Replies to This Discussion

Permalink Reply by David Mason on November 14, 2014 at 6:03am

Jim,

Met with a lawyer in Pittsburgh on Monday - he reported his client in WashCo rejected a $6200/20% no deduct lease.  He didn't tell me township or Lessee.

Glad to see you're out there slugging it out.

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Permalink Reply by Adam Martin on November 14, 2014 at 6:14am

I just attended a meeting in Blacksville, WV that was hosted by a group called US Mineral Rights. They are based in Pittsburgh and they negotiate leasing for large groups of land / mineral owners. My family has not signed with them but they said that you should get 5k+, 18% and no deductions for just Marcellus and you should expect the same for Utica and Burkett. That is for a 3 year lease, with a 4th and 5th year option that will cost the operator another 2k for each additional year so that would be 9k total if they took 5 years to produce your mineral. They are putting together 1284 acre production units and are negotiating with multiple operators. If anyone would like their info, DM me and I'd be happy to provide.

We have not decided if we are going to sign with them but the numbers seem to be much higher than we've had offered by many of the landmen who have knocked on our doors.

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Permalink Reply by Chris on November 17, 2014 at 9:20am

What does US Mineral Rights get paid for representing you?

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Permalink Reply by Adam Martin on November 17, 2014 at 9:29am

They get 5% of your up front bonus payment. So with numbers they say they will get you, 5k per acre, it would be $250 bucks per acre. I went back thru and did the numbers based on 5% of a 1280 acre unit and your talking 320k per each unit they put together. It doesn't seem like they are making a killing but I'm also not sure it seems like they are making enough money for what they are offering. (red flag)

My family currently has a few offers from a landman company offering 2500 per acre, 16% and deductions so even factoring in the 5% take for US Minerals, it would seem like it's better to join up with them vs going it alone. But the obvious advantage is what makes me second guess joining up. My family still has not come to a decision on what direction to go.

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Permalink Reply by Adam Martin on November 17, 2014 at 9:32am

And they may be completely on the up and up, so my comments are not to defame them in any way. I just don't know enough about all that is involved when signing with them. My family is being very cautious as we've seen a lot of folks being taken advantage of so we just want to be sure...

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Permalink Reply by Chris on November 17, 2014 at 9:51am

5% is fairly standard, I've seen deals like that around. Its not a huge amount for them but its also very low risk since they are basically just shopping your leases around to the operators so they don't have much upfront cost. Basically a couple guys with connections can do this and make six figure payouts each on it.

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Permalink Reply by Adam Martin on November 17, 2014 at 10:16am

Agreed, this is a Husband / Wife team and they do have some pretty impressive software which shows the parcels they have locked up and how it will impact your properties. My family has multiple parcels in a few different area's so anything that we sign does not guarantee that it will all be put into a unit and leases. That's part of our hesitation. This company also brings along an arm of Wells Fargo Wealth Management and they are offering to assist in managing the money along with limiting your tax exposure when taking on any windfall type of money.

I like that they put this into a 3 year lease for only the Marcellus strata, with the 4th and 5th year as an option at a cost of 2k per year to the operator.

You said standard with regards to the payment, do you have any experience with signing up in this kind of group? I'm looking for folks who have experience so they can offer some insight. US Mineral Rights told me all of the good stuff, I'm looking to hear everything else that may be good, bad or indifferent so we can make an informed decision.

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Permalink Reply by Chris on November 17, 2014 at 11:25am

I'm a Landman so I've done something like this before in Texas in the role of US Mineral Rights. I would be wary of what the upsell is from Wells Fargo as there isn't much to be done to minimize tax payments on royalty income and they will likely try to steer you into high load investment products. I'm not sure how much of a bonus/royalty payout you are due for but if its just a couple hundred thousand you are probably better off just to stick that in an index fund with Vanguard. That mapping software is probably ESRI Arcmap. I would say your best bet with these guys is not to get locked into too long of a commitment with them to market your lease. Give them 30 days and see how it goes. 

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Permalink Reply by Adam Martin on November 17, 2014 at 1:45pm

I'm not so eager to deal with WF as others may be but I am interested in hearing about forming a family LLC which we have already discussed with a few lawyers. We currently have 2 wells in production and another 6 planned for drilling on leases signed in Marion and Doddridge Co. This last piece is close to 500 acres over 8 separate parcles in the same general area in Mon Co WV. The only appealing thing about having someone like US Mineral work a deal for us is to maximize as many acres as possible in however many units they can. If they can get the numbers that they have advertised for Marcellus, Utica and Burkett, working with the group will get us further than we have on our own, dealing with each company that knocks on the door or sends a letter in the mail.

Permalink Reply by wandering juju on November 17, 2014 at 10:35am

more land owner groups who don't write the check  but take a percentage of any lease made for the next 2 yrs..  no thanks.. best to deal direct..  and if using a lawyer pay them the 100$ review fee. not a 3k or more fee at all..

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Permalink Reply by al raptoria on November 17, 2014 at 7:40pm

Please note which STATE your Washington County is in as nearly all 50 states have one. Thanks.

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Permalink Reply by wandering juju on November 17, 2014 at 10:34am

you can decline anything.  doesn't mean you will get paid more.   drilling block next door can basically mean nothing at all

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