Anyone have a natural gas well on the homestead?

Michael W. Smith · #21 04/16/11, 08:07 PM

Quote:

Originally Posted by earthkitty

One of the properties we looked at before we bought this one was selling with the current owner retaining the mineral rights...I thought that was crazy! Who would buy a property without the rights???

Why would anyone WANT to sell the mineral rights with the property - especially if there is already a producing gas well on it that produces monthly royalty checks?

Around here sometimes you can buy land with the mineral rights, and sometimes you can't. I'm sure anyone who sold land here in the last 10 years with the mineral rights would be kicking themselves now.

We are in the midst of the Marcellus Gas location, and some people are getting gas leases that pay them up to $3000.00 per acre bonus for the right to drill, this is NOT selling the land, only letting the gas company have the right to drill. And most leases are for 10 years, so if the company doesn't drill a well within that time, in another 10 years you can sell the drilling rights again. And if the company does drill, most people are getting a royalty check of at least 15% of the total amount of gas sold.

We have an old well on our property that was drilled back in the 20's. It supplied natural gas to the whole little town by us until it became "unprofitable" for the company and they sold the gas well back to the landowner - my wife's Great Uncle. He used that free gas to heat the house as well as brood 20,000 meat chickens every 8 weeks. I'm guessing the well reverted back to them in the 50's or before - and we still heat the house with that gas well!!

With us owning the well, we are aware that if it ever needs plugged, that will be at our cost. But I'm assuming the cost of heating a house for over half a century, will more than pay to plug the well.

fordy · #22 04/16/11, 08:36 PM

Quote:

Originally Posted by Michael W. Smith

Why would anyone WANT to sell the mineral rights with the property - especially if there is already a producing gas well on it that produces monthly royalty checks?

Around here sometimes you can buy land with the mineral rights, and sometimes you can't. I'm sure anyone who sold land here in the last 10 years with the mineral rights would be kicking themselves now.

We are in the midst of the Marcellus Gas location, and some people are getting gas leases that pay them up to $3000.00 per acre bonus for the right to drill, this is NOT selling the land, only letting the gas company have the right to drill. And most leases are for 10 years, so if the company doesn't drill a well within that time, in another 10 years you can sell the drilling rights again. And if the company does drill, most people are getting a royalty check of at least 15% of the total amount of gas sold.

We have an old well on our property that was drilled back in the 20's. It supplied natural gas to the whole little town by us until it became "unprofitable" for the company and they sold the gas well back to the landowner - my wife's Great Uncle. He used that free gas to heat the house as well as brood 20,000 meat chickens every 8 weeks. I'm guessing the well reverted back to them in the 50's or before - and we still heat the house with that gas well!!

With us owning the well, we are aware that if it ever needs plugged, that will be at our cost. But I'm assuming the cost of heating a house for over half a century, will more than pay to plug the well.

...............10 year lease is WAY Too long in my opinion , 5 at the most !! That gives the oil co. way too much time and leverage too drill ! All they need is one well too hold the whole lease by production . , fordy

texican · #23 04/17/11, 03:53 PM

Quote:

Originally Posted by fordy

...............10 year lease is WAY Too long in my opinion , 5 at the most !! That gives the oil co. way too much time and leverage too drill ! All they need is one well too hold the whole lease by production . , fordy

3 years is pretty standard around here... I'd never lease for ten years, without some serious 'incentive'. Pugh clauses and vertical Pugh clauses really protect the mineral owner from the dreaded "held by production' clauses...

Only silly people sell their land with minerals (A fool and their money is soon parted...) if there's even the remotest possibility of minerals being discovered/exploited. Owning mineral rights is a close to a license to print money that exists. Owning the dirt, you pay numerous property taxes, regardless of how much the dirt 'makes' you in a year. Owning minerals costs you zero, tax wise, until the minerals are actually produced (and then become royalties)... paying taxes on something that's actually producing mailbox money is not a burden...

In this part of the world, it is a rare tract where you can actually buy land of any sort, with minerals (unless your family already). One HT member here actually got land nearby with minerals... and leased those minerals during the boom... sure the sellers are kicking themselves royally right now!

Yvonne's hubby · #24 04/18/11, 02:21 AM

Quote:

Originally Posted by texican

Only silly people sell their land with minerals (A fool and their money is soon parted...)
In this part of the world, it is a rare tract where you can actually buy land of any sort, with minerals (unless your family already). One HT member here actually got land nearby with minerals... and leased those minerals during the boom... sure the sellers are kicking themselves royally right now!

That is one of the reasons I would never buy land without the mineral rights included. The other reason is that someone else can come onto your property at anytime and drill, mine, or otherwise destroy anything I have on the surface to get "their" minerals. Why would anyone in their right mind purchase a piece of land without getting the mineral rights with it?? Without the mineral rights, you dont really own whats on the surface either.