Hi, I’m new here and very confused. Had a gentleman come to my house with a lease offer from Antero for someone mineral rights that I supposedly own that I never knew about. My portion is a very small amount (0.68750 acre). There is a signing bonus involved and it’s a 5 year lease. My husband is concerned about giving my SS# and also if we’ll have to pay taxes, either on the royalties or on the property. We really can’t afford to consult an attorney right now, but the signing bonus would be helpful to us right now. He left the paperwork and told me to contact the man listed on paperwork on Monday if I have more questions, but I’m not even sure what my questions should be. Any advice? Thanks in advance. Lisa
Lisa, I am not a professional just a lease holder in Marshall Co. Our property taxes on 34 net mineral acres just now drilled but not producing are $21 annually. I would suspect your’s would be less since it is smaller acreage. You will owe Fed and WV tax on the bonus payment and any eventual royalties. You should certainly still come out ahead. As to the lease you received, know that the minimum royalty in WV is 12.5 %. I would ask for 15% or 16% at least as a counter. Also strike out any reference to post production expenses and don’t agree to an automatic lease extension just the original 5 years. If they don’t drill in the original 5 year term they have to renegotiate a new lease. That is what happened to us in Marshall Co. Antero is very active in Tyler Co. You can check the dep.wv.gov website and click on the Database and Map Information button and then select the Oil and Gas Map Search button. On the map which is very sensitive try to find the area in Tyler Co where your property is located and see if there are proposed or existing wells in the area. If you click on each wellsite the specific info for that well appears. After you use the site bit it becomes easier to find what you’re looking for. I hope that helps. An attorney is always an option but with an expense. Good luck.
Hi Lisa,
I agree with dome on a lot of aspects. First, I would like to say that there are a lot of professionals (lawyers included) that have very reasonable costs for helping with a lease negotiation. There are definitