Wetzel, WV Lease Question

We have received a lease packet from American Energy-Marcellus LLC.  They are offering us a 10 year term at $2500 per acre and 12.5% royalty on produced minerals for property owned in Wetzel County, WV.  We are complete novice to this.  We just found out we inherited this property and do not know if this offer is a) legitimate or b) a fair offer or c) how we go about determining what would be reasonable expectations of monthly income from this lease. Is there a process out there that would provide historical data of output production for this geographic area and or is there a recognized method that would assist us in trying to calculate this revenue information?  Any help you can give would be appreciated.

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Permalink Reply by Angela Smith on October 4, 2014 at 10:12am

It might be a good idea to contact an oil and gas attorney in your area.  This seems like a very low offer.  Typically lease terms are shorter (3-5 years), royalties are higher (16-22%) and price per acre is also higher but varies depending on where it is.  In addition, most leases offered by oil and gas companies are not landowner friendly, so an experienced attorney can construct a lease that will be in your best interest.

Permalink Reply by LBaker on October 4, 2014 at 10:21am

Thank you, Angela.  We live in California and have zero experience with all of this.  Our red flags went up when the consultant hired by HG Energy, now this is under the new Am Energy-Marcellus LLC group, called and said, "We've written the paperwork in easy to understand terms, so you don't have to have anybody look it over."  HA!  The other thing she said was that if we didn't sign we lose all rights to the property's proceeds and then pressured us to sign by the end of the month. Double HA! 

We didn't fall off the turnip truck yesterday!  Any recs on an attorney who is not working on behalf of the oil companies? I'm thinking we need to find one in WV.

Permalink Reply by Angela Smith on October 4, 2014 at 10:38am

Rokisky & Assocs. in WV has a pretty good reputation.  They have a radio show on Saturday morning that deals exclusively with oil and gas developments in the area.  They offer free initial consultation.  You'll find them on the internet.  Good luck.

Permalink Reply by LBaker on October 4, 2014 at 11:20am

Excellent!  Thank you, Angela.  I'll look into their website!

Permalink Reply by searcherone on October 4, 2014 at 10:45am

Absolutely, you need an attorney in WV, Wetzel County if possible and one that knows the oil and gas business.  In my opinion if at all possible a trip to Wetzel would be helpful where you will see lots of heavy truck traffic for the oil and gas industry which will make you understand that Wetzel is one of the prime target areas of the Marcellus and now Utica area.   Both of those formations will produce well in Wetzel.    The per acre is too low as well as the percentage.    Wetzel County has had strong oil and gas drilling and leasing for at least the past six years.

DO NOT SIGN anything with this company until you are totally satisfied with a lease that your attorney and not one in California says is okay. If you speak with this woman again ask her if the property is getting ready for a well pad or even if it is already drilled.   If it is the later and it sometimes happens you are entitled to way way more than the 12 and a half percent.  There is definitely a reason you are being pressured to sign before the end of the month.

Permalink Reply by LBaker on October 4, 2014 at 11:19am

Thanks, Searcherone!

She did mention something about money being held in a trust.  I spent a lot of time online and finally found the drilling permits that were filed back in Feb and Apr this year on the property.  I got the impression that these are in addition to wells already existing.  These talk about the deep horizontal drilling (fracking?).  We sure are getting a new education!

We won't sign anything until we get an attorney to help us.  Thanks again.

Permalink Reply by searcherone on October 4, 2014 at 2:02pm

Just remember I am not a lawyer and only repeating what a man told me a couple of weeks ago with property in Wetzel county.  He and his siblings were not signed on a small piece of property that was drilled and when contacting the lawyer they were informed that they were entitled to 100% of royalties on that acreage prior to signing any lease. If they had signed they would have gotten only the percentage in the lease.  Landwoman is definitely pressuring you for a reason.

 Make certain what the real status of this property is and that the lawyer really knows the oil and gas law.  And yes if money is being held in trust there is a reason.   Just keep your name from a lease until every t is crossed and I dotted.    Best of Luck.

Permalink Reply by LBaker on October 4, 2014 at 6:25pm

Thank you.  I appreciate your posts.

Permalink Reply by jason irvine on October 4, 2014 at 11:48am
I have property in wetzel and would not except that. We received 1500 and 12.5 on a 5 year and this was almost 5 years ago when they new nothing of the area. That is no longer the case. There is wet gas on two layers and recently large dry gas from the utica. I am due to resign in jan. And I will not except anything less then 6k and 20%.
Permalink Reply by LBaker on October 4, 2014 at 12:12pm

Wow!  That is great news, Jason.  Thank you and good luck!

Permalink Reply by Jason on October 5, 2014 at 1:15am
Does your lease have a 5&5 term? Meaning, does your lease holder have the right to offer you same terms without negotiation?
Mine does with Chk. Three years in - multiple layers - no vertical Pough clause (didn't think to ask).
Best of luck to all Wetzel county.
Permalink Reply by jason irvine on October 5, 2014 at 2:24am
Yes it does. That's why I'm hoping it will slip thru the cracks and why I'm not giving details of who I signed with. It expires Jan 1 2015. Either way if they do something I'm going to fight back. I will not except the same lease or at least try. I've already have a attorney in the works.

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