Replies to This Discussion

Permalink Reply by Geo5 on September 18, 2014 at 6:47am

I think SR Law is a good outfit to work with and $100 per acre is reasonable.  I would stay away from the ones asking 10 to 15 percent of the lease payment.

Permalink Reply by Oliver Perry on September 18, 2014 at 9:54am

I contacted SR Law 2 1/2 years ago to go over my proposed lease with Swepi. They quoted me $250 an hour and said it would be a few hours of work for them. Unfortunately, I never had a chance to use their services. I don't think $100 an acre is a fair amount if you have a large parcel like smitty does. 208 acres x $100 = $20,800

I would ask about an hourly quote if I were you smitty. Just my opinion.

Permalink Reply by Geo5 on September 18, 2014 at 12:04pm

I had a friend with 230 acres that insisted on using a lawyer.  He checked out SR Law, and i don't remember if they refused to work by the hour, or if they convinced him it would be cheaper to pay the $100 per acre.  Anyhow, him being cheap, he found an out of area Lawyer he felt would be cheaper.  IMHO, most times lawyers only put stuff in the lease you don't need, which is already covered by state law.  For example, gas wells must be 300 feet from water wells and houses. I believe its 500 feet now.

Permalink Reply by smitty on September 19, 2014 at 2:02am

Thanks for your thoughts, Oliver, I was thinking I was maybe just a miserly cheapskate...

 

Here's the story so far:

 

In fact, that $100/acre fee is our hang up with SR Law. We had been under their marketing agreement for a year, the agreement having expired in August 2014.

 

At this point, we are reluctant to renew the marketing agreement with SR due to several factors:

 

-We expected, and as I recall were encouraged by SR to expect some sort of group or bundled lease deal whose acreage level would put SR's fee at $25/acre. It appears now that that is much less likely. Rather than see a large multi-landowner deal emerge, we have watched as neighboring and nearby properties were leased independently. We think $25/acre was fair, and expect  we may seek to engage SR to review and advise regarding any lease we might find on our own, but wish to avoid such costing us $100/acre on 208 acres, as $20,800 seems excessive to us. It is difficult to visualize that a law firm somehow expends more work effort wholly dependent upon the amount of acreage: a lease for a 200 acre property properly costs 4 times the cost of a lease for a 50 acre parcel…really? The provisions of the agreement also appear to entitle SR to their fee schedule regardless of whether they were involved in obtaining the potential lease offer we may eventually sign on with.

-In the year under the marketing agreement with SR, SR had not offered us any meaningful lease, only an offer from Edgemarc to negotiate regarding only one of the four parcels that comprise the farm (not placing blame, just pointing out facts), which we immediately rejected with SR concurring. Shortly after expiration of the marketing agreement, SR contacted us with the news that EM was now ready to negotiate a lease covering all four parcels that make up the farm with the bonus at $3000/acre and a royalty of 12 ½% gross (note that independent of SR Law, EM is offering us $3000/acre & 13% gross). I then inquired as to what SR’s fee would be, and was advised $100/acre. I will be checking with SR regarding a fee to only review a lease we negotiate ourselves rather than SR handling the negotiation.

-Edgemarc engineers were tramping about the property in just the past several weeks doing a ROW (right of way) engineering survey for their gas pipeline. The pipeline may traverse the farm especially if they route it down Slater Road towards the Cratty well. Since Dad is not party to the SR marketing agreement, he has been occasionally speaking to Edgemarc directly and through their landmen when they have initiated contact and has heard encouraging things regarding a lease. If approached by Edgemarc for ROW we intended to link that with the farm also being leased by EM. Now, of course, we have been offered lease terms by EM that are worthy of pursuing regardless of where the pipeline placed. So it would seem a bit of going on our own is in order. At worst, we don't get a lease, which is identical to results thus far.

 

Thanks to all who have offered their opinions, and more is welcome and appreciated.

