We are currently evaluating an offer from Antero on mineral rights just south of Mountain. It appears that the bonuses offered in WV may be lower than other areas of the US. The family members that are involved are in four different states; none in WV. I would be interested in knowing what others think of an offer of $3000 bonus per acre and 17.5%.
We hold 50% of the mineral rights. We are concerned about postproduction costs coming out of our checks, assuming there is a productive well. Any sense of Antero's willingness to eliminate postproduction costs in a lease agreement? Is anyone limiting the lease to the drilling of the Marcellus shale layer?
Finally we have a second request from the same company to pool another tract that was leased years ago with the typical lease and 12.5% royalties. Given that the land is already leased, what can we expect to get in return for signing a pooling agreement that will allow Antero to drill under the vertical wells? Can we expect an increase in dollars in the checks we receive from the company that currently holds the lease based on what a new Antero well produces?
We would love to hear from anyone in or near Mountain/Clay District who is leasing to Antero.
I think $3000 is what Antero is offering now in Ritchie County. If they offer that they will be able to pay more. In other words, feel free to ask for more, maybe $3500 an acre.
The 17.5% is probably in line with what they offer. However as you say the post production costs make that less good than it sounds. I have sent a lease modification proposal to Antero for property somewhat west of Mountain, on Bunnels Run and have not heard back yet. My proposal includes a no cost clause. I have seen leases from Antero for gross, but this is a couple of years ago. I read somewhere that some companies won't allow a gross (no deductions) lease but will allow a minimum royalty clause (... no less that 15% of gross... (or something like that) even though lease says 18% (or something))
We are also proposing limiting the lease to the Marcellus. Similarly I have seen this in the leases from a couple of years ago. Don't know about Antero's current practice. And the more acreage you have the more leverage you have in negotiating.
One thing to remember, leases can be assigned from one company to another. I recently saw a reference to an assignment from Antero to Chesapeake in Ritchie county. This is on www.uslandrecords.com which has free searches (a fee to view and download the documents). Chesapeake has a bad reputation for its actions in Pennsylvania for taking out huge costs so the royalty checks are tiny. That is why it is important to get good solid leases that can withstand an assignment to a company that tries to do similar things.
I highly recommend getting an attorney to review the lease.
About your modification, if you allow this pooling, you are likely to get additional wells for which you will eventually be paid. You would likely be paid by the new company, probably Antero in your case, so you would get checks from more than one company. The original well(s) on that property are still going to be operated by the current company and that shouldn't change. Check might be higher because price of natural gas is going up etc. but the horizontal wells don't have an affect on the existing wells (as far as I know).
You can ask for $ for modifying the lease to allow for pooling. With this, too, I would recommend an attorney.
If you have a chance to go to the Doddridge County discussions, they are very active over there.
Attorney here. I’d like to add a few things to what Nancy has said. She’s right on the money, by the way.
Antero will give gross proceeds. They are willing to do that because they think that the language they use will allow them to deduct costs. At least, that’s what it seems like from my conversations with their landmen and project managers. My reading of Tawney v. Columbia Natural Resources is that they have to specify the costs that they want to deduct. You should go read it for yourself. I’m on a mobile device or I would create a link for you, but a Google search will pull it right up.
You can always ask for more bonds and royalties. Drive them up. If they’ve offered $3,000, I suggest you ask for $4,500. They’ve offered 17.5 percent, ask for 24.
If you can find out who owns the other 1/2 interest it could be helpful. You could team up and ask for more concessions. The more property you represent, the more you can ask for.
Antero has given some formation leases. Usually they encompass the Marcellus and the Utica. Sometimes they do Marcellus-only. You could also get a Pugh clause.
On the pooling agreement, make sure they pay more than they offer. They’ll be tough about the up front payment, but if you just say no enough, they’ll give more. My best with Antero so far is $4,000 (not per acre, just flat). They were very desperate for that particular piece of property.
Just received a copy of another lease from Antero. They will do 3000/18%. I think they are moving more into northern Ritchie now since they have torn up Doddridge Co. That assumption is based on them raising the bonus from 1500/14% to the above mentioned figures. We asked for no production costs and they put a mineral enhancement clause in the lease instead. That is a joke because it gives you what you want and then takes it away at the end by changing the wording. Bottom line Susan, you can tell them what you want and then they will drag the process out and try to frustrate you. This process in a lot of cases requires an attorney and tons of research on your part and more patientce than Job. We have been dealing with these people for a year and a half and are no closer now than last year. Why, because they want you to pay for most of the "work" needed to get the oil/gas flowing and to market. It would be like you selling something for your neighbor and then giving them a portion of the money. You had nothing in the item. It's like selling something by consignment.
