I was approached by Tug Hill this past Spring and offered a $4000 NMA signing bonus and 16% royalty rate for .69 NMA, but the lease terms were decidedly in their favor of course and they wanted the rights to all the formations from the surface on down, plus 120 days to close. I countered with the usual recommended clauses such as 20% gross royalties, no title warranty, no recoupment, etc. and for the Marcellus only as I had checked the WV drilling permits and they had only pulled one for the Marcellus, but they have subsequently drawn one on the same API# for the Point Pleasant formation. The landsman went silent over the summer and of course EQT now owns Tug Hill and they contacted me this week and are only offering $1500 NMA and 14% for the same original Tug Hill lease offer. Does anyone have any recent information about bonus amounts and royalty rates in the district? This land has never been leased to any O&G company and I really don’t want to lease all the formations for one signing bonus amount. I have land in Lewis county and only leased the Marcellus for fracking a few years ago, but that land was already under lease on a old vertical well from the 1910’s. Any information will be appreciated.
$1500/NMA and 14% are ridiculously low prices for Wetzel County, but EQT has been making this their starting offer lately. You should counter with $7K/NMA and 20% gross. Your other requests are reasonable.
Tug Hill was actually drilling to the Utica in Wetzel County, so they were asking for leases that included both the Utica and the Marcellus. Since EQT has taken over Tug Hill’s operations, it makes sense that they would also be asking for Utica, at least in places where Tug Hill was the operator. If they have to have both, make sure the formation limit clause only gives them the two formations and nothing else.
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