Oil & Gas Rights North Central PA

Discussion in 'Homesteading Questions' started by Cindy in PA, Nov 12, 2005.

  1. Cindy in PA

    Cindy in PA Well-Known Member

    Messages:
    740
    Joined:
    May 13, 2002
    Got a call yesterday afternoon from a guy wanting to lease the oil and gas rights on our 11.25 acres in Tioga County PA. He wanted to come right over as he was in our area and I told him no and to send the info to us so we could look over it. He is from a leasing middleman I think and not a drilling company. DH and I feel it is not something we would want to do and I think we are way to the west of the prime area. I did some research to ease my mind and got more nervous after that! Since we only own a small amount, the money involved even if they hit oil/gas would not make it "worth it" if in return our property was destroyed. We bought it 4 years ago and I had hoped we could build a small place and move after retirement. It looks more and more like that will never happen, so I would just like to leave it as it is. It has a beautiful view and though our access is from a deeded right-of-way technically, we would only have to go a few feet off the township road to gain access as we are by the road. This guy said that they lease in blocks of 640 acres and you would get your percentage of the royalties of that block if they hit, which is a long shot. The leasing is $100/per acre for the first year and $50 after that. I read that most leases are 3 years now, but haven't seen his paperwork. In researching, I read a lot of articles about the good and the bad of the process from Chemung County NY and the Southern Tier where they have done more drilling to date. My concern is that if the people behind us who are from out of state and own 115 acres sign on to something like this, how would it affect my property, as we share the ROW that is on their property but is shared by 3 lots? I read articles about them pressuring a homeowner to sign, trespassing on people's property who didn't sign etc. What I need to know is what is happening in Tioga County PA? Other than the State Lands is there much interest in drilling up there? Are any actually drilling companies (Endura) looking at leasing land instead of these gas and oil exploration companies? Can I just ignore it and it will go away? Do they have to get 640 contiguous acres or is it just that wells have to be on 640 acres? Any help would be appreciated. Just want to protect my land as is for the future and know what my rights are.
     
  2. chas

    chas Well-Known Member

    Messages:
    549
    Joined:
    Dec 12, 2004
    Location:
    western pa
    I would look into what could happen if they drilled as close to your property as legal,and tapped into a pool or vein or whatever.And just pumped it out from under your land and give you nothing if you DONT SIGN???????
    I need to know also,since they are after my dads farm.
    Chas
     

  3. Pat

    Pat Well-Known Member

    Messages:
    542
    Joined:
    Jul 24, 2004
    Location:
    Arkansas
    Normally they get a section at a time. Your 11.5 acres would equal 1.8 percent of the royalities. If they needed right a way to the drilling site, or if they want to drill on your land (or use part of your land for set up etc.) then they would pay out of hand (not part of royalities). I'm pretty sure if they had the majority of the section your land is located on, they can still drill, and you would get the 1.8 percent of the royalities generated. I'm not sure if they would pay you (because you didn't sign the lease) for the "right" to drill.

    Pat
     
  4. texican

    texican Well-Known Member

    Messages:
    12,327
    Joined:
    Oct 3, 2003
    Location:
    Carthage, Texas
    I've got one seven acre tract of royalty that brings 450/month.

    One three acre tract that brought 770 last month.

    If they don't drill on your place, you're potentially losing out on a nice little nest egg.

    If they drill next door, you'll have all of the negatives anyway, and if you don't lease, you'll get nothing. They don't have to have your acreage, they'll just add more acres to get the lease up to size.
     
  5. Helena

    Helena Well-Known Member

    Messages:
    3,740
    Joined:
    May 10, 2002
    Location:
    north central Pennsylvania
    Hi Cindy !! I also live in Tioga County and haven't had anyone call me. I did receive a post card to come to meeting in Mansfield this week..don't think I even kept it though..and to find out more about leasing you land for the gas companies. I don't know what to tell you. Several years ago..maybe 3 now..some men came down our road with long "cables"..and laid them on the dirt road for a few days. Told me that it helps them find gas. I always had a "thing" about having the mineral rights to our 4 acre homestead. Since you do not live there..don't know if you are planning to ever..think about it. My husbands fellow co-worker lives in Horseheads, Ny..not far from us. He owns a small 1/2 plot with his home in a housing developement and they drill about 3 miles from him and hit gas but since they "pull" the gas from his direction or something like that he is currently receving $2,000 a month..yep 2 thousand !! Others that own more land of course receive so much more. He doesn't have any set up or noise or anything near him. He never sees the gas company. Also closer to us in NY state they hit a really a big well and paying the people many thousands. Of course it could all end tomorrow. I don't know what I would do either. As mentioned..they could drill or pull gas with the land near you..not yours..and you could never see any $$ or sign the papers and still get the $$ and never see them. Check into what your neighybors on the land are doing. I guess until someone knocks on my door I won't think too much about it with our property. It's a tough call...Good Luck and let us know how things turn out. I certainly would be interested in what part of the county you are in.
     
  6. woodspirit

    woodspirit Well-Known Member

    Messages:
    1,274
    Joined:
    Aug 3, 2005
    Location:
    Bristol, ny
    you need a lawyer to protect yourself, land and more.
     
  7. michiganfarmer

    michiganfarmer Max Supporter

    Messages:
    6,615
    Joined:
    Oct 15, 2005
    Location:
    Near Traverse City Michigan
    what rights? the state keep all the rights
     
  8. Cindy in PA

    Cindy in PA Well-Known Member

    Messages:
    740
    Joined:
    May 13, 2002
    Thanks everyone. Guess I will wait and see the paperwork and then call the people I know right around us to see what is happening. Guess it is the luck of the draw as to which company comes to sign you first. Will let you know what happens.
     