Permalink Reply by Philip Thackray on September 19, 2014 at 2:09am

smitty

I use Wil White at Dillon McCandless King Coulter & Graham in Butler, PA.  He is from an oil and gas family.  I've done two leases with Wil.  One with XTO and one with Rex.  He knows all the players.  Bills by the hour.

Phil

Permalink Reply by smitty on September 19, 2014 at 2:23am

Thanks Philip,

We will be sure to check out this firm.

This is the sort of help we really appreciate, especially being that we are located outside PA.

That is a cute pup you got there...

Permalink Reply by Philip Thackray on September 19, 2014 at 7:04am

"Bouncer" WAS a cute pup.  Unfortunately he departed this Earth some time ago.

Wil White's mother Mary Jo White was a vice-president at Quaker State Corporation and later a PA State Senator.  She had a lot to do with PA's favorable legal attitude towards Oil and Gas.

Regards,

Phil

Permalink Reply by Oliver Perry on September 19, 2014 at 1:02pm

smitty,

I had no idea SR Law was into this "marketing agreement" crap. I don't like this particular approach to leasing.

Philip has substantial experience in leasing, and I believe I would take his advice concerning an attorney.  

Permalink Reply by Matthew Williams on September 22, 2014 at 2:15am

If you need help with your lease. You can always check out America's Choice Royalty Services. They help with leases and Sells and do not charge a hourly fee. In fact they take care of any and all marketing expenses at no cost to the land owner. 

Permalink Reply by RB on November 1, 2014 at 5:35am

Chuck,

Curious to know who would suggest you not disclose terms and why.

RB

Permalink Reply by Chuck F on September 19, 2014 at 5:56am

Good point that $100 per acre is way too much.  My lease was for <10 acres and the law firm negotiated non-surface leases with EM for fewer than 10 acres. Non-surface wasn't being offered by the EM landman.  It seems Smitty would pay $20k more at $100 per acre, to have basically the same boilerplate lease executed.

Anyway, it's good to see some conversation about northern Butler county/Allegheny Township.  Glad things are starting to happen there.

Permalink Reply by pa landowner on June 30, 2019 at 4:15am

What your you prefer  8% of 1000 dollars royalty or 12.5% of 1000 dollars royalty.

Remember the landmen work for the company and their goal is not the goal of the landowner.

With the bankruptcy of Edgemarc, other companies will be coming in to offer what they say is a take it or leave it deal  for the right to lease underneath your property for gas and or oil extraction. The offer will be in all likelihood be along the lines of 2 or 3 thousand per acre and 15% royalties downstream which means they can deduct transportation, marketing and other charges off of the 15%.  The landowner could in all reality receive 7 or 8% after deductions.

If the landowners would start talking to other landowners and ask for 12.5% royalty at wellhead then the landmen who work for the oil companies cannot say”take it or leave it”  With the cracking plant coming on line in a few years the demand for the gas is going to increase dramatically.

Pennsylvania and Texas are the two states with the most gas volume. In Pennsylvania, the building of the cracker plant in Monaca is being built because of access to the gas nearby.   It is the same reason why a new cracker plant is being built in Belmont County, OH.

While very few if any landowners hold enough property to be able to demand 12.5% royalty at the wellhead, if landowners would all demand 12.5% at wellhead and 2 or 3000 dollars per acre, then we would hold power as a group. 

If enough people are informed about and see the amount of monies that they would benefit  then we should be talking to any and every person we know that holds mineral rights to their property.

I am not a lawyer,but my first lease I negotiated the 12.5% at wellhead and 3000 dollars an acre on just 15 acres.  The second time around I was offered 15% downstream with deductions and $2000.00 an acre from Edgemarc on a take or leave it basis since i had only 15 acres.  Then they went belly up before signing of contract.   

The other problem with Edgemarc was  they wanted you to sign document first.  This is just another delaying tactic they use to push the monies owed to landowner out further.

Please start the discussions with your friends and neighbors and feel free to post or send this to fellow landowners.

• ‹ Previous
• 1
• …
• 4
• 5
• 6
• 7
• Next ›
• Page