Penn Virginia lease about to expire. Land men have come knocking but...

   

    We bought a farm in 2012 and are aware that KLMJ bought the Penn Virginia lease that is on our property. It is about to expire July 2, 2015. KLMJ said everything is in place for the lease to be released upon expiration.

  We had a land man (Colonial) come knocking last November (2014) offering $1,500 an acre, 12 /12% royalty for 10 years. He said when our lease expired to call him if we were interested.

  A month ago another offer came from a land man who said KLMJ may be interested and he offered $2,200 an acre, 15% royalty for 5 years.

   We are totally ogm illiterate to all of this and wonder, should we wait? What's the chances a better offer will come along? We do not know how much the former owner got for the lease that is expiring but we do know it was for a considerable amount more than $2,200 and acre. We were told to use that as a bargaining chip. Does it matter that our land has a pipeline right-of-way that runs through it?

  We are in Bingham Township, Potter County and have 43 acres. Any thoughts?

Thanks in advance

Lori

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Mike MurphyPermalink Reply by Mike Murphy on July 1, 2015 at 1:06am

request a copy of the original lease agreement ........did the mineral rights transfer to you when u bought the property .......or did the previous owner keep the rights.........all documents should be available at your courthouse you should have received a copy of the lease when you closed on the property......most landowners have sold but kept their mineral rights  and of course remember those landmen are working for the oil companies not you .........rule of thumb "if a landman opens his mouth he is looking out for the oil company not you".........they want you to think that they are your friend......but really they are just working to make a paycheck from the oil company.....talk to an attorney before releasing your land   also talk to KLJM and see what your release bonus and royalties are also remember you are  setting on more formations then just the Marcellus.....upper Devonian,utica, and possible rome trove   and who knows what is below that

 .....landman=.carpet baggers here today and gone tomorrow

Permalink Reply by Jack Young on July 1, 2015 at 2:19am

I suspect that if you contact JKLM again you may find that their $2,200/acre offer isn't available any more. With gas prices very low in that area (perhaps $1.30/Dth net) everyone has cut back dramatically in recent weeks, and unless you are sitting right in the middle of a possible test well location they probably won't offer you much. And remember that Bingham Township has two gas storage fields which reduce the appeal of the area - it's hard to assemble drillable units when you have to work around storage fields.

We have lots of acreage in Bingham Township, and the other companies who were interested in leasing there a year or two ago (Travis Peak, PGE and Shell) have all walked away. So JKLM really is the only game in town, and as they have no competition you won't do any better than what they offer you at this point. I would sign happily for half that amount - waiting hasn't proven to be a good strategy in Potter County over the past five years!

Just my thoughts - that's what I would do. Please let us know what JKLM says when you talk to them again.

Permalink Reply by Lori Wood on July 1, 2015 at 3:09am

What pushed us over the fence into buying the farm in 2012 was that the ogms would transfer and the realtor hyped up that soon we would get a knock at the door that could possibly pay the farm off. No one told us that the farm already had a lease on it and we never got a copy of that lease until a month after closing, after one of the neighbors told us we were already leased. We have been holding our breath that the lease would be released before any drilling in the area began.

 Our lawyer told me to ask him (the landman for JKLM) for a draft of the proposed lease so she can take a look at it before anything is signed.

Thanks so much for both replies, will keep you posted!

Mike MurphyPermalink Reply by Mike Murphy on July 1, 2015 at 8:44am

seems pretty funny that the mineral lease was not disclosed in the closing of the purchase and I am still wondering if you own the mineral rights .........and that bonus money that was received was actually a rent payment for the 5 year term of that lease so the previse owner keep rent money your property has been paid on your mineral rights ....if you own the mineral rights I dont think that the previse owner should have kept all the rent money........it is funny how you were not informed at closing that your minerals were already leased better ask your attorney about that too something aint right there as far as storeage fields they would be well above any production formations and the driller would just run casing thru that area and drill past it

Permalink Reply by Lori Wood on July 1, 2015 at 8:59am

After the neighbor told us that there was already a lease on our land we saw a lawyer and she printed the lease for us. A couple weeks later, when we got the deed in the mail, a copy of the lease came with it. As far as we know, the previous owner got a lump sum upon signing with Penn Virginia in 2010, for a 5 year lease.

   The real estate contract has the transfer of to ogms to us, included in the sale.

