Bonus amounts paid for 5yr. lease signing in Doddridge Co. WV

West Virginia Mineral Rights Doddridge County, WV
1

I have been approached by Clarence W. Mutschelknaus with an offer of $500.00 per mineral acre I'm only a small mineral rights owner along with my brother & three cousins. The tract of land in question is 5.875 net acres(my share), of 23.50 gross acres. Is this a fair offer or should I (we), hold out for more? What happens if we don't sign or only two of us sign & the other three don't sign, does some other entity pick it up & try to have us sign with them, or is it lost?

I along with my brother & three cousins inherited a small percentage of mineral rights in Doddridge, Gilmer, Harrison, & richie Counties. We don't know much about this as our parents never mentioned anything about mineral rights & royalties. Any help on this would be greatly appreciated!

2

Go together and hire a good oil and gas lawyer! You have to do your homework, or you will not get the best deal available!

3

I am no expert, but having gone through all this several months ago I would say that $500 is a very low offer. I studied up (on this forum and other websites), talked to people, and learned all I could about negotiating leases and then did just that, negotiated the lease for us, and two others involved. Some important things to consider are 1. the more people you can band together, the better negotiating power you will have - even if you have small acreage. 2. the bonus money is great if you can get it really high (ours ended up being $2000 per acre, but other people were getting more than that after we signed), but the royalty terms are more important than the bonus. 3. holding out for better terms is in your favor - don't believe the landman when he says this is the final offer, etc. etc. and 4. it is much advised to hire a WV oil and gas lawyer to do all the work for you because, trust me, it is a lot of work to learn all this stuff, and having a lawyer represent your lease is priceless.

By all means, do NOT sign the lease they presented to you because nothing on it is in your favor.

Doddridge and other counties are getting a lot of action right now, so if you don't like one leasing company you may have the option to choose another.

Wish you luck!

4

If you live in or near one of those counties you mentioned, I'd suggest going to the courthouse and researching your title. I have done this mostly long distance for Ritchie, and can give you ideas on the Ritchie process but I'll put that on that county's discussions.

I don't think much is going on in Gilmer. Ritchie's activity is mainly Clay and some Union. I think Doddridge is active all over. Don't know about Harrison.

Good idea about an attorney, a WV oil and gas one, as suggested below. And read this website.

5

Started out with a lease to Antero 3yrs ago for 500 ac and 14%, I have signed several leases with them since and each time I have negotiated for more, last lease I signed June 2013, was 2000ac and 16 %, all in Doddridge County. Some are getting more.

Arnold

6

Thank you for your input but, we are very small mineral rights owners we don't get but $600.00 to $ 700.00 in royalties a year. I don't know what a mineral rights atty. costs but, I don't think we can afford it!

Eleanor Davis Casler said:

Go together and hire a good oil and gas lawyer! You have to do your homework, or you will not get the best deal available!

7

Thank you for your advise but, my cousins & myself live in Florida & my brother in Arizona so it's very difficult if not impossible to go to the county court house of the three counties involved. read the reply I made to Eleanor Davis Casler. The one lease we were given an offer for is only 23.50 acres. Could you tell me what happens if we don't sign or only two out of the five of us signs & the three of us don't sign? Does it just go away? Or does someone else pick it up & makes us an offer?

Nancy Mosley said:

If you live in or near one of those counties you mentioned, I'd suggest going to the courthouse and researching your title. I have done this mostly long distance for Ritchie, and can give you ideas on the Ritchie process but I'll put that on that county's discussions.

I don't think much is going on in Gilmer. Ritchie's activity is mainly Clay and some Union. I think Doddridge is active all over. Don't know about Harrison.

Good idea about an attorney, a WV oil and gas one, as suggested below. And read this website.

8

Thank you for the information you gave me, Please read the replies I made to Eleanor Davis Casler & Nancy Mosley, that will explain our situation I hope!

Stephanie said:

I am no expert, but having gone through all this several months ago I would say that $500 is a very low offer. I studied up (on this forum and other websites), talked to people, and learned all I could about negotiating leases and then did just that, negotiated the lease for us, and two others involved. Some important things to consider are 1. the more people you can band together, the better negotiating power you will have - even if you have small acreage. 2. the bonus money is great if you can get it really high (ours ended up being $2000 per acre, but other people were getting more than that after we signed), but the royalty terms are more important than the bonus. 3. holding out for better terms is in your favor - don't believe the landman when he says this is the final offer, etc. etc. and 4. it is much advised to hire a WV oil and gas lawyer to do all the work for you because, trust me, it is a lot of work to learn all this stuff, and having a lawyer represent your lease is priceless.

By all means, do NOT sign the lease they presented to you because nothing on it is in your favor.

Doddridge and other counties are getting a lot of action right now, so if you don't like one leasing company you may have the option to choose another.

Wish you luck!

