My son and I jointly own property in Lynn Camp, Ritchie County. We've received several inquiries over the last year regarding leasing or purchasing the mineral rights that we own. Someone else owns the other 1/2. I'm interested in leasing our mineral rights. I want to get educated when I contact these companies so I don't get taken advantage of. I'm totally 'green' when it comes to this. What can I expect as far as a good offer? How can I find out who owns the other 1/2? What if we are willing to lease our 1/2 and the other party isn't ? Does anyone know of any activity going on in the Lynn Camp area?
I also own property in Ritchie, and I have also started receiving inquiries/offers to purchase. So far, the offers have seemed to be more "fishing" by companies or speculators trying to get in low and early. A couple of them seemed fair enough considering that they are taking all the market risk, but there is always a chance that we will not see any better offers any time soon.
I was at a investment conference recently where several O & G development companies were presenters, including one group that did much of the drilling in Ritchie around 1980 during the last "boom", so they know the area. They had drilled four wells on one of my leases back then. Of course, the drilling industry is suffering, but the general attitude seemed upbeat for the future in the Marcellus drilling areas. "We" are considered to be a lower cost drilling area of the country and gas prices seem to be ready to make a comeback ahead of oil, so maybe we will benefit. Properly financed companies will continue to develop and drill where they are already operating, with places like Ritchie about one or more years away from serious activity. Unless something changes, I plan on waiting before I commit to a lease or sale as I think prices will go up.
Yes to activity in Lynn Camp or Lynncamp. I think today to soon the Ritchie deeds and other records will be available online for free viewing, see my post about that. When that happens I can help you trace your title, probably and unofficially. You need a lawyer for a certified title opinion and I am not one. But to figure out the owner of the other half you need to know when the interests separated. Not at home now but I might be able to help a little later this evening. I agree that parts of Ritchie are hot now, parts will be hot soon, and all will be valuable eventually. Just checking, Lynn Camp in Clay? I think there is another one in Union district, also active.
Just heard it will be June 15 for the deeds database.
Thanks to both of you for replying so quickly. I don't know much about how land is divided by sections, districts, etc. But my property is Lynn Camp, Grant District. Does that help identify it any better?
Grant District? I’ll look around and see what I can find. This evening.
I found Lynn Camp in Grant district, over west of Cairo, south of Hwy 50. As far as I know, this is not a really hot area but I have heard of some big companies being interested in the general area. My guess would be bonus money would be maybe $2000 an acre, but probably by next year the price will pick up. 15% would probably be offered as royalty but again that should be better, and the first offer is never the best offer.
About leasing if the other party is not interested, that is a potential problem but the WV Legislature is planning to look at a forced pooling bill in the fall session. They keep trying and failing. If passed, that would have provisions for requiring people to be leased under certain circumstances. If you lease and the other doesn't, then at least you get a bonus payment.
Try to read up on this site about leasing, things like that.
Here are some links with good information
Links for Oil and Gas Lease Terms and Negotiation
http://www.gdhm.com/images/pdf/jbm-ogleasechecklist.pdf
CHECKLIST FOR NEGOTIATING AN OIL AND GAS LEASE
http://recenter.tamu.edu/pdf/229.pdf
Hints on Negotiating An Oil and Gas Lease
If you have a surface ownership of your tract, there should be a tax map and parcel number on your tax ticket. If you have that map and number, you can contact the Ritchie County Assessor's office and order a copy of that tax map. I think the WV Dept of Highways sells county maps; worth having.
In a couple of weeks when they get the new system working in Ritchie, you can research your interest. I'll help if you want. Anyway those are some ideas.
My greatgrandmother's father had a farm near there many years ago. Sold it long time ago.
Most people say never sell your minerals unless you are really needing the money. They say that you are likely to get your bonus money and then some in a few months for one of the new horizontal wells. Not likely the'll drill a horizontal well there in the next couple of years, but in the years after that, it could happen, if the price of natural gas goes up. I hope so!
Thanks, Nancy, again, for responding so quickly. You mentioned $2,000/acre. That would be for how long of a lease, and would that be a one time payment? And I don't really understand what "bonus" money is.... perhaps the initial $2,000/acre? Then you'd get monthly payments after that depending on how much oil/gas comes from the wells?
Yes, I have the info you mentioned on the tax reports. I will definitely check into that. You are a wealth of information! You have no idea how much I appreciate that!!
