Can anyone tell me what happens after getting bonus check? We are leasing mineral rights in wheeling township Ohio and was told it was a level one priority and they are pulling permits in January 2020. What happens then? Ascent Resources Utica is the company, they said no information is available until production starts. Thanks for any info.
In general, take their words with a grain of salt on timing. In most states, there is an oil and gas commission that has information. You can find the permits listed there. In Oklahoma, the process is for the commission to give spacing permission for the type of well that is to be drilled, the operator has to get enough leases (or the majority of them) with enough acres to cover the spacing acres. A permit is filed, the well is drilled and completed and then the Division Order is sent out for payment of the well. The commission may have a completion report filed (usually months late). Payment for the well is usually controlled by statute as to the timing of when it is required.
Maybe someone from Ohio can comment. I am moving this post into the Ohio Mineral Rights, Belmont County Topic area.
ODNR Map Viewer. This is the map viewer for Ohio. Can someone post the Ohio oil and gas board link please.
Agree with the previous post in general - LOTS of people will tell you they have big expectations for development. Then silly things like $$ keep them from drilling every piece of land they own all at once.
I will say Ascent overall has been better than most from a general consensus of people in the area. They have been developing in that area, and unless something changes drastically - I would expect them to begin pulling permits in 2020 as they said. Drilling could begin anywhere from 30-60 days until ???. Just comes down to economics…as long as they are making money - they will keep drilling until they dont make money. Look at the ODNR maps - lots of “permitted” wells out there that never got drilled for one reason or another.
Once actual drilling starts - then the well should go into production within 6 months. Another 3-6 months from beginning of the flow of gas, royalties will begin. Initial royalty checks will be great - DO NOT expect this to continue. The first year of royalty checks will be by far your best. Expect a 50% reduction from first year to years 2 and 3…then another 50% drop or more. By year 5 you might have a check of 10-20% of those first year checks.
Royalties are very dependent upon price of gas and potentially transportation deductions as specified in your lease. Right now gas is at historic relatively low levels and deductions are eating into most recent lease signings. Makes it tough for a producer to profit - which is why Ascent is actually becoming active when others are cutting back. A producer might have a cost of between $2.30-$2.50 for gas paying lease signing bonuses that the market saw between 2011-16 (when gas was much higher) and not taking deductions for transport expenses amongst other cost factors. Ascent is taking advantage of less competition for land and ability to negotiate better terms than some of those prior leases offered as well as using lower cost production technique and is able to get their cost basis lower - meaning they can PROFITABLY sell at todays level.
At some point - the market will either consolidate and only the strong survive or a catalyst will come along that boost prices of gas and it will be a boom market again. The Belmont/Monroe/Noble county areas have seen their share of booms - a quick review of things show booms around 1900-1905, 1955-1960, 1978-1980 and most recently 2012-2017. All of these eras someone signed a lease - thinking they were going to become rich off of a oil well or gas well on property. History shows probably less than half of these leases got developed and the people who got rich were the operators - not the landowner in general. Just food for thought.
Thank you so much for so much information. This was a surprise inheritance and I have been trying to learn as much as I can. Not an easy task! This helps a lot. Basically, patience is a virtue, I have no control of anything, and if and when I see a royalty check, be glad then it will decrease in value over time. Maybe my priority now would be to check with ODNR to see when a permit is pulled for my acreage, then check to see if drilling has began and the if it’s producing. Ascent has a page for owners to get info but you need the first royalty check. Again, great info for a newbie up in Wisconsin!
Largely in agreement with Djefferies. Ascent is focusing on Wheeling Township, but like others their rig count is down due to pricing. You can obtain the name of your PROPOSED unit from your land man and then follow it through the ODNR website. Again, they tell you things are happening quickly in an effort to get you to sign ASAP. When they obtain enough acreage within your unit they will have a hearing through ODNR and you should receive a copy of the DECLARATION OF POOLED UNIT in the mail. This DPU will also be on record at the County recorders office under YOUR name as lessor. When approved they will continue to lease up unsigned tracts and do additional title work before drilling, known as CURATIVE in order to perfect titles so appropriate owners can be paid. Depending on the total number of leases and number expiring soon they may SPUD the well in order to hold the leases and avoid paying another bonus. If another unit is further along they might pull the rig and come back later ( ?? A year ? ) and complete the well. Your well would then be known as a DUC ( drilled but unCompleted). As I stated earlier it all depends on the number and age of leases in your unit and ability to tie your well in laterally to a pipeline. In short, look for the DPU and amendments and HOPEFULLY production MAY begin within 2 years or so. Unless your an Ascent shareholder ( uh, privately held ) good luck getting meaningful information from them directly. That being said, in our area Ascent IS one of the better companies to work with. Good Luck !
