Oil and gas lease

rrlund

Well-known Member
Has anybody else here in mid Michigan been approached about leasing for gas and oil? There's been a guy trying to get ahold of me for six weeks or better. My brother called me and said he had dropped off a contract for him too,wanted to know what I was going to do.
The guy finally caught up with me today. I figured it was one of those $1 an acre a year for 10 years things like I've always signed before. This guy was offering a one time payment,up front of $12,000 for five years with an option for another five years for another $12,000.
Said he'd be back in a few days with a lease and a check.
 
rrlund- Not in MI but KY, I got ~$6500 + 15% of production + free natural gas for lease of almost 200 acres.

Sorry, forgot to add...That was for a 1 year lease.
 
I can't offer any advice other than "BE CAREFUL", there's a lot of flim-flam in that gas business. Anybody can get a standard lease and ask you to sign it then try to sell it.
 
Leave him sweat for a while, Keep him hanging, They came around here 2 years Ago Shell, and some other Big names. They were in a hurry have to do it befor the 1st of the year!! They said, Well it been two years and they are still doing maps, paperwork permits and all that goes along with gas wells We did OK. Kept two company"s hanging For 3 months. Always someone behind them wanting gas/ oil leases
 
Do your research.

I read info on Fracking and how it can mess up the water table............Aint worth the measly $12,000 to have water that smells like rotten eggs for 10 years.

ANYTHING you do with this guy you need to get an attorney to review it.
 
Wouldn't you wait 'til they find the actual oil and gas? Then your rights would be worth many, many times more, wouldn't they?
 
We got $19,000 for 9.7 acres from Shell, and $20.000 from Halcon for a 500' pipe line and 100'x100' pad for a d d rig. Don' get in a hurry any one. They are throwing Money around like it's free.
 
Randy, they are as thick as flies to honey at the moment around the county. Most cases that I've heard about are folks being offered $25-$50/ac per year for 5 years. If you are tempted, I would consult a lawyer to make sure it is in your best interest. My personal opinion is that they are not currently interested in putting in too many wells, just locking up rights in case the price is right.
 
This is the standard "I get one eighth" if they strike deal that I've signed before. He was only offering half that when he started out,said he was authorized to pay double now.
I told him that last time I leased,the guy gave me a dollar to make it legal then he must have sold the lease to somebody else because I started getting a check every year for $1 an acre. He said "No,we pay it all up front".
 
Ya,this amounted to $50 an acre up front. Years ago,when I was just a little fella,they drilled three wells in a straight line from southeast to northwest about 3/4 mile apart with the nearest one being half a mile west of here. They capped all of them and never pumped a drop. I never knew of another one being drilled around here since in my lifetime.
Looks like the standard contract. I'm sure tempted to fleece him out of his money.
 
If they struck and paid me enough in royalties,I wouldn't care if the devil himself came out of the faucet. I'd be out of here with the money!
 
rrlund- Back then they only going for easy to reach gas/oil. Now, around here, they are going down a lot deeper and then angle the bit to go up to a half mile horizontally.
 
I'm' Going to slap ya Right Up side the Face for your own good and so you remember this!! "THERE IS NO STANDARD!!" REPETE "NO STANDARD TODAY!!" Sorry, It had to be done.
 
OK,it LOOKED like it contained all the same stuff as the other ones I've signed. It's just the money that's throwing me this time. I know energy prices are up and I haven't leased in a while,but this seems a little "Too good to be true".
 
I have dealt with these for years, If you would like me to review it, send me an e-mail. Whatever you do, do not sign their blanket offer, there is allot of things that are in their best interest, but not yours.
 
All the bs online against fracking is all just that bs, none of it is real, the tap water being lit on fire was that way long, long before any fracking was done. The Oil and Gas industry can be shady, but they are not out to destroy any ones land or the environment.
 
No one should take less than a 1/6th royalty, that is what the State of Michigan gets on the state leases. Also, do not sign an automatic renewal, I would not sign anything for less than $100.00 an acre, and with no automatic renewal, there are several other things to be aware of this is just the start.
 
Don't do it.