DT - was the original offer $3,000 and 18%? Or did you negotiate it up? Also, based off the language of Tawney v. Columbia Natural Resources, I'm letting my clients sign leases with Antero that includes their Gross Proceeds clause as it's worded right now. I think that they have to specify the costs that they take out, and the Gross Proceeds language does not specify the costs. Read Tawney yourself and let me know what you think.
Susan Denning - DT is very right. This process takes time and the patience of Job. The longer you can wait them out, the better. Just be sure to always be nice, even when they're not. Keep track of every conversation you have with them, and try to do as much by mail/email as possible. That way, if negotiations break down and they try to partition suit you, you can show that you were trying to put together a lease with them. In a partition suit, they will claim that you were not willing to lease to them. Always express your eagerness to put together a lease with them, and always make a good argument for any changes you request to the lease.
Thank you Nancy-- I hope you will share the outcome of your lease negotiations. I am working with 5 other family members and currently have a list of 8 items about the lease to discuss with our attorney. We will need to determine how important each of our points is. We have only 89 acres and the attorney has cautioned us against 'overplaying our hand.' Still, I see that surface owners and some mineral owners of our 89 acres have already signed on with Antero, so my thought is they would like to wrap this up- and our famiy owns half of the minerals. At least we have settled who the owners are! I appreciate your caution about making the lease something that we can live with for the long haul, regardless of what company eventually holds the lease.
Kyle-- I received the first offer from Antero in 2012, so we have been at this a while. I read Tawney v CNR - thank you. Also, thank you for your advice re the relationship; there are many who speak as if the landsmen are subhuman, but it it only human nature for them to respond more helpfully to those who are polite. It makes me a little nervous that our attorney appears to be more of a telephone vs an email kind of guy, but I just recently saved to my Antero folder all the email exchanges that we have had. Kyle, do you think it wrong or inadvisable for me to have contact with the landsman when we have legal counsel? i don't wish to make things difficult, but I'm planing to travel to Ritchie County soon, and I thought a face-to-face might be a good thing...
My family is now in negotiations with Antero in Ritchie County. They are offering $2500 an acre and 15 percent. It was passed down from my great grandfather and is now down to 1 grandchild 2 great grandchildren and 3 great-great grandchildren. We as a group have one-half rights. I am being told that my sister and I will split my dad’s but it doesn’t add up to my uncle and 2nd cousins share. How is this done in West Virginia? I live in Florida and my uncle is in Ohio. We have signed nothing. Any advice would be appreciated.
Kyle, we had a 1700/15% offer and then after we had very little contact for a year then 3 land agents later they came with the 3000/18% without even asking, if everyone left would sign. Half of the heirs had already took the "bait" and ran over a year ago. We were in no hurry and just recently on our 4th land agent we sent a amendment to a new lease for changes and the no cost royalty. They sent back the reply with the mineral enhancement clause. The part that gets them what they want is the last sentence where they talk about enhancing the value of the marketable minerals and charging you to do that. From the well head to the point of sale will be called enhancement because they get more money at the point of sale. They can call that enhancement. So you get charged for all the ways they use to get the product there. The clause we got states that any such costs resulting in the enhancement will be deducted from our royalty and so on. Kyle, how does that sound compared to the clauses that your clients have received? The only thing that bothers me is even if they do not state what the enhancements are, they could charge you and you would have to take them to court to prove otherwise. Tawney v. Columbia??
Susan, Those agents for the most part will be nice until you start telling them what you want or you tell them you have an attorney. They do not like to deal with folks who are up on what's going on. They love the folks who live in other states that are not here to deal with them directly. They like to call and tell you how lucky you are and they are going to give you some money for signing a lease. A lot of people do not even know what the agents are talking about. That makes the mineral owner more vulnerable to just sign and wait for their new found "fortune". What folks need to know is that those minerals are real property that is under the surface.
Side note: Just got a call from another agent about a tract we are already negotiating on with another agent. Those agents do not get the facts from their office people apparently
Susan Weyrich, do you know how this inheritance is structured? Did your great grandfather have a will? Then did his heirs have wills? In WV there is a specific law about inheritance without a will. Even if the decedent lived and died out of state, WV laws prevail in inheritance of real property including mineral rights. The Antero landman should be able to spell out to you your (you and sister) portion coming from the greatgrandfather.
