Gas and oil lease - The HuntingPA.com Outdoor Community
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post #1 of 22 (permalink) Old 01-04-2011, 11:35 AM Thread Starter
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Gas and oil lease

Hello all, i have a company out of Ohio that wants to lease my land, roughly 105 acres, for the drilling of a gas well. My question is what kind of terms should I be looking for in a fair deal? I am not really sure what terms are fair since I am basically clueless about the drilling industry. Thanks in advance for any advice

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post #2 of 22 (permalink) Old 01-04-2011, 11:55 AM
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Re: Gas and oil lease

Don't search for legal advice on HPA...hire an attorney who specializes in oil and gas leases. This is a long-term committment that you'll be making and you have a lot to gain or lose, depending on how you handle it.

Shut Up and Drill
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post #3 of 22 (permalink) Old 01-04-2011, 12:05 PM
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Re: Gas and oil lease

investigate whether or not there is a landowner's coalition in the area.
Join them if there is.

Sign-Up bonuses are anywhere from $2000 - $3000 per acre for a 5 year lease (if they don't drill in 5 years, the lease reverts back to you) with the same payout in 5 years.

Royalties should NOT be below 15% (18-20% is your goal)

DO NOT SIGN THE LEASE until you read and understand the lease!
If you don't want them drilling within XXX number of feet from this, that or the other thing, put it in the lease.

TEST YOUR WATER BEFORE YOU SIGN THE LEASE!
Pay the scratch to have it independently tested... I would have 2 tests done by different laboratories.
One thing to consider is attaching a notorized copy of the water test results with the lease, with a clause in the lease that states that any change in water quality will result in X,Y and Z...

Put everything you want in the lease up front... during negotiations, you and the lessee can work on the details.

In an age of universal deceit, telling the truth is a revolutionary act.
<span style="font-style: italic">ixnay on #11534</span>
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post #4 of 22 (permalink) Old 01-04-2011, 12:17 PM
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Re: Gas and oil lease

Quote:
Originally Posted by erschiessen
Sign-Up bonuses are anywhere from $2000 - $3000 per acre for a 5 year lease (if they don't drill in 5 years, the lease reverts back to you) with the same payout in 5 years.
The price of gas is very low right now and company's are generally no longer offering $2000-$3000 per acre. If the company desperately needs your property to complete a unitization, you may get this, but the chances are, right now, you won't. Not sure what you mean about "the same payout in 5 years."


Quote:
Originally Posted by erschiessen
Royalties should NOT be below 15% (18-20% is your goal).
In Pennsylvania, companies are required to pay at least 15% in royalty.

Again, contact an attorney!

Shut Up and Drill
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post #5 of 22 (permalink) Old 01-04-2011, 12:24 PM
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Re: Gas and oil lease

I think the minimum in PA is 12.5%, but I could be mistaken.

In NEPA, leases have been for 5 years - with another bonus if your property was not in production to perpetuate the lease beyond the 5 years.

Crude Oil prices are on the rise... NG prices will follow suit.

He DEFINITELY should contact an attorney that has experience in leasing.

In an age of universal deceit, telling the truth is a revolutionary act.
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post #6 of 22 (permalink) Old 01-04-2011, 12:30 PM
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Re: Gas and oil lease

Quote:
Originally Posted by erschiessen
NG prices will follow suit.
I hope so!

Shut Up and Drill
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post #7 of 22 (permalink) Old 01-04-2011, 12:35 PM
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Re: Gas and oil lease

Quote:
Originally Posted by erschiessen
I think the minimum in PA is 12.5%, but I could be mistaken.
Actually, you may be right. HB 2214 was in the state legislature over the summer and would have raised it from 12.5% to 15%, but now that I'm thinking about it, I'm not sure if that bill passed.

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post #8 of 22 (permalink) Old 01-04-2011, 12:37 PM
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Re: Gas and oil lease

I would strongly recommend consulting an attorney with mineral rights experience! Every word in the contract needs to be reviewed.

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'Pinnin Ain't Easy' 'TR' East Ohio


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post #9 of 22 (permalink) Old 01-04-2011, 12:37 PM
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Re: Gas and oil lease

Pa min is 12.5%. best advice so far was hire a attorney who specializes in gas/oil lease.
Clark law firm from Peckville Pa is very good, and specializes in this.
Also a web site called RLSTORE is very helpfull.

Google Marcellas gas lease, read all you can. The friendsville group has their lease posted on some web sites, it was a good lease to read and learn from. May be better ones out their now.

Your never to old to learn something stupid
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post #10 of 22 (permalink) Old 01-04-2011, 12:48 PM Thread Starter
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Re: Gas and oil lease

The company is Cobra Mineral or something like that, they are offering 12.5 %, 8,500 spud fee, right of refusal to any right of ways or drilling location, 400,000 of gas per year for 2 dwellings, and 100 per year for leasing the rights. I will be contacting my attorney and doing more research thanks for every ones opinions and thoughts. I have never dealt with this before and really had no clue as to what to expect, I didn't even think of contacting an attorney until you guys mentioned it. Thanks again

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