Hold out until you're contacted by the actual oil company doing the drilling. They will not offer a "lump sum" settlement. It will be a lease amount plus a percentage of what they retrieve from under your land.

And then don't take their first offer. Talk to your neighbors. Don't let them bully you with "You're the last holdout, all your neighbors are mad at you for not signing. You're holding their money up!" That's a lie, work with your neighbors to get the best possible deal. It may take a while, just be patient and persistent.

If they offer to do surface work, like a test well or pump station, and you can still operate around it, DO IT! Big bucks for a little piece of land!
 
I wouldn't Sign any thing for less than a $ 1000.00 dollars a acre. They have Been getting $2,500.00 to $3000.00 per acre in North West Pa.
 
Ok GOOD I got your att. lol. It may be the same stuff that you have signed in the pass, What I am saying is everything Has changed in oil/gas drilling and contracts. The BIG boys are in town And they have DEEP pockets, and they WANT the gas/oil.
 
It's not like that. This guy has been around here for two months or more now. Said he only has 4 townships here in the county that he's trying to lease. I just got off the phone with my brother. Most all of his land is adjacent to mine in one location or another.
The guy left a contract for him to read a few weeks ago. He said he had gone over it trying to make sure he wasn't signing the place over. Said he couldn't find anything fishy. All looked legit and run of the mill to him.
Like I said,I've signed these things before and they were meaningless. They just expired without a single rig going up anywhere around here. I still haven't heard anything about anybody even thinking about drilling. As far as I know the state hasn't offered up any leases around here of State owned land.
Nobody else has even contacted me about wanting to lease since this guy came around.
 
If they have been doing seismic studies in your area you can't really go by what others have been offered as it may depend on how you property looks in the tests. If they do not have seismic yet then you probably can be guided by what is offered to neighbors - but you can't go too far away for a comparable because different parts of the county will be worth different amounts, depending on the prospects of success if they drill.

An oil geologist can look at two fields that look alike, but can point to one as better than the other. Hard to know what all they see, but it is a real skill.

Watch out though, my mother was going to negotiate with them and they just didn't bother to give her a counter offer at the time and she got zilch. Of course her property wasn't a hot prospect, but the $10 an acre she turned down (in central Kansas) would have been better than nothing since she had a section at the time. She essentially let $6,400 walk, so it is hard to tell you what to do. Your mileage may vary.

We were hoping they would be back the next year but she later had to sell the section for living expenses anyway so it is a moot point now.
 
We could do that years ago with a water well we had with methane gas in it. It would flame up a lot more than what is shown in video. The largest was a ball of fire about 30 inches in diameter. It got to be common practice to stand back when you turned the water on in the bathroom first thing in the morning to avoid a water bath. Finally quit using well after minor explosions in basement and in well pit. The barometric pressure and the amount of water pumped was a big factor in the amount of gas released. The state tested the amount of gas available, but I cannot remember. It would have not been economical feasible to capture it and use it though. Several wells ion the area were that way.
 
(quoted from post at 18:07:17 07/21/14) All the bs online against fracking is all just that bs, none of it is real, the tap water being lit on fire was that way long, long before any fracking was done. The Oil and Gas industry can be shady, but they are not out to destroy any ones land or the environment.

I wish we could stamp out all the BS against fracking. We need that carbon on the surface and we need it now.

The oil engineers live in the same communities that we do - they drink the water, breathe the air, and their kids go to the same schools.
 
My experience with a gas lease. I received a yearly check for a number of years on a lease that my deceased Aunt left us. Called the folks who leased the land. The well was already in. had been for a number of years. I asked when did they plan on activating the well. Reply. Probably around 2050. He stated there were no pipelines anywhere within 50 miles of the well. Is there a pipeline near your land? Without the pipeline they are just speculating. is there proven gas or oil wells in the area?
 
I've said it a hundred times and I'll say it again, with something so important and a lot of money at stake CONSULT A COMPETENT TRAINED LOCAL PROFESSIONAL instead of lay opinions especially from so many different states and jurisdictions and practices. When hurry up or pressure tactics are used it always makes me wonder???

