Minerals/Royalty Owner Info
WV SORO is primarily a surface owners’ organization. However, 30% of our members are also small mineral owners.
Recently we have been getting more and more questions about leasing. Based on those questions it is clear that landmen for oil and gas drilling companies from all over the country are aggressively trying to lease up all unleased mineral interests they can find in West Virginia. In doing so are taking advantage of our citizens’ lack of knowledge about what can be struck out of, and added into, the oil and gas leases offered by the drillers. They are also taking advantage of citizens’ lack of knowledge about how much money the companies are willing to pay. And finally, they are in some instances playing neighbors against neighbors to rush people to sign leases before they can get more information about what they are doing, when the best thing that neighboring landowners can do is to share information and even bargain together.
We therefor prepared the first document below that is specific to West Virginia. It contains a general encyclopedia of information about leases and leasing.
Also we have piggybacked on work already being done by an organization of mineral owners in Pennsylvania. On their web site they created West Virginia specific forums for West Virginians to share information on what gas companies are offering, and on leasing generally (and seeing what is happening in Pennsylvania is also useful). Links to those forums are set out below.
An important issue for landowners who already are receiving royalties is whether their royalties have been correctly calculated. So a link below will lead to a private lawyer who will give a free initial consultation on this issue.
Below that are links to a variety of other information we have collected that should be helpful.
Although landowners who own their unleased minerals are in much better position to protect their surface than landowners who are only surface owners or whose minerals are already leased, we think that those of you do owner your minerals and are considering leasing will find that you will still want to join us in your role as surface owner.
General information for West Virginians about leasing.
Top 6 Pieces of AdviceBefore Signing a Gas Lease
This article, Information about Oil and Gas Leasing for Surface Owners Who Also Own Their Minerals, was prepared the author of the West Virginia Surface Owner’s Guide to Oil and Gas. This article is a starting collection of important information for you if you are approached by an oil and gas company about leasing your minerals.
Since the drafting of this article the author has learned two more points that could be important. First, Chesapeake, and a few other large producers are trying to get all of the land leased that they can. They are trying to squeeze out competitors. But that could also give them a near monopoly on drilling. They can then pick and choose which tracts to develop – and it may not be yours. And there is a lot more money in royalties after drilling than in delay rent or bonuses up front. It may be wiser to take a little less money up front, but go with someone who is more likely to drill on your minerals and not the minerals of some other mineral owner in their vast holdings. Second, be careful and do the math if you are getting a “paid up” lease. In the past leases were $5 and acre per year. You shold be getting a lot more in the current drilling boom. If you get a 10 year paid up lease at $50 an acre instead, you have not gotten any better bargain – in fact you have removed any incentive they have to surrender your lease if they are not going to drill so you can lease to someone else. On the other hand, if you get a signing bonus per acre and will also get delayed rentals, then you are getting a better deal. Or if you get a lot more than $50 paid up, you are getting a better bargain.
How much are oil and gas companies offering?
To find out what offers are being made, go the Natural Gas Lease Forum for Landowners new "offer tracker". Other people have put their offers their to assist you, so if you get an offer, you should post it for the next folks. To do that, if you can't find it from the offer tracker page, click here., and click on the link at the bottom that says "Submit your Offer or Lease" and follow the instructions. Below is a link to the same organization's home page with lots more information available.
The Pennsylvania offers may also be helpful. Some of them are $1,500.00 an acre and 15% royalty, which is confirmed by news reports! They are probably leases intended to use to drill to the the Marcellus formation which is hot right now, and this map of the thickness of the Marcellus shale formation shows that the seam is up to 150 feet thick in that area, and not so thick generally here.
Find out about and report on good and bad landmen!
Go to this site and report on good or bad landmen experiences. Participating in this will hopefully improve their behavior!
Are my royalty checks right?
At least one Supreme Court case and one jury has found that some oil and gas companies are underpaying royalty owners by deducting unjustified expenses or using market values for calculating the royalty that are not the proper market values. If you want to know if the royalty checks that you are receiving are being properly calculated you can get a free initial consultation with a lawyer who has volunteered to do this for WV SORO members and others.
Here is an update on the Tawney class action against Columbia Natural Resources, LLC (formerly Columbia Natural Resources, Inc.), NiSource Inc., Columbia Energy Group and Chesapeake Appalachia, L.L.C. ("Defendants")
Here is a September 20,2008, newspaper article explaining that the class action against Dominion has been settled. If your are a mineral owner with Dominion wells, you should go to the settlement web site to keep up on what is happening and what you need to do.