9

James said:

Could you tell me what happens if we don't sign or only two out of the five of us signs & the three of us don't sign? Does it just go away? Or does someone else pick it up & makes us an offer?

If some of you sign and some don't, if they are sure you won't, they might stop trying for awhile. Or they would hope that forced pooling becomes law in West Virginia and they could "force" you to be leased, if they are able to get enough people to lease. Or maybe another company leases you, and the two companies work it out. If they have a plan to use your land, because they know from other wells that your area is a good one, they will probably keep trying, increasing bonus money or something.

10

There has not been a well dug on our leased mineral rights yet, so I am not speaking from personal experience, but only from what I have read on this site. The wells (the horizontal wells) they dig now yield much higher production revenue than the old vertical type. When you say you only get $600-700 in royalties a year, is that on a vertical well or a horizontal one? Is it from one well or more than one well?

As for not being able to afford a lawyer, I understand that, which is why I did so much research and negotiated the lease, myself, for us and two others. I would have liked to have left it up to a lawyer, but we just weren't able to do it financially. I feel like we ended up with a fairly good lease, but it may have been even better with a lawyer involved.

I was advised (by researching and talking to people on this site) to ask for $2400 bonus (no reason you couldn't ask for even more than that). I didn't ask for that, only $2000 - which is what I got, so I should have asked for more! I was also advised to ask for 18% royalty - we got only 15%, but if I would have held out (said "no"), I have a feeling the landman would have come back with more later. I was advised to ask for no warranty of title and an indemnity clause, which we got easily. I also asked for a depth severance clause and got that. I asked for a cost free royalty, but we did not get that, but we did get a mineral enhancement clause, which hoping that Antero is more honest than Chesapeake, will get us more return on our 15% royalty cut than the "at the wellhead" royalty they originally offered. Supposedly, that was the best they could do. I wonder if we had a lawyer, if we would have gotten the cost free royalty.

Other advice I followed was to negotiate simply the bonus and royalty percent first, before going into any other negotiations. That seemed to work well.

Some advice that I read, but wasn't able to follow because one of the others I was also representing would have lost his mind if I would have done this, was to just say, "no, we're not signing anything" and wait until the landman came back with better terms. I believe this would have worked, but we didn't try it. The only difficulty with this is, like Nancy Mosley said, if WV passes a forced pooling law, then they would be able to start drilling without you signing a lease. From what I understand is they tried to pass this law recently, but it didn't pass. So I don't know how soon it would come up again in the legislature.

Hope this helps you!


James L. Reed said:

Thank you for your input but, we are very small mineral rights owners we don't get but $600.00 to $ 700.00 in royalties a year. I don't know what a mineral rights atty. costs but, I don't think we can afford it!

Eleanor Davis Casler said:

Go together and hire a good oil and gas lawyer! You have to do your homework, or you will not get the best deal available!

11

Stephanie, Thanks again for your help & advise. In answer to your question about our royalty payments, there are several wells of the vertical type. But we hear that there are going to be a few horizontal wells put into operation it the near future (whatever that is?). We are just to far away to do any meaningful research, & we definitely couldn't afford a lawyer!

12

Nancy, the two of the five of us are the Black Sheep of the families. One my brother & I haven't spoken to each other since 1996. I'm not sure how to contact him if I had too, I'd be willing to talk if for nothing else but to make sure none of us got a bad deal. But we are like night & day, have been since Jr. High School!

The other black sheep is my two cousins sister, she took over as our agent(don't really know how) when her mother passed away(she was our agent). since she took over as agent no one but her got any money from royalties or lease bonuses. This went on for several(four or five years, & we were gullible), before we discovered what had happened! So she's not on speaking terms, at least if you want the truth!

For some reason they are the first to sign as soon as the get an offer, which sorta screws things up for us to make the best deal we can. If they weren't such Pig Heads, we could make the pot richer for ALL of US!

My cousin Don in Orlando found out his sister lost some mineral rights for non payment of taxes & between he & I we paid $7000.00 to get it back. That left us in dire straights for awhile! So now you see what we're up against!

Nancy Mosley said:

James said:

Could you tell me what happens if we don't sign or only two out of the five of us signs & the three of us don't sign? Does it just go away? Or does someone else pick it up & makes us an offer?

If some of you sign and some don't, if they are sure you won't, they might stop trying for awhile. Or they would hope that forced pooling becomes law in West Virginia and they could "force" you to be leased, if they are able to get enough people to lease. Or maybe another company leases you, and the two companies work it out. If they have a plan to use your land, because they know from other wells that your area is a good one, they will probably keep trying, increasing bonus money or something.

13

Interesting family! Let's hope the company really wants your land, and makes you a good offer. People here will help as much as we can.