Thank you so much for this information. I was just trying to learn more last night. My brother is a ‘holdout’ for reasons unknown to me. We are 2 of who knows how many (I asked land man, wont tell me) on about 50 acres in Wheeling Township. I was looking for info on my situation w/bro not signing and found the term ‘unitization’. (?) If he never signs I read that Ascent needs 65% of MR leases to be signed and they have to go in front of judge and then bro might see higher interest than others. Is that true? Something called ‘forcing their hand’? It gets so complicated! Well, the don’t hold your breath part seems applicable on all levels. In my mind I was thinking by the end of 2020 I might see royalties. Now, it could be years? I would like to follow on ODNR, so I will attempt to get proposed unit name. Thanks again! Very,very helpful.
So, the land management company called me yesterday. The parcel was a level one priority, permit to be pulled early 2020 to a maybe we will pull a permit in a couple of years. It is in Wheeling Township, Ohio. I don’t understand the 180 degree turnaround. Could it be because my brother is a holdout? Doesn’t a holdout cost Ascent thousands of dollars to get a forced pooling permit? I am so confused and upset. Somebody mentioned mineral rights can be an emotional roller coaster…I’m riding that coaster and it isn’t fun! Any help to understand my situation will be greatly appreciated! I do know the name of unit now, the Exeter Unit.
Coro, almost certIn yourbrother has nothing to do with the delay. They’ll file when they’re ready. Unless he holds other acreage between 120 and 200 acres in the unit, HIS interest certainly has no effect. That being said, the longer he hold out, the better deal HE will get. Prices are near all time lows and things will go very slow until they rebound. Hope for your sake you got competent advice upfront
That is good to know. I know he means well and I don’t want him to lose out on the sign on bonus or have his royalties held in escrow which I was told would happen if his acreage is forced pooled for ascent to get a permit. Again, I am grateful for this forum and thanks so much for all info. It is quite the experience having inherited these mineral rights and trying to navigate all the in and outs having absolutely no knowledge of anything! I spend hours and hours reading and searching for relevant information. I ask the land man for info, yet the response is shallow or not at all. Someone suggested a ‘holdout’ will impede attaining a permit as it is a major inconvenience for ascent. Also, my brother would lose money and I don’t want to see that happen, so they said.
To be clear, please don’t take advice from the land agency or E&P Company. They are looking out in THEIR best interest. As far as forced pooling they will make a very generous offer the closer they get to obtaining the necessary acreage. Also, don’t be threatened by the “ escrow “ talk. Even though there may be a delay in payment if he NEVER signs a lease, he will come out way better in the long run. That being said, I’ve never seen a line item in the E&P Companies balance sheets identifying ESCROWED funds. In my opinion they DO keep track of delayed royalties but probably use the funds for working capital. Some states ( such as WV) require an accrual of interest after a certain time period. They have to pay based on state law and as long as the title is good about the only thing that would prevent payment is bankruptcy by the company. Too many people are enticed by the bonus money and simply don’t realize that lease language and addendums are WAY more important !
Wow…my mind is all befuddled. So land management company leading me to believe my bro will receive NO sign on bonus…royalties held in escrow. I’m in already so I’m where they want me. I just got off phone with landman, he said my bro will not get bonus check, royalties held but at much lower %. Ascent pulling back on permits now because cost of gas low…bro being holdout has nothing to do with it but other gal yesterday suggested he was. Geez…what’s a person to do? I’m all learned out. Landman did say that’s why lease is 5 years because its a go then a stop a go then a stop…so many variables!
The National Association of Royalty Owners has an active Ohio chapter. They are the folks to go to when you have questions and don’t understand all the “talking heads” around you.
Good Advice from M Barnes. I’m a member as well and agree. Too many variables to discuss in the forum. DO realize that if your brother refuses, after all attempts, to sign he WONT get a bonus and his initial royalty % MAY be lower than their offer. However after the E&P company recovers a predetermined amount of expenses he would be entitled to significantly more. This brings into play a host of other issues, namely losing passive activity tax status. They will do their best to avoid this situation and settle for a reasonable deal. A few bucks spent on a knowledgable attorney to guide him BEFORE signing is money well spent. The OHIO Chapter of NARO can provide more help in this area.
I did not know that association existed. Thank you for that info. Yes, I am overwhelmed by the variables. The whole process actually. He was waiting for them to come to him. I was told they were “done” with him. I think I went into a rabbit hole, but I’m out now. Thank you all for your help. Knowledge is power and that I have accumulated thanks to this forum. Thanks everyone!
Ok, first - I think its a good thing to stop and remind the OP (and anyone else in a like situation) of the obvious here.
No - you should not take the “free advice” offered by a representative from the other side of a contract negotiation as being in YOUR best interest always or as being the best fit for your situation. At the same time - view any advice you get off of an internet forum (including mine) as being of similar value. Unless you create it - no one has a fiduciary duty to give advice that is tailored to YOUR needs and represents what is best for YOU.