HOWEVER its your land your money your choice none of ours, so do as you please.

John T Country Lawyer
 
Ya,IHRed lives up in the far end of the county and he says they're offering the same thing up there. This guy told me that they didn't necessarily have to drill on me,but they'd pay if they were pulling it out from under me. That's better than what one of'em told me several years ago when he wanted me to lease. He just said "fine,if we drill on somebody else close by,we can just pull it out from under you and not pay you a cent.".
This might be one of those times to just take it as found money and be real happy with it.
 
What problems in particular? Like I said,any time I've ever signed one,they just expired and nothing ever happened.
 
I did not take it that you were, or were not, just know that most people are led to believe that tap water being lit on fire has something to do with it, which it does not, natural gas is just that, natural.... I only wish fracking was more successful in more formations.
 
i would have countered with go ahead and drill smart azz the day you start drillin i'll take a sample of my water well and have it sent out and verified,,,, or another fella offered to lease and he can drill and meet you down there....
anumber of things you can do to agitate
al
 
That's what's throwing me John. I can smell a high pressure scam a mile away. Salesmen try it on me all the time. This guy is so low key and the offer is so high it makes me wonder what's going on.
Any oil lease I've ever signed before,some nervous little guy has been standing at the door with the engine running and a pen in his hand saying sign this now,one time only offer,I'm leaving.
This guy has called a few times,was pretty calm. I called him back and told him to stop over. I don't think he even had a pen with him. We sat down,drank some iced tea,chewed the fat,he gave me a contract to read,told me what he was paying,said he'd see if he could get ahold of my brother to see what he'd decided and he'd be back in a few days. Didn't say when specifically.
It might be a whole new trick,but I know when somebody is giving me a prepared sales speech,and he didn't have one.
 
Well here in Pa. they weren"t What you or I call "High press". I hung up on him three times in two weeks. BUT they DON"T GIVE UP either, Guy From Shell called ever week for a month fore I started to talk to Him. Who does This Guy Work For? That is the question you need answered. Get the big boys with deep pockets.
 
Hello rrlund,

Just because he was SMOOTH it was still a well prepared sales pitch! Like John T. stated get local competent representation, and sit back and wait for the professional litigator to advice you.
He will be on your side. The other guy does not work for you does he? There are a multitude on considerations. Investigate now and make a educated decision hat will protect your land after they are gone!
My 2 cents.............

Guido.
 
rrlund- sounds like you are in the same boat I was in two months ago. For years, strangers kept knocking on my door wanting to lease my oil/gas rights. Since I always answer my door with shotgun in hand they seemed quite perplexed. I informed them to leave my property. Then I started having neighbors showing up with the speculators trying to get me to lease. The neighbors were only looking for 'Bird dog' fees.

One day, the owner/drilling rig showed up. He showed me the half page contract for a one year lease. I read it, signed it, got the check and cashed it.

My neighbors thought they were getting a better deal by signing a contract for less money and less percentage of royalty. But, they signed for 5 or 10 year lease.

The way I see it is...Each neighbor signed with a different operator. My contract says the lease can't be sold(it is only a one year lease). I'm square dab in the middle of a few thousand acres of pretty good land.

So, if anyone wants to drill, the neighbors have signed off for 5 to 10 year leases, while I retain the right to renegotiate the prices after my one year lease is up.

So, my guess is...there won't be any drilling around here.

I really hate that because we have the resources.

Greg
 
Just north of me in Pennsylvainia there are alot of wells and the pipelines going in to transport the gas.

There are some problems. Some of the companies that offered 15-18% royalties are now deducting production costs. That really lowers the overall percentage. I believe there is a court case to rectify the issue.

I know there are some guys on here that live in the drilling area of northeast and central PA. They can provide a great deal more info than I can.

I had a gas lease a couple of years ago and two wells that were drilled within our group did not produce gas in commercial quanties.
 
wouldn't hurt to call Susan Topp from Gaylord.
she's top of the line in lease representation, and a few locals were very pleased with her services. she would also know exactly what's going on in all parts of the state, and who's buying for which company.
 