Here is the part of the WV Code that pertains
1/2 of 89 acres is a good amount around here. You can afford to hold out some. But trust the attorney who's actually talking with the landman.
I am also an attorney. I do a lot of oil and gas leasing, from the mineral owner's side. I've had landmen go behind my back to talk with clients. I didn't appreciate it, but the client was OK with it, so I was OK with it. The client is in charge, after all. I would talk with your attorney about how you want to approach it. In some situations, a team approach will work wonders. I don't have any problem at all talking on the phone with landmen. Sometimes that's by far and away the best way to get to a solution that will work for both sides. Following up with emails to confirm is a good practice. Don't worry that your attorney would prefer to talk on the phone. Just keep track of the changes in writing somehow, and make sure things don't get forgotten.
Susan Denning said:
Thank you Nancy-- I hope you will share the outcome of your lease negotiations. I am working with 5 other family members and currently have a list of 8 items about the lease to discuss with our attorney. We will need to determine how important each of our points is. We have only 89 acres and the attorney has cautioned us against 'overplaying our hand.' Still, I see that surface owners and some mineral owners of our 89 acres have already signed on with Antero, so my thought is they would like to wrap this up- and our famiy owns half of the minerals. At least we have settled who the owners are! I appreciate your caution about making the lease something that we can live with for the long haul, regardless of what company eventually holds the lease.
Kyle-- I received the first offer from Antero in 2012, so we have been at this a while. I read Tawney v CNR - thank you. Also, thank you for your advice re the relationship; there are many who speak as if the landsmen are subhuman, but it it only human nature for them to respond more helpfully to those who are polite. It makes me a little nervous that our attorney appears to be more of a telephone vs an email kind of guy, but I just recently saved to my Antero folder all the email exchanges that we have had. Kyle, do you think it wrong or inadvisable for me to have contact with the landsman when we have legal counsel? i don't wish to make things difficult, but I'm planing to travel to Ritchie County soon, and I thought a face-to-face might be a good thing...
Those are good offers. If that's what they're offering, they'll go higher in negotiations.
I really don't like the Market Enhancement language that Antero uses, for the same reasons you state. Ask them for their Gross Proceeds language. I'm OK with that for now. I may learn something in the future that makes me not want to use it, but for now, I think it will work. Like I said before, I think Tawney requires them to specify the deductions they're going to take. I think that is going to have to be litigated sometime in the future, because I guarantee that Antero is going to take deductions based off their interpretation. But I think they'll lose. I sure hope I'm right.
The safest route is to get language that says "no deductions may be taken from the royalty", or something to that effect.
DT said:
Kyle, we had a 1700/15% offer and then after we had very little contact for a year then 3 land agents later they came with the 3000/18% without even asking, if everyone left would sign. Half of the heirs had already took the "bait" and ran over a year ago. We were in no hurry and just recently on our 4th land agent we sent a amendment to a new lease for changes and the no cost royalty. They sent back the reply with the mineral enhancement clause. The part that gets them what they want is the last sentence where they talk about enhancing the value of the marketable minerals and charging you to do that. From the well head to the point of sale will be called enhancement because they get more money at the point of sale. They can call that enhancement. So you get charged for all the ways they use to get the product there. The clause we got states that any such costs resulting in the enhancement will be deducted from our royalty and so on. Kyle, how does that sound compared to the clauses that your clients have received?
Susan, Those agents for the most part will be nice until you start telling them what you want or you tell them you have an attorney. They do not like to deal with folks who are up on what's going on. They love the folks who live in other states that are not here to deal with them directly. They like to call and tell you how lucky you are and they are going to give you some money for signing a lease. A lot of people do not even know what the agents are talking about. That makes the mineral owner more vulnerable to just sign and wait for their new found "fortune". What folks need to know is that those minerals are real property that is under the surface.
Side note: Just got a call from another agent about a tract we are already negotiating on with another agent. Those agents do not get the facts from their office people apparently
No one has ever put in a will. We were contacted through the records and deed book back in the 1980’s. It passed from my grandmother and down to her 4 children.
Nancy Mosley said:
Susan Weyrich, do you know how this inheritance is structured? Did your great grandfather have a will? Then did his heirs have wills? In WV there is a specific law about inheritance without a will. Even if the decedent lived and died out of state, WV laws prevail in inheritance of real property including mineral rights. The Antero landman should be able to spell out to you your (you and sister) portion coming from the greatgrandfather.