Well intentioned people can come along and tell you GENERAL advice and it may fit 98% of the audience - but it is not guaranteed to be a best fit for you. Get advice from someone you trust and feel comfortable with. There are plenty of O&G attorneys in St C, Barnesville, Woodsfield, Marietta and Zanesville for example - most of whom will give a free consultation - meet with as many as you need to until you find the best fit for you.
Now, as to your brother - if he is a holdout, as mentioned it is not likely meaningful in this matter. As you mentioned - forced pooling can be brought about in Ohio if the producer has enough of a percentage. A well is going to cover 650 acres more or less…so even if someone holds 50 acres (and they are all included in the area of production) this is still far less than 10% of the development.
Will holding out ALWAYS yield a better result. No - it will not. Want proof - go ask landowners around Belmont County who turned down lease bonus money between 2012-2016…thinking there was BIGGER BONUSES coming their way…after all there were rumors of land owner groups getting 7,500 an acre and 20% royalty with no deductions. Gov’t properties were on record as getting this level of bonus (Govt always gets the best deal - its how business is done…producer kicks back to gov’t treasury and local govt looks out for their new best friend big o&g). Ask the people passing out leases what terms of their leases looked like circa 2014 and what they look like now…guaranteed those hold outs cost themselves money.
Really, why should it bother you if your brother does not participate - assuming your finances are independent. Unless he is holding up your signing - it has no bearing on you. Will some companies try to use family connections to get what they want…sure. Don’t let them - its business, plain and simple. Business is not about family or friendship - its about $$. Keep the 2 things independent and if you cant - hire someone who can and allow them to manage things for you.
Owning minerals is a headache only if you allow it to be. Inheriting minerals is no different. If you inherit something you did not know existed - it should not create a hardship. Just get it in the hands of the right manager and let them send you the profits as they arrive. Just remember there are no guarantees in business and promises and leases are one in the same. A lease is an option - not a guarantee of production. Options cost money - but they are cheaper than buying the land and developing it yourself for a producer. As a company - it is not uncommon for the initial term of a lease to expire and for it to be renewed. Some in Belmont county are on their 3rd or 4th lease now…all because someone took out the option - and then waited for the “right time” - some are still waiting.
Great post. I finally get it. My bro needs help sometimes so I was trying to look out for his best interest. I’m at the point, in agreement with your post, so be it. These are pennies from heaven anyway. Brother will do what he wants. I have no control over any of this! Seems like nothing is linear in the mineral right world, things change on a dime and I am stepping off the emotional roller coaster. This forum has been of great help as up here in Wisconsin on Lake Michigan not many folks even know about mineral rights or any attorney’s nearby to discuss topic with. Bottom line, thanks and I will stay calm and carry on! All the best to everyone trying to help me.
You have had great responses to your inquiry! As a member of the NARO Ohio Chapter executive board, my advice is always to seek legal help. The question to ask a potential attorney is: Does your firm represent oil and gas companies? Very few Ohio law firms do NOT have oil and gas company clients.
The forced pooling process has advantages and disadvantages. Are you involved in a dormant mineral process? Doesn’t sound like it. I agree with the comments you received, since Ascent has come to you, you are on their list as part of a potential drilling unit. You will be receiving notification when the Unit is formed and can find all applicable ODNR required documentation on the ODNR website that has a learning curve to it. Until then, don’t hold your breath! The NARO Ohio Chapter has a FB page if you need additional information.
I don’t know what a dormant mineral process is. One more thing to look up! I’m up in Wisconsin, not many attorneys up here with mineral right knowledge and unfortunately I’m widowed and disabled…no extra $. I did sign the Ascent lease after negotiating a better deal, that I did know to do so I received the sign on bonus but landman said bro won’t as they aren’t pursuing a permit on our acreage at this time or may not for years. My brother is in Illinois. He needs help sometimes and that’s all I was trying to do. I appreciate the info from this forum. I was confused, thinking that my bro as a ‘holdout’ would affect my royalties but that is not the case, thank goodness. I will check out the NARO page, thanks for that. All I know is as a college educated woman, the mineral right world is worse than physics! It gets emotional when money is involved but the main thing for me was why was I told our acreage was a “level one priority” to not pursuing a permit for years. I thought what I was told was a fact that didn’t change but once 2020 came around, Ascent is re-evaluating or who knows what…I have no control over any of it and need to let it go into the wind. If I see some progress, good, if not, so be it. I can’t miss something I never had but the landman sure had me going for quite a few months! Glad I found this forum and hope I didn’t cause any trouble!
@coro I think I am in the same boat as you. I did get notification from the company on the 19th and when they finally called me back today they said they are no longer perusing a lease on the property. I am interested in what your bonus was and what lease was negotiated if you are willing to share. I believe you can private message me.
Incorrect. Personal Messaging is not provided for.