Mike MurphyPermalink Reply by Mike Murphy on July 1, 2015 at 6:59pm

the lump sum they received was a payment of rent for 5 years .......you owned the property for 3 of those years .......the real estate agent frauded you into the sale by acting like the land was not leased and telling you that landmen would be knocking on your door to lease the property  when he or she already knew it was leased........if they didn't know then they were not doing their job very well...........sounds like the previous owner made money from a lease and right away payment then dumped the property  on you.......you get to pay taxes on the right away for the rest of your life but the oil company controls that piece of land .......you should have received a right away agreement also so you know what the previous land owner agreed to in it

Permalink Reply by Lori Wood on July 2, 2015 at 4:35am

Exactly. The seller got so much per square foot for the pipeline right-of-way and a lump sum for the OGM's in 2010, moved away in 2011 and we bought the place in 2012.

   Between the time we signed the contract and closing, the seller ripped up fences, trashed some of the place and refused to close unless we wrote a satement that we didn't want  some of the things we were trying to keep them from taking, that were contracted to come with the farm. It was an Amish farm and before the bank would give us a loan we had to put in utilities, so by closing we had about 20K into the farm and we were very much at the real estates/sellers mercy. After closing when the farm was ours, we went to a lawyer and started a lawsuite. It's a very long  story I have written 2 books about. We have been in court for 3 years. Won small claims aginst the seller, they appealed, went to Common pleas, they settled. We got some of the money back we lost from the stuff that was taken and for cleaning up the mess left behind.

   As for the OMGs and pipeline right of way. If I had any more fight in me we'd go after that too but I can't let the whole sitiation take any more of my time, so we have been waiting for today (the last lease expires) hoping to get what we can. We're very thankful that we may get something out of all this....as I said, the omgs are the reason we decided to buy, so after finding out there was already a lease, July 2nd 2015 has been an important date to us.

 

Mike MurphyPermalink Reply by Mike Murphy on July 2, 2015 at 7:21pm

it like you closed on a 4 bedroom house but after closing found out it was only a 2 bedroom house ........sounds like you didn't do your homework very well and how could you put utilities in a property you didn't own??

you said before closing you had to put utilities in...........I hope u bought place pretty cheap.........sounds like the amish took the Englishman to the cleaners......first time I have ever heard of the buyer spending 20k on a property before they had ownership ........what if the bank would not have given you the money......the amish would have had an electrified house

Permalink Reply by Lori Wood on July 2, 2015 at 7:37pm

A very long and complicated story but in the end we are past all that and love it here and now that the lawsuite is past us and the lease has expired we're moving forward.

  I'll be calling the landman on Tuesday. His offer still stands at $2,200 but we need a draft of the lease so our lawyer can take a look at it before we sign it, if we decide to sign it.

Permalink Reply by Gringo on July 4, 2015 at 1:06pm

You would be smart to listen to what Jack Young has to say, he has more knowledge of what is happening in Potter County than the all the rest of us combined. Taking advice from people who are not familiar with a specific area will do more harm than help.

Permalink Reply by Suzy on July 7, 2015 at 7:02am
Hi Lori. I am a Realtor in Arizona and have mineral rights property in WVa and was just reading some of the Forums. Always interesting. Came upon yours. Two questions: how does one find your books and did you go after the realtor from your transaction? You can sue the Brokerage Firm for malfeasance and fraud and other little things. Most realtors and firms all carry E&O Insurance (errors and omissions). In AZ one files with the Dept of RE and they go after the Realtor. I don't know all your details but you can absolutely go after both realtors and re-coup your incurred expenses due to non- disclosure and not giving you the correct advice. It all falls under the umbrella called Agency. They are Expected to know all your rights ... it's their job being a Professional in real estate. If you need me: suzy@suzybuck.com
In Arizona if a Seller is playing games before closing... you don't close until he puts the items back or gives you a credit at closing for what he took. Again it falls under Agency. Most lawsuits against realtors are for Agency and non Disclosures.
Permalink Reply by Lori Wood on July 7, 2015 at 7:42pm

Hi Suzy!  My Books are on Amazon "Amish Above the Law, Everything for a reason" and
"Amish Above the Law, Karma Farm" 100% non-fiction about buying our farm. Actual
emails to and from the realtor are in the 1st book. There is also a face book
page by the same name full of pics taken during the contract period. We were
played very strategically by the bank, the realtor and the seller from start to
finish. We did not go after the real estate company, a lawyer told us that real
estate contracts are written by real estate lawyers and we wouldn't' win. We
did, however, sue the seller in small claims and won. They appealed, we sued
in County court and they decided to settle, so we are getting back enough to
cover the things that were taken + a little for their mess we had to clean up.
The statute of limitations for going after the real estate company has passed.
We were never told there was a pipeline right-of-way or that the OGMs were
already leased until well after closing. The past 3 years has been such a
stressful struggle that we feel thankful we were able to recoup something and
now we can move on and hopefully get a little money to make things easier for
us. We both work more than we do anything else.

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