Natural Gas Lease

[keving]

Anybody have a gas lease on their property? I'm getting ready to sign a 10 year lease and I was just wondering what concessions you got the gas company to give. In addition to mutual determination for well site, 900 foot setbacks, and all the other standard items in the lease, I'm asking for my LP bill to be paid or have the gas company provide a monthly allowance for LP.

Your thoughts?

 

[plowking]

I don't know if there are lawyers for this situation. My wife's parents had a pipeline go thru their field. Different story here that you will be selling your gas to them. Should be worth more then that. Do you own the rights to your land or does the gas company own them? How does your insurance handle the situation. If there is an environmental problem,lawsuit who is responsible? plowking

 

[Western]

I don't have a lease, but had a friend that did.

I would want a shorter lease, if possible, like 5 years.
I would also want them to keep everything well maintained, clean and painted.
What about reclamation? if for some reason they shut it down will they remove and clean up the aftermath?

I would get every dime I could, since you will have to look at it every day.

 

[Captinjack]

I just replied with a long post, but the web site for some reason or the other wouldn't let me post it and all was lost. I don't have time to do this all again so here is the short story.

I have property in the Morgantown, WV area and have had discussions over the past 3 yrs. and 3 different leases proposed. Each lease gets better as time goes on.

This is not conventional gas drilling as they will be drilling 7000 ft. deep and need "brine" tanks and equipment that will require daily visits for maintenance.

It is unacceptable to me until I see one of their installations and find more about what is involved. They said that they will be drilling shortly about 2 miles from my property soon so until then..........it's no deal.

I believe that it would be prudent to hold out longer in any event as they have greatly improved the value of the lease with each conversation. I am going to wait and see if the hit it big then my lease may be worth substantially more $. If they don't hit big, they could just walk away and leave their mess behind.

Their first contract was laughable in the ridiculous terms and the $ they wanted to pay. I don't trust these folks and would sign nothing until. I have everything reviewed by lawyers familiar with what they want to do.

 

[keving]

Reclamation is built into the lease after drilling and if they shut it down. It's very likely they will not be drilling on my property but my property will be in the "field" of gas.

State law and the lease reflects that liability is on the driller.

Chesapeake Energy is the company that is doing the leasing and drilling in my area. Fortunately, I own my mineral rights. Others have found that they don't own their mineral rights.

 

[ancientlake]

I live in northeast PA, also an area where the marcellus shale play has taken off recently. First, of all: what are you getting? Until about 6 months ago, the landmen were getting landowners to sign boilerplate leases with terms very favorable to the gas company, offering $50/acre, 12.5% royalties, leases that automatically extended to 10 years or more, and no Addendum to help the landowner protect his land and asset.

Today, they are paying $2,700/acre, as much as 18% royalty, and a 5-year lease is the norm. In addition, an Addenum is added that addresses all the protections you are concerned about. I have signed such a lease recently.

Spoke with some landmen last week who were having a going away party. They told me they were on their way to WV to start the process again -- getting landowners to sign leases for $50/acre. Email me and I can provide you with the Addendum to the standard lease that is the norm up here.
jcs@ancientlake.net

Chris


Beware!

 

[ancientlake]

One more thing. My understanding is that the because of the pressures involved with Marcellus gas, and all the expense involved, it really isn't woth messing with getting gas for your own use from the types of wells they will be drilling. Up here, they agree to allow you to take 300,000 cubic feet/year for personal use, but in lieu of taking the gas, they agree to just pay you for the value (at the wellhead) of that gas for not messing with it. Better way to go. This is one of the Addendum items...

 

[RobJ]

Fortunately, I own my mineral rights. Others have found that they don't own their mineral rights.

If you own the rights then you can call the shots. But if you play to much hardball then they could go nextdoor, the reserve probably covers a large area.

If you don't own the rights then you are really entitled to nothing. My neighbor owns a small gas and oil company and I asked him specifically. If you don't own the rights and you get any money...take it. Because they can and will get on the property through the courts. He tries to play fair but some landowners are hard to deal with. Some even ripped up their own fences and said his guys did it...just to get a few bucks.

 

[Lasgambler]

Every state might be diff. I have had oil and gas leases for about the past 20 years down south. (MS) The leases have always been for Three years. If the operator does any work to develope the feild the lease goes on indefinatly.

 

[Wayne County Hose]

Ancientlake is right on. This has been the norm around here. best thing is to have a lawyer and form a landowner group. The more acreage involved, the more money and better terms they will be willing to give. Visit this site, Northern Wayne Property Owners Alliance. This is a landowner group with over 50,000 acres up for bid to the gas companies, Chesapeake and Stone Energy being the main 2. They will tell you to sign now because they might up and leave town tomorrow. They said this at $25 an acre, $100 an acre, $250 an acre, etc, etc. Our hunt club signed for $1850 an acre and could have gotten more, but, hindsight is 20/20.

Also, be ready for a barrage of negative press from the tree huggers. Your water will be poisoned, they'll use nuclear waste in the soil, it never ends. There will be full page ads in the papers with what "MAY!" happen. No facts, just scare tactics and outright lies.

 

[plowking]

Tree Huggers?...I thought that's why they make backhoes. Or is that because of exwives. I'm still married so I shouldn't be digging any holes soon. Up here the issue is water rights for profit. Now those meetings can get ugly. plowking

 

[Flatheadyoungin]

i didn't read the replies..

i read somewhere the other day on the net, that gas companys are really hitting WV hard and they are some high pressure sales guys feeding people a lot of crap.......like offers of $300 per acre when other companys are offering, for the same quantity, $3500 per acre and much more % of what is pumped...

do your homework, don't let them pressure you.......you have the power and there are many companys that will make offers....

or so it sounds from what i read.....don't know how valid it was..

 

[dmccarty]

Follow the link that Wayen County Hose posted.

You might also want to search the Wall Street Journals website for stories about groups of landowners getting together to get deals from the oil/gas companies. The article was just in the last couple of weeks and talked about, but did not list websites, where landowners where talking about what kind of deals they had been offered. This is one of those deals where the owner does not usually know the worth of what they own. Gotta be careful. Like selling Timber.

These websites are helping with knowing what the lease is really worth. And some landowners are banding together to maximize the lease.

Some of the companies like to buy up the leases from a group of landowners because it makes things easier but maybe more expensive.

You might have to pay to get the WSJ article.

Good Luck,
Dan

 

[moeh1]

Penn State has some excellenty resources that you should read.
http://naturalgaslease.pbwiki.com/