Other information related to leasing.
WVSORO's relaible information as of, October, 2012, is that the Utica Shale will not be such a big play here in West Virginia as the Marcelluls Shale has been, or as big as teh Unitcal Shale will be in Ohio. This is because teh Utica is thinner here and does not have the oil found the formation in Ohio. For more information here is an early assessment done by teh United States Geological Survey.
"Marcellus Play 'fairway' and rich gas areas -- December 2010"
Information on roads to negotiate into lease addendums
A gas company wants me to sign an amendment to an old lease! I own the surface and the minerals. Should I sign it?
If you own a fraction of, or know the name of one owner of a fraction of, the minerals under your land, you may be able to find on line who owns the other interests in the minerals. Contact the other owners and negotiate together with the drillers/landmen.
I signed a lease that allows for injection of fluids and maybe other materials into the ground into the ground. Are there any controls over that?"
I am considering signing a lease or doing other business with a driller or landman for a company. Can I find out if that “operator” has a history of “violations” of state laws or rules?
Oil and gas lease can be set aside if the landman said $25 is as high as the company will go and that they will lease neighbors' property and drain the gas out, if those statements were false, according to a Pennsylvania federal trial court judge's decision.
The best site for finding information on individual gas wells.
W. Va. Geologic and Economic Survey site with plats and completion reports for wells on line
Oil & Gas Boom Leads to Leasing Educational Campaign
Info on the Marcellus shale
Maps of Oil and Gas Wells. Find what oil and gas wells are in your area, or another area you care about.
Penn State Cooperative Extenion service web site on leasing.
Here is the home page of the Pennsylvania Natural Gas Lease Forum. This organization is an organization of landowners in Pennsylvania that has done a ton of work educating and organizing themselves. They have been good enough to add West Virginia sections onto their web site. Above we have given the link for West Virginians to share what the oil and gas companies are offering to us. They have also created a West Virginia web page on oil and gas leasing generally. And there is a new West Virginia web page on well spacing and royalty sharing.
Chesapeake Leases Voided: Middlebourne Couple Out $100,000 October 31, 2010
Information on signing bonuses and royalty payments paid by Chesapeake Energy in Wayne County, Pennsylvania
Morgantown Dominion Post article on Marcellus Shale August 16, 2009
Article on signing bonuses June 1, 2008
Hoping to tap a gas bonanza;
Rising prices lure natural gas drillers to vast, but deep Appalachian field
Pennsylvania mineral owners form organization to negotiate
300 agree to $90 million gas deal [inPA]
major leasing companies in an article with tips on leasing
The West Virginia Land and Mineral Owner Council
National Association of Royalty Owners
Pennsylvania Attorney General press release with advice
Property owner files suit over gas extraction
Circuit Court Decision on Flat Rate Royalties. We think that the "contemplation of the parties" theory that is only mentioned in this decision and also contract theories might be good theories for a lawyer to pursue in a court case.
Lease clauses and other forms from the web site of an organization of oil and gas industry landmen.
Owners have way to fight landmen
DEP Orders Partial Shutdown of Two Natural Gas Drilling Operations in Lycoming County
Information for Chesapeake/NiSource/Columbia Natural Resources class action members about the settlement
Chesapeake Energy says shale leasehold costs are rising sharply
Daily Natural Gas Price (NYMEX Henry-Hub)
Natural Gas Lease Forms and Addendum. This document was drafted for Pennsylvania law and conditions. However, it is useful for West Virginia for the most part in explaining the major terms of leases, how addendums work, and things to consider in signing a lease. We do not know whether or not the signing bonus amounts mentioned are justified in West Virginia -- based on what this says about free gas, the pressures may be higher there. The problems this mentions with free gas and gas pressures does not apply here, whether because their pressures are higher or they are not accustomed to free gas like we are here. Also in West Virginia there are statutory provisions for surface damages even without a lease provision, but a side agreement in an addendum would also be legal. Also there are revegetation requirements, but the State would probably not interfere with provisions in an agreement that are different so long as they prevent soil erosion and sedimentation. Finally, limiting the depth of formations drilled is one thing, because a really deep well, around 10,000 feet, takes a lot more surface area. More importantly is the number of different formations to which they may drill. Lots of formations means lots more wells if you are a surface owner. Consider leasing to only the formations they say they want to drill to, and negotiate up.
Oil & Gas Mineral Services - Website featuring information of importance to oil and gas mineral owners