Is it true you can only lease your property two times?
Our landman said you can only lease your property two times? I'm wondering if ones lease runs out adn then the grid they are in starts producing gas, are you no longer able to collect rolyalties because both your leases are done?
I'm thinking all these properties are being leased and some in their second contract and wells are being built but pipeline might be a ways down the road?? What happens if the 2nd contract runs out?
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Permalink Reply by Brian V. on
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If you currently have a lease that is do to expire you can sign a new lease. The new lease only becomes effective if your currently lease expires. Meaning, if you are pooled onto a unit (the company with the first lease files a declaration of pooling that includes any of your leased acreage) the new lease does not become effective. Most leases have very loose language that defines operations. These operations could include making a well pad, drilling a well, reworking a well, stimulating a well, building a pipeline for that well....ect. I spoke with a guy recently who's job it was to go look at property and verify if the company holding the current lease had not performed any "operations" on the land before the lease expired so that the "top lease" could become effective.
I'm not sure what you mean by second contract, but I'm guessing you mean secondary phase of a lease which would be the unit and royalty phase. If you are in this phase it could be some time before you get your first royalty check but if they have drilled or plan to drill and you are withing the unit you are in the secondary phase of a lease. -
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Permalink Reply by Robin Jackson on
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I totally am confused by top leasing. My grandmothers lease is about to run out (several discussions on that have gone on, you can check them out) she has rec'd notice of siesmic testing that will occur soon by a company which her gas lease holder is aware of and are buying the results. That much I know to be true. However, her gas lease holder (Anadarko) has informed us taht they have already CUT her check and she is locked into her lease and has an extension clause(she does)..Her lease states if they pay her again she is locked in whether she chooses to cash the check or not.
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Permalink Reply by Brian V. on
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If it's true she has an extension clause in her lease then she is locked up for another 5 years. I'm not sure how she could get out of it. If she claims she was not aware, it will not fly, mostly because the lease is a legal document that she signed. A top lease can't be done if the lease has an extension. that sucks. But like I stated before at least PA has drilling. NY has shut the door and thrown away the key.
Our lease expired in Tioga co. At about the same time all of ERM's competitors pulled back offers for what ever reason. We're just holding tight. No drilling going on near us so eventually they will be back. We're looking for $3-4k with an 18-20% royalty. I know we will get it eventually. Heck, it is worth it if you look at what other shale gas plays are paying. -
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Permalink Reply by Robin Jackson on
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We signed 4mo. ago for 2,500 in Covington twp..Covington PA
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Permalink Reply by Robin Jackson on
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We did..In Covington. Grandma is in Nauvoo.
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Permalink Reply by Robin Jackson on
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Another thought , the property we are referring to that Grandma holds the MR to is our property now..Deeded to us and MR come to us when she passes. She is 92 and in poor health, I'm thinking she may not see this prosper. She has a well behind her in Nauvoo but hasn't rec'd any info about being in a track. The landsmen for that area said she isn't in a track. Anadarko owns her lease and told me her check will be there before Jan 7 2011. Can't see why they would do that unless they have plans for her property .She has (we have enough) enough for a well. The testing is going to occur soon.
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Permalink Reply by Brian V. on
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Any lease extension for less than the going rate is more than worth it to the lease owner. Most leases end up getting flipped in Billion dollar deals. Kind of like what happened with all the East leases when Shell swooped in.
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Permalink Reply by Lynn Wigglesworth on
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Is your grandmother's property in Nauvoo leased to the company drilling the well? Her property might not be in the unit for that well...units are designed around where the horizontal wells will go...usually SE/NW in this area. So units are often long thin rectangles, oriented NW/SE to the wellpad.
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Permalink Reply by donna elliott on
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Doesn't first right of refusal mean no automatic lease renewal?
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Permalink Reply by Lynn Wigglesworth on
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No; only the gas company has 'right of first refusal'. THEY can decide they don't want to renew the lease, but if there is an automatic extension, the landowner doesn't have that right. That's why you have to fight for addendums that will protect you (like an addendum to specify NO automatic renewal) and be careful what you sign. But with East, chances are you will be put in a unit (although maybe not a producing unit) before your lease expires anyway, so it doesn't matter.
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Permalink Reply by donna elliott on
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thanks
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