We are due for lease renewal NEXT MAY not the current one coming up. 

Our property lies mostly in Beaver County (near airport). 

Went to a meeting maybe a month ago. Range offered all of us $3500/acre signing bonus and 17% royalty. They said they are offering us more than last lease so they could sign us up early as they are attempting to show a pipeline company that they have all the leases so that the pipeline company will put the infrastructure in place.

The kicker is they will only pay the signing bonus spread over the 5 year timeframe (1/5 a year) do to he fact of them being land rich and cash poor right now- can't sell gas till infrastructure in place to transport. ALSO if they drill at year 2 you would not receive the 1/5 of your signing bonus PLUS the royalty, you would only be guaranteed your royalty with a guarantee of $100,000 paid to you within that year. So if I was supposed to receive a $100,000 (1/5 of signing bonus) that year plus $20,000 in royalty for a total of 120,000 that year I would only be paid $100,000! So essentially they would short me for that year alone the $20,000 of signing bonus!  ALOT of us were up in arms but they said they have a ton of people signed so if we don't agree then they will essentially drill around us and not renew a lease...mind you we have well over 100 acres.

The other thing that has happened is Range Resources has contacted a ton of attorneys in the area and Range will be paying them $50 acre to get the paperwork done so now the landowner will not have to pay out of pocket. They presented it as if they were doing everyone a favor! This includes the lawyer many of us used in years past who we really trusted! Can you say CONFLICT OF INTEREST!?

Not sure how to handle this...Range has essentially gotten rid of all the competition since they have virtually all the land locked up.

THOUGHTS?

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see if you can lease just one of the formations at a time your setting on a triple play  yyou should try to get three leases one for the marcellus one for the upper devonian and one for the utica reserving anything below the utica for later leasing ........remember the utica is not the bottom productive formation ....there has been exploration below the utica but no buddy is saying what they have found .....when these companies came in here 5 years ago they knew what all was under us but promoted the leases around the marcellus not talking about the upper devonian or utica  but now a few companies have drilled the utica in west virginia and pa and got some real good results on those wells and they been poking upper devonian in sw pa with good results ... if they wanted to make payments try just for a 2 year split on the bonus ......remember things change ....companies come and go and with the uncertain oil and gas future range could bankrupt and you never see the money ....if they are cash strapped right now and prices stay low how long can they last  look at the cheasepeck mess they are lucky there hasnt been a fire sale of that company already  and they control over 1 million acres in this area  5 years is a long time to get your bonus money 

are those net leases or gross lease or market enhancements?

The most likely reason you didn't get renewed is the lease budget was exhausted.  Once they hit that number, it's over until they get new budget

To landmen, it's known as "the landman's revenge."

Mineral owners try to wring better terms too long and the budget gets exhausted.  Next thing they know, no one will even return their phone calls--the jig's up.

The situation calls to mind that famous line from the police detective in the movie Scarface:  "Now, now Tony.....Don't go too far."

Range's lease is horrible and apparently non-negotiable.  Even with excellent representation, they will not negotiate the terms of that very horrible lease.  Never mind the bonus payment, the lease we were offered was like it was from the 1800's.  Surface to the core of the earth with all sorts of ridiculous and outdated clauses.  Previous experience with them and their employees is not good. 

If you want to make money with Range, buy their stock, DO NOT sign their lease. If enough landowners stand up to them, maybe they will start to see the light. 

I personally would eat dirt before I would sign the lease they offered.

Maybe you can get a land owner's group together.

Well, Martha:

Sometimes, where leases are concerned, "no" just has to mean "no".

mornin folks
 very interesting  discussion  in this situation a landowners group would be a good thing but all people being represented would have different situations that could not be covered by a group agreement it does however give you strength in numbers maybe if you could get a guaranteed 2 or maybe 3 years bonus  and here is the BIG one a true 17% WITH NO DEDUCTIONS PERIOD there is another thread about not signing a gas lease on GMS. IT WOULD SUCK to be left out in the cold because they would use "law of capture" to line there pockets on your minerals personally we had no idea that leasing was going on we had a guy show up in the driveway and once we contacted them we found out  we where labeled unfriendly or hostile  landowners. Now  everyone concerned with our lease just wanted to go away but as we found out we where the donut hole you hear mentioned on this website so we sorted out a deal we could live with and we signed glad we did now this was in 2013 but I understand your frustration best of luck and wisdom  keep us posted

I don't believe law of capture applies to fracked minerals. But I am not a lawyer.

I dislike being the bearer of bad news, Martha.  But in PA the Rule of Capture most assuredly DOES apply to fracked minerals.  At least that is true today.  It has not been challenged in court . . . . . . . yet!

It's a quite old discussion going back at least five years.  Today in PA they cannot drill your (unleased) land, but they can frac your (unleased) land and capture any gas released by and through that action.  The law on this, believe it or not, goes back to the origination of the Rule of Capture a long, long time ago.  At that time, for water wells, it was permitted to dynamite your well in order to increase (water) production.  If the action of the subterranean dynamite jostled your neighbor's property, that was his problem.  Such dynamiting was permitted by PA law regardless!  So even though they cannot drill your unleased land, they most assuredly in PA CAN frac your land . . . . whether you like it or not . . . . and thereby legally release and steal your natural gas based on Rule of Capture.

Now mind you, Martha, I'm not writing to express agreement with this situation.  I do NOT agree, and in fact I think this is unfair, wrong, and stinks to high heaven!!  But I don't make the law here in PA.

I doubt the argument that Range is "cash poor" - just go to their webpage and read all the investor presentations and press releases.  The company has NO debt!!!

In any business - Multinational or "Mom and Pop" - you keep your overhead low and maximize profit.  Someone in the High Command decided to pay out lease extensions per year, over 5 years, rather in one lump sum.  This was probably backed up by one of their "bean counters" in the bean counting department who saw significant cost-savings by spreading out and paying lease "bonus" payments yearly instead of one lump sum.  In this way, Range gets to hold all of their renewal acreage rather inexpensively, rather than going into the "hole" so to speak by paying out millions upon millions in 5-year extensions.

Probably the best thing is to get an abstractor to quickly research whose leases are set to expire in the next year (leases in your township and neighboring townships), compile that data and start a land group ASAP!!!!  Then contact an attorney outside of Ranges "sphere of influence" - where they do not operate, say Indiana, Cambria, Somerset, or Clearfield County.

Good Luck!

Great discussion everyone -- everyone is making good points. Range is playing divide and conquer. The only way to increase negotiating power is to form a land group. Finding the right oil and gas attorney is paramount to form the land group and negotiate landowner friendly terms from a business standpoint. And, yes, Range saying they're strapped for cash is just a negotiating tactic. If they say that again, I'd ask them to look at their presenations regarding them having the best of the best acreage/productions all the way down the hydrocarbon continuum of shale layers/productive pay zones.

Best of Luck

Terri, I have sent Craig a message and he is very knowledgable about your area..by the Beaver county airport..hopefully he will give some details of what is going on in your area..I know CHK is drilling all around you ..I was supprised to hear that you are leased to RRC...lets hope he can shed some light on what is happening ...

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