14

James, we are not from WV either, so I did all our business with the landman through email. I wanted to make sure I had everything in writing. Our portion of the mineral rights was very small after being divided among, I don't even know how many, heirs, and we were told that "everyone else has already signed" except us. The landman put a lot of pressure on us, saying we had deadlines and this was his final offer, and stuff like that. Apparently, it is just their salesman tactic to get you to sign, so they can move on. Like I said, one of the people I was representing in the family was so stressed out about the whole thing because he was convinced we were going to miss out if we waited, that there was no way we could have told the landman to come back later. So I had to negotiate the best I could and close the deal. Even if there are only a few of you, or even one of you, the landman will negotiate a deal with you to get you to sign. He may try to say that everyone else signed the lease as is, and it wouldn't be fair to change anything....don't listen to that. Just demand better terms. Look up the things I mentioned before and ask for those. You may even find other things to ask for. They all have their own language for these clauses and such, so you just have to ask for it generally, you don't have to have the exact wording. But it is at that point where I wish I had enough money to hire a lawyer to review THEIR language and make sure we still weren't getting screwed.

As for the income of the vertical wells verses the horizontal wells, the horizontal produces a lot of income immediately and tapers off after the first year and years after that. No one really knows how long they produce since they are so new. The vertical wells are more consistent over time until the end when they run dry, but they don't yield anywhere near the same amount of money. There was one guy on here recently that says his horizontal well is giving him a check of $9000 a month and he said his mineral interest was small. Needless to say, we are all anxious for a well to be drilled on our lease!

15

James, you may get someone to represent you and they take their fee from the bonus. They may very well make you more in the bonus than they cost and a higher royalty and better other terms could be more gold in your pocket. Just a thought. With a poor lease you can be almost as poor after leasing as you were before.

It miffs me that mineral owners own something of sometimes very high value but they benefit so little from the exploitation of it.

16

I didn't mean to air my families dirty laundry, just let those reading this what my two cousins & myself are up against!

Nancy Mosley said:

Interesting family! Let's hope the company really wants your land, and makes you a good offer. People here will help as much as we can.

17

We'll do our best, do as much research as possible from Florida, that's what we've done in the past. Although I know somethings we've done haven't been to our best interest, we could have done better from everything I read on this forum. Thanks again for your help!

Stephanie said:

James, we are not from WV either, so I did all our business with the landman through email. I wanted to make sure I had everything in writing. Our portion of the mineral rights was very small after being divided among, I don't even know how many, heirs, and we were told that "everyone else has already signed" except us. The landman put a lot of pressure on us, saying we had deadlines and this was his final offer, and stuff like that. Apparently, it is just their salesman tactic to get you to sign, so they can move on. Like I said, one of the people I was representing in the family was so stressed out about the whole thing because he was convinced we were going to miss out if we waited, that there was no way we could have told the landman to come back later. So I had to negotiate the best I could and close the deal. Even if there are only a few of you, or even one of you, the landman will negotiate a deal with you to get you to sign. He may try to say that everyone else signed the lease as is, and it wouldn't be fair to change anything....don't listen to that. Just demand better terms. Look up the things I mentioned before and ask for those. You may even find other things to ask for. They all have their own language for these clauses and such, so you just have to ask for it generally, you don't have to have the exact wording. But it is at that point where I wish I had enough money to hire a lawyer to review THEIR language and make sure we still weren't getting screwed.

As for the income of the vertical wells verses the horizontal wells, the horizontal produces a lot of income immediately and tapers off after the first year and years after that. No one really knows how long they produce since they are so new. The vertical wells are more consistent over time until the end when they run dry, but they don't yield anywhere near the same amount of money. There was one guy on here recently that says his horizontal well is giving him a check of $9000 a month and he said his mineral interest was small. Needless to say, we are all anxious for a well to be drilled on our lease!

18

James, think nothing of it. I talk about my brother here who drinks. I say the exact same thing to his face. I've been told I have no tact because I tell it like I see it and or the way it is according to what I have seen. It's not that I don't care about peoples feelings, it's just that you can't fix anything until it becomes evident to all concerned that something is broken.

19

Thank you ever so much, I thought of that but dismissed it but, I think I'll have to rethink this. It my indeed be the opportunity my two cousins & I need & deserve! Let the other two sign for the lesser amount!

r w kennedy said:

James, you may get someone to represent you and they take their fee from the bonus. They may very well make you more in the bonus than they cost and a higher royalty and better other terms could be more gold in your pocket. Just a thought. With a poor lease you can be almost as poor after leasing as you were before.

It miffs me that mineral owners own something of sometimes very high value but they benefit so little from the exploitation of it.

20

Exactly!!!

r w kennedy said:

James, think nothing of it. I talk about my brother here who drinks. I say the exact same thing to his face. I've been told I have no tact because I tell it like I see it and or the way it is according to what I have seen. It's not that I don't care about peoples feelings, it's just that you can't fix anything until it becomes evident to all concerned that something is broken.