active with seismic testing will be approached for testing done on their land.  The surface intrusion on their acreage should come with explicit language in the contract for protections and to establish timeframes for the work and any reclamation needed to bring the land back to its original condition.

Fencing, soil impaction, crop fields, farm animals (escaping or injured), blasting that damages foundations, etc..  The testing agent will downplay the need for such wording, but these are liability issues that shouldn't be overlooked.  Walk around foundations with the agent.  Take pictures prior to the testing.  If you're concerned interior plaster walls make crack, better have "before" pics taken and dated.

The testing itself  IS  NOT an evil activity, no more than drilling is ... when done with skill and integrity.  It's a shared responsibility between all parties to conduct such tests in a responsible, business-like manner.  It's prudent for all parties to be sure that happens.

Perhaps instead of $5 per AC, a seismic contract that reflects a % of what the seismic company will receive for the information they sell would be a better plan.  It would not be an amount similar to leasing payments per AC ... oh, wait a minute.  Not so long ago many of those people were given $5 per AC too.

 

Permalink Reply by Jack Straw on August 9, 2012 at 4:59pm

I can add a little personal perspective regarding seismic surveying.

A simple Landowner today, at one time I was associated with seismic data acquisition; one of many hats I wore over the many years. Though I once had an industry career, today I side with my fellow Landowners.

The seismic data contractors are the “poor boys” of the industry.

When things are booming, they make a profit and stay afloat – but they never get a piece (percentage) of the ultimate wealth that might come. When things go slow, they are some of the first to suffer. The “good times” are not that great and the “bad times” are terrible.

Luckily, my association with that end of the business was as a client – not a seismic data contractor. I can name many seismic data acquisition contractors that were once familiar names in the industry which have disappeared into bankruptcy or forced merger.

I will now present an argument as to why I believe a Landowner should (if not welcome,) at least accept seismic surveying.

They do not need data from an individual property to know the relative depth, thickness or richness (total organic carbon). What they stand to gain is a bit higher resolution and (importantly) better knowledge of the presence or absence of faults. If no faults are present under or near a landowner’s property, this is good news. If faults are present under or near a landowner’s property, this is not necessarily bad news, as knowledge that a fault is present will allow siting of a well such that the fault can be avoided. Knowledge gained from obtaining seismic data increases the confidence of finding the best well location. This increased confidence can result in increased interest and a better deal for the landowner. I feel that there is more to be gained than lost in allowing for seismic data acquisition.

I do think that $5/acre is a bit stingy, I would push hard for $10/acre – but, reluctantly, would accept the $5/acre.

Also, I agree that strong language should be inserted to protect against damages, and it should be insisted that the Landowner be informed as to timing. And the Landowner should have the cell phone number of the (onsite) responsible party (the Party Chief) - in case something does go wrong and needs fixing.

 

All IMHO (but it is an informed opinion),

                                                                      JS

Permalink Reply by Rick on August 7, 2012 at 4:01am

Fang, do you think they would forgo seismic testing if the fee went to $25/acre? or $100/acre? or if the cost of explosives wire or fuel to get to the property went up? I dont believe that asking for more compensation is always greedy. But, which area if any do you think it is ok to get greedy on? And what would be considered greedy?

Permalink Reply by NY Gas Rights on September 1, 2012 at 5:47pm

You are being greedy because you are jumping to a price that you have no justification asking for. Just because you want it, doesn't mean you deserve it. Since you have no clue what you are talking about, your price is based on pure greed. Maybe you won't get any survey done and maybe the company decides to work only in the areas of friendly owners. Hopefully in 20 years after your neighbors are spending their royalties and sending their kids to college, your wife will take control of your land through the divorce settlement so she and your kids can try to catch up financially with all the rest.  She might even send you a post card while she is on vacaton spending what could have been some of your money. Stay greedy, my friend.

Permalink Reply by Janice L. Hancharick on September 2, 2012 at 5:52am

"Getting on a high horse" about someone else's decision isn't in anyone's best interest.  In all shale regions there are basically 3 legal documents landowners/rightsholders may have offered  them.

1. lease for the gas/oil --- could last for many generations, could be over in 5-10 yrs., etc.

2. lease for easement/right-of-way  --- a "forever" agreement unless it needs to be re-negotiated due increase in # or size of the pipes,etc.

3. seismic testing --- legal document lasting as long as the established timeframe as stated in the agreement

 #1 is seen as the "biggie" in regards to $$$ ... sweet potential

#2 won't be negotiated for more $$$ if the initial agreement wasn't carefully worded in the first place

#3  the results are sold to a specifically contracted company, or to many different companies

ALL of these legal contracts should have established timeframes of action, strong liability clauses that have established "before" and "after" perameters for compensation if the need arises.  This is not planning ON a  disaster, it's planning for a just in case disaster.  Negotiating for any or all of these is not something to be handled on one's own.  Cliches like "those who represent themselves in court have fools for clients", and "there's safety in numbers" aren't dreamed up sayings.  They originated from the experiences of many!

Anyone satisfied by the $$$, clauses, benefits, and protections in a gas/oil company-generated lease cannot complain when they learn how much better others have done.  The same holds true for easement agreements, and seismic testing documents.   Reality and common sense dictate businesses must have profit margins to stay in business!  But really ... $5 - $10 an AC for testing?  What will the findings be sold for?

#'s 1, 2, and 3 above should all reflect FAIR pricing for what is gained, and those that hint to expect it is nothing but Greed on the owners part ... really.

Permalink Reply by Rick on September 4, 2012 at 6:02am

 NY GAS...HAHAHAHA!!! Your're kidding right? You're such a kidder...  good one!

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