Nancy Mosley said:
I found Lynn Camp in Grant district, over west of Cairo, south of Hwy 50. As far as I know, this is not a really hot area but I have heard of some big companies being interested in the general area. My guess would be bonus money would be maybe $2000 an acre, but probably by next year the price will pick up. 15% would probably be offered as royalty but again that should be better, and the first offer is never the best offer.
About leasing if the other party is not interested, that is a potential problem but the WV Legislature is planning to look at a forced pooling bill in the fall session. They keep trying and failing. If passed, that would have provisions for requiring people to be leased under certain circumstances. If you lease and the other doesn't, then at least you get a bonus payment.
Try to read up on this site about leasing, things like that.
Here are some links with good information
Links for Oil and Gas Lease Terms and Negotiation
http://www.gdhm.com/images/pdf/jbm-ogleasechecklist.pdf
CHECKLIST FOR NEGOTIATING AN OIL AND GAS LEASE
http://recenter.tamu.edu/pdf/229.pdf
Hints on Negotiating An Oil and Gas Lease
If you have a surface ownership of your tract, there should be a tax map and parcel number on your tax ticket. If you have that map and number, you can contact the Ritchie County Assessor's office and order a copy of that tax map. I think the WV Dept of Highways sells county maps; worth having.
In a couple of weeks when they get the new system working in Ritchie, you can research your interest. I'll help if you want. Anyway those are some ideas.
My greatgrandmother's father had a farm near there many years ago. Sold it long time ago.
Most people say never sell your minerals unless you are really needing the money. They say that you are likely to get your bonus money and then some in a few months for one of the new horizontal wells. Not likely the'll drill a horizontal well there in the next couple of years, but in the years after that, it could happen, if the price of natural gas goes up. I hope so!
Hi Virginia
In the "olden days" leases often were for a term of months or years, with rental payments made quarterly or yearly to keep the lease in force for the term, or until a well was drilled, or drilled and producing. The last few years, the companies have been offering "paid up leases" where they pay the whole rental money in advance for that term, usually 5 years. This is called "bonus money" and is usually negotiated as an amount per net mineral acre. If you have 1/2 mineral interest (oil and gas) for 100 acres, your "net mineral acreage" is 50 net mineral acres. So when people talk about lease terms, what many people think about first it that bonus money.
That is what I was talking about.
I know up in the very active areas of Clay district, in the northeast of the county, $3000 was standard last year. Due to the low price of oil, which somehow causes natural gas to be low, there has been a big drop off in bonus money, at least that is what I have read on this and other forums. Many people don't want to talk about it.
If you get an offer to lease your acreage, there will be an offer of some amount for the bonus (remember it is for net mineral acres so a $3000 bonus per acre, would be $500 for 1/6 of an acre. They next usually talk about the royalty percentage. In the "olden days" even probably 10 or 12 years ago, 12.5% (1/8) was the standard royalty. Lately there have been offers of 15%, 16%, 18%, sometimes (not often) higher.
The next thing the company usually doesn't bring up is what does that 15% mean. It SHOULD mean 15% of what the producer was paid. It usually means 15% of what the producer was pail, minus 15% of the expenses to prepare it for sale, transport it, a few other things. There can be things put in the lease to prevent those deductions, but most companies now in WV are not willing to grant such terms. This is a big deal, can mean lots of money. It could amount to 1/3 or more of the "gross" (before expenses) amount.
There are other important things in the lease. The documents I put links for, above, explain some of this.
If you have a surface tract, you should also get good surface issue terms in the lease.
It is important for the mineral owner to know as much as possible, but even then is is almost always worth the money to have an attorney, not just any one but one who knows about West Virginia oil and gas leases, be involved. If you get to the point of being ready to negotiate with a company about a lease, and want a recommendation, I can give you two names.
Ok so now we have a lease that is a good one, then we wait until the company gets a plan to use our land in their drilling location. They already have our permission to "pool" our acreage with other nearby acreage to form a drilling unit.
Then they form this unit (by finding all the mineral owners in the area they want, getting leases, and planning where the well will go). They will file a Declaration of Unit in the county courthouse in Harrisville. Sometime around then they will send out Division Orders, showing how many net mineral acres you have in the unit. It might not include all your leased acres. You check their math, make sure they have your correct mineral interest and royalty %, and that is the number. If you agree, you sign it and return it. If not, call and talk about it.