There is gas and oil in Central Michigan, My Father in Law was an oil field services engineer, I met my wife in Lansing as she stayed there after her dad had been assigned to manage the central Michigan field office for Schulmberger. As John T. said have the lease looked over by an attorney, yes you're locking your options up for oil & gas for 10 years at $24,000. No telling what's really going to happen, I'd research the company offering the lease, are they purely speculating or trying to bundle enough land to make a project attractive. Unless Michigan law has changed since I left they have to have so much land to drill, if adjacent land is drilled on and the owner of your lease fails to act to develop your tract they can be sued and made to pay you for missed royalties. The big question is if you lease does your lessor have enough money to drill, are they willing to sell or reassign the lease or do they have enough money to pay damages? After/as my my Father in law retired he and a few of his cronies bought up a bunch of gas leases in West Virginia (some say at one time they held leaseholds on 25-30% of West Virginia), they sold some of the leases off to finance some wells and ended up sinking two wells, they both are in production but not throwing off significant money, one doesn't even break even but we get to deduct the depreciation of the well, another throws $100-$200 a quarter, with the depreciation there isn't much tax liability. Of course he had 25% of the syndicate and left equal shares to each of his 4 kids so the money is about 1/16 of the wells profit (1/4 of a quarter).

Again find out about the company and make sure you know all the rights and privileges you are granting or leasing and find out the financial stability of the company buying the lease.
Friends of ours fought Consumer's power over a lease for a right of way for a gas pipe line. He ended up getting a much better deal than his neighbors because he fought it. They got the same money but a much more restrictive lease as it was considered adverse. The public's need for the pipeline allowed the state to force him to let the lease but CP wasn't allowed to share or reassign the lease, couldn't have anything protruding from the ground and they could only work on the right of way when access to the ROW was over bare fields(couldn't run on planted ground) unless damages were paid up front. This worked well for them as 10 years after they let the lease CP assigned/shared it with a power transmission company, the transmission company ended up buying another ROW to get around their farm. He said it was worth it to see the look on the line crew leader's face when the Sheriff's Deputy told them to leave the farm or they'd be arrested and their trucks and equipment impounded.
 
It is basically free money wanting a home. O/G leases are simple contracts by and large, I would think the only difference from state to state was based on local and state law, if a successful well is drilled within the section that your land lies in you will receive some royalties regardless if you leased or not but you will get more if you are leased and there is always the chance they would drill directly on your land. The only time I ever worry about an O/G lease is when they don't renew, which has happened in my part of the country since the natural gas boom/glut.
 
I live in Butler County PA. (30 miles north of Pgh.). We're sitting on top of the Marcellus shale, which is a huge deposit running thru much of PA, WVa, and eastern Ohio. A good source of data in this area can be found on Range Resouces website. They are a big driller in SW PA and publish a lot of useful data in their presentations. Also the website Marcellus gas.org has data on every well drilled in PA. We have published a booklet on the numbers in our area, which might be useful to you. If you give me your mail address ([email protected]), I'll send you a copy. I don't know what the oil or gas fields in your area are
but a little research shoud net similar sources for you area.
First of all, read the lease, if you don't like some of the terms, make changes. You've negotiated before. It's not a contract until you both sign it.
 
If its the same people that were up here in Kalkaska a couple of years ago, send them packing! They were up to $1750 an acre, a lot of 1000-1500/acre, then one day they packed up and were gone. Stiffing A LOT of people. No check, no explanation, nothing. Encana, Chesapeake, and I think Chevron were the 3 big ones. If there are enough acres signed around you, push for a non-developmental lease. Then you don't have the mess on your property. That is if it is gas they are going after. They can horizontally drill close to 9000'. But be ready to hear a lot of the people complain about fracking. HUGE controversy about that up here.
 
Around here they started out at $50/acre. They even got up to $70 an acre for me and I only had 5 acres they wanted. I've heard rumors of people getting $200/acre but nothing from the horses mouth. The most I was ever offered was the 70 and I never signed. Think it was a one time payment good for 7 years. If it were more acreage I'd of considered it more. I'm not saying hold out, but if you have a bunch of land dead center where they want to be, you might get more.
 

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