What's fair oil and gas lease?

Just got my lease offer. My question is how do they come up with these figures? What is a "net mineral acres"? How do they determine what to offer for a signing bonus? What about the royalty percentage? Not knowing all the other parties involved in the entire tract, how do we know that what they are offering to each of us is fair? Thanks.

Net mineral acres: If the total tract size is 100 acres and you own 1/4 interest of that you have 1/4 of 100 acres = 25 net mineral acres. The 100 acre number is the gross mineral acreage.

How do they determine what to offer? They probably see what other people have signed for and use that as their first offer. However, they always can go up.

Royalty %: in the olden days a 1/8 royalty (12.5%) was standard. It might still be what is their offer However, some people get larger % offers, usually people with more net acres. 15% might be a starting offer some places, and 18% might be the top offer.

The best way is to have a good attorney who knows oil and gas in WV to help negotiate for you. If you search posts by me you can find some names I have suggested. A good attorney can get you more than his fee, so well worth the cost. And remember, there is more to the lease than the bonus and royalty %.

First off, take a deep breath. Don't feel pressured by anyone, friends, relatives, and especially not the folks who are trying to lease you.

There are a number of factors involved in how they value your mineral rights. It can depend on where they are, how much you own, what they have leased around you, to name just a few. Whether you own only the mineral rights, or also the 'surface rights' (the land above the minerals) is also an important factor in negotiations.

'Net mineral acres' refers to the actual amount that you own. This calculation is based on the fraction (usually converted to a decimal) of the tract or tracts that you are a part owner of. The entire tract is referred to as the 'gross acreage'.

The more co-owners that you can communicate with the better, but you can negotiate your lease separately from them. What you'll want to do is talk to as many people as you can that have executed recent leases in the vicinity of your property. You may get some responses here, and I recommend that you also join another group called gomarcellusshale.

Unfortunately, not a lot of Tyler Countians use these forums, so up-to-date information might be scarce here.

Folks will want to know where your acreage is, and how much you own. I'm not going to ask you, because it has been years since I have been involved in lease negotiations, so I'm not up to speed on values. What I will say is that if you own more than an acre or two, net, please speak to a lawyer. There is an attorney in Buckhannon who is knowledgeable in these negotiations, and also Tyler County. His name is Kyle Nuttal.

An attorney is valuable for more than just pricing. The gas companies will try to get you to sign what is called a 'boiler-plate' lease. This lease will be to their advantage, with several clauses that give them controls that you don't want to give them. A good attorney can and will negotiate a lease that protects you from these predatory clauses.

Marcellus shale is almost entirely Appalachian basin wide. Production numbers for the gas (for the most part) are very similar for all wells in West Virginia on a per lateral foot basis. The wet gas or areas high in NGL's (in WV all properties from West Union to the Mason Dixon/Marshall County border intersection west and south to about Route 50) Is the area in the highest demand. If you look at the production numbers for the laterals inside the wet gas area...you will see a huge drop-off after the first year of production...80-90%. Lease and Rental bonuses inside the wet area appear to be drastic as well... I could go on and on...but in my professional opinion the #1 driver of lease and rental bonuses is the corporate competition between Antero and EQT. If you happen to be in an area where both of these companies are competing for acreage you may see bonuses upward of 5k/6k an acre. If you are not in an area where both of these behemoths are competing than you should expect...anywhere from 1k to 2.5k/acre no matter if its wet/dry.

I guess what I am saying is that lease rental bonus really doesn't have a whole lot to do with estimated reserves, production, NGL production, access to pipelines, NRI...etc. It is almost entirely propped up by 2 large companies in a giant pissing contest. I don't believe it will last much longer.

Hey is the way to reach you direct?