Here is the part of the WV Code that pertains
Get this?? I am on here answering a post and the phone rings and an agent from Antero calls and asks if we are aware we own mineral rights and would we be interested in leasing? Come on now, we have been talking back and forth for a year and this agent was asking about a tract that our present agent has on his desk. This why you need to be careful dealing with these people. Get this?? 5 minutes after I explained to her the facts, the agent I am dealing with now calls. I talked for a few minutes concerning language in the amendment pertaining to the "Mineral Enhancement Clause" They tell us they won't charge for transporting the gas through their pipelines from the wellhead to point of sale. Hmmm??
DT those people don't know how to run a business. A lot of wasted time for the landman and for the mineral owner.
I think with the Mineral Enhancement Clause their charge is not for the extraction or transport but for separation and things like that, to get the natural gas liquids in a state where they can be sold for a price higher than the basic methane (dry gas).
Even that is not as good as a gross lease. From what I understand about their Gross Proceeds clause, it doesn't allow them to take out any costs unless they have specified the costs somewhere in the lease. What Kyle wrote above. In reading the Tawney vs Columbia case that Kyle talks about, I agree with him. However I'll keep pushing for a no deductions and see how far I get.
They will say almost anything on the phone, see what turns up in writing.
DT said:
Get this?? I am on here answering a post and the phone rings and an agent from Antero calls and asks if we are aware we own mineral rights and would we be interested in leasing? Come on now, we have been talking back and forth for a year and this agent was asking about a tract that our present agent has on his desk. This why you need to be careful dealing with these people. Get this?? 5 minutes after I explained to her the facts, the agent I am dealing with now calls. I talked for a few minutes concerning language in the amendment pertaining to the "Mineral Enhancement Clause" They tell us they won't charge for transporting the gas through their pipelines from the wellhead to point of sale. Hmmm??
Getting a straight "no deductions" clause is better than their Gross Proceeds clause, because I'm confident that they're going to take deductions thinking their Gross Proceeds clause allows them to, and we're going to have a fight about it. But getting a straight "no deductions" clause out of them is like pulling teeth out of an elephant.
Nancy Mosley said:
DT those people don't know how to run a business. A lot of wasted time for the landman and for the mineral owner.
I think with the Mineral Enhancement Clause their charge is not for the extraction or transport but for separation and things like that, to get the natural gas liquids in a state where they can be sold for a price higher than the basic methane (dry gas).
Even that is not as good as a gross lease. From what I understand about their Gross Proceeds clause, it doesn't allow them to take out any costs unless they have specified the costs somewhere in the lease. What Kyle wrote above. In reading the Tawney vs Columbia case that Kyle talks about, I agree with him. However I'll keep pushing for a no deductions and see how far I get.
I have leases with Antero, so far so good. I did the pooling thing too.
Sorry, but I've got to disagree. They are the best we found in Ritchie county. Money has been spot on and surprise deductions or bugus charges. They did two new wells this year and they're doing great.
Nancy Mosley said:
DT those people don't know how to run a business. A lot of wasted time for the landman and for the mineral owner.
I think with the Mineral Enhancement Clause their charge is not for the extraction or transport but for separation and things like that, to get the natural gas liquids in a state where they can be sold for a price higher than the basic methane (dry gas).
Even that is not as good as a gross lease. From what I understand about their Gross Proceeds clause, it doesn't allow them to take out any costs unless they have specified the costs somewhere in the lease. What Kyle wrote above. In reading the Tawney vs Columbia case that Kyle talks about, I agree with him. However I'll keep pushing for a no deductions and see how far I get.
That's ok to disagree, but I would like to see a copy of the lease you signed and then I could decide if we are on tract or not.
Sometimes the operator gets absolutely everything they want out of you in the lease and they don't want to do anything to upset that apple cart. What kind of bonus and royalty did you get if you don't mind my asking?
ROB O'NEILL said:
Sorry, but I've got to disagree. They are the best we found in Ritchie county. Money has been spot on and surprise deductions or bugus charges. They did two new wells this year and they're doing great.
Nancy Mosley said:DT those people don't know how to run a business. A lot of wasted time for the landman and for the mineral owner.
I think with the Mineral Enhancement Clause their charge is not for the extraction or transport but for separation and things like that, to get the natural gas liquids in a state where they can be sold for a price higher than the basic methane (dry gas).
Even that is not as good as a gross lease. From what I understand about their Gross Proceeds clause, it doesn't allow them to take out any costs unless they have specified the costs somewhere in the lease. What Kyle wrote above. In reading the Tawney vs Columbia case that Kyle talks about, I agree with him. However I'll keep pushing for a no deductions and see how far I get.