Then, wait maybe 3 or 4 months, or more than that, and eventually your royalty check will come. Usually the first one is several months, and people say it is worth waiting for! Then usually you get checks monthly that will vary depending on how much they produce that month, and the price they get paid for it.
That is how it works.
I'll let you know when the new system actually is up, and you can see if you can find who owns that other part. I'll be glad to help if you want.
Hope that helps.
Nancy
WOW! Nancy, you are a wealth of information!! This is mind boggling. The more I learn, the more I realize I don't know.
Is there documentation anywhere that tells what leases people have, with what companies, etc.?
I look forward to the new system coming online.
Again... thank you so very much, Nancy.
Nancy Mosley said:
Hi Virginia
In the "olden days" leases often were for a term of months or years, with rental payments made quarterly or yearly to keep the lease in force for the term, or until a well was drilled, or drilled and producing. The last few years, the companies have been offering "paid up leases" where they pay the whole rental money in advance for that term, usually 5 years. This is called "bonus money" and is usually negotiated as an amount per net mineral acre. If you have 1/2 mineral interest (oil and gas) for 100 acres, your "net mineral acreage" is 50 net mineral acres. So when people talk about lease terms, what many people think about first it that bonus money.
That is what I was talking about.
I know up in the very active areas of Clay district, in the northeast of the county, $3000 was standard last year. Due to the low price of oil, which somehow causes natural gas to be low, there has been a big drop off in bonus money, at least that is what I have read on this and other forums. Many people don't want to talk about it.
If you get an offer to lease your acreage, there will be an offer of some amount for the bonus (remember it is for net mineral acres so a $3000 bonus per acre, would be $500 for 1/6 of an acre. They next usually talk about the royalty percentage. In the "olden days" even probably 10 or 12 years ago, 12.5% (1/8) was the standard royalty. Lately there have been offers of 15%, 16%, 18%, sometimes (not often) higher.
The next thing the company usually doesn't bring up is what does that 15% mean. It SHOULD mean 15% of what the producer was paid. It usually means 15% of what the producer was pail, minus 15% of the expenses to prepare it for sale, transport it, a few other things. There can be things put in the lease to prevent those deductions, but most companies now in WV are not willing to grant such terms. This is a big deal, can mean lots of money. It could amount to 1/3 or more of the "gross" (before expenses) amount.
There are other important things in the lease. The documents I put links for, above, explain some of this.
If you have a surface tract, you should also get good surface issue terms in the lease.
It is important for the mineral owner to know as much as possible, but even then is is almost always worth the money to have an attorney, not just any one but one who knows about West Virginia oil and gas leases, be involved. If you get to the point of being ready to negotiate with a company about a lease, and want a recommendation, I can give you two names.
Ok so now we have a lease that is a good one, then we wait until the company gets a plan to use our land in their drilling location. They already have our permission to "pool" our acreage with other nearby acreage to form a drilling unit.
Then they form this unit (by finding all the mineral owners in the area they want, getting leases, and planning where the well will go). They will file a Declaration of Unit in the county courthouse in Harrisville. Sometime around then they will send out Division Orders, showing how many net mineral acres you have in the unit. It might not include all your leased acres. You check their math, make sure they have your correct mineral interest and royalty %, and that is the number. If you agree, you sign it and return it. If not, call and talk about it.
Then, wait maybe 3 or 4 months, or more than that, and eventually your royalty check will come. Usually the first one is several months, and people say it is worth waiting for! Then usually you get checks monthly that will vary depending on how much they produce that month, and the price they get paid for it.
That is how it works.
I'll let you know when the new system actually is up, and you can see if you can find who owns that other part. I'll be glad to help if you want.
Hope that helps.
Nancy
If you run into troubles finding the other 1/2 interest, I have a couple of landmen that I'll hire out to do the work. Nancy will be a great help to you. She really knows her stuff. If you want help negotiating the lease, if it comes down to that, that's exactly what I do. Good luck!
Thanks for the good word, Kyle. I think the Ritchie database, if it works like it should, should be helpful, and Mrs. Patterson might enjoy doing some of the research. It is very good to know that you have resources to help with title work. Sometimes things go beyond the deeds, wills, leases, and other documents in the records room, like chancery court proceedings etc. That is where the fun really begins!
And Virginia, Kyle is very knowledgeable about leases. He is helping me with mine.
Thanks to both of you!!