  9. Cindy in PA

    Cindy in PA Well-Known Member

    Messages:
    740
    Joined:
    May 13, 2002
    Helena,

    Our land is in Union Twp. about 14 miles form Canton. That's why I was surprised as it seems the gas interest should be in the western part of the county. I guess there must be renewed interest if they had a meeting in Mansfield. I would like to move there one day, but with DH I don't know if we ever will. He has lived the same place for 52 years! The amounts you said people are getting are amazing! I am not opposed to the process, but just want my land to be OK in the end or the ability to buy other land. Guess I need to do some more research before we decide to sign or not. Wish we also knew if signing with the middleman is common or what. I find it odd that you live there and no one has contacted you. The guy on the phone did say that most people do not live there or just have hunting camps, so maybe they are trying to just get the out of towners first, figuring they have no reason to balk. Will keep you posted on anything I find out! Thanks.
     
  10. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

    Messages:
    30,863
    Joined:
    May 10, 2002
    Location:
    Texas Coastal Bend/S. Missouri
    Hubby is a registered petroleum engineer. We have leased out our own acreage twice, and it has not been drilled on.

    What these leasing companies do is put together a "prospect" that is basically a collection of leases for a given area that has potential, plus the geological info for the area, plus a history of drilling and production in the area. Then, the company sells the prospect to another company that is interested in being the Operator. The leasing company may keep a percentage of potential future production when the deal is made.

    The Operator will then do their research and decide whether or not to actually drill.

    If you lease, you get cash when you sign (or shortly thereafter.) If they never drill, that's the end of it, and the lease runs out. If they do drill (which may be in your area, but not on your land) you get a percentage based on the "pool" which is all the lease holders and acreage in the collection of leases. Your percentage of the potential production should be defined in the lease agreement. Here in Texas, landholders who lease are getting a quarter of the production. You will not pay any of the expenses of the drilling and production. What landowners get is called a Royalty. Royalty payments come off the top, before production expenses are taken out.

    Remember that they have to do some guessing, based on seismic data and previous production. They don't know EXACTLY where the reservoir is underground. It's not like there's an underground river. There are geological formations, sands and porous rocks, that are saturated with oil.

    In the lease, make sure that what would be paid to you (damage payments) IF they drill on your acreage is specified. You need expert help reading the lease and negotiating. You can also specify that they put in gates, what kind of road, what they do for land restoration after the well is drilled if it's a dry hole, etc etc.

    Again, if you are just a small spot in a large area of leases, the odds are they are not going to drill on your acreage...but it COULD happen.

    For us, it has just been some extra money in the bank.
     
  11. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

    Messages:
    30,863
    Joined:
    May 10, 2002
    Location:
    Texas Coastal Bend/S. Missouri
    Hubby says to drive around and make notes about what companies are producing oil in that area. (There should be a sign by the gate going to each well.) Then send a letter to each company (attention Land Dept.) saying that you have been approached about leasing your property. Ask if they are interested.

    One advantage of this is that you can look at existing production facilities and see which companies do a good job of keeping the area clean and have more info about who you might want to deal with.

    Do you know what company the land man is representing?

    You can also tell the land man that has contacted you that you are looking to negotiate with other companies as well. You could get a bigger percentage of production or a bigger signing bonus with his company.
     
  12. Cindy in PA

    Cindy in PA Well-Known Member

    Messages:
    740
    Joined:
    May 13, 2002
    Thanks Rose, that explains it a little more. So the amount of royalties and the damage stuff should all be in the lease agreement? I know he mentioned $100/acre the first year and $50/acre after that for the lease. In PA the royalty amount is at least 1/8 or 12.5% by law. I have read that because of that people in NY and PA are hard pressed to get anymore. I did see in Texas and OK etc. 25-30% is normal. The total from a three year lease would be about $2200 fro us if it is 3 years as I have read. I will do some investigating, calling our RE guy who has always been helpful with local stuff and our known neighbors. I know an expert would be the way to go, but for a possible $2200 that is where it gets tough! Of course when you think it is to protect your land it make more sense, but I can see it costing us more than the income! I will read the paperwork when it comes and go on from there and check on other work being done if possible. This guy was talking about doing the seismic work and such and I don't know how much damage that could do like cutting trees etc. Thank your husband for me also. Yes, the guy told me what Company he is representing and so far it checks out.
     
  13. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

    Messages:
    30,863
    Joined:
    May 10, 2002
    Location:
    Texas Coastal Bend/S. Missouri
    When they do seismic here, they don't cut trees. It's so modernized now, it's amazing. There is a 'line' on a map that runs across the countryside. Along that imaginary line, they drill holes (memory says several hundred yards apart, but I'll check on that) and put in a small explosive charge underground. After they have it all set up, they set the charges off in sequence, and the small shock waves are monitored from small boxes at set points in the area. A man with the monitor box stood in my front yard last time they did seismic on our place. It was really interesting to talk to him and watch the readings come in. All you feel is a very small "Whump" when the charges go off. Very anticlimactic, actually.

    We felt more when there was an industrial accident 250 miles away!!

    Hubby will be more than glad to answer any questions you have. If you want to fax us the lease when you get it, just let me know. He can read it and look for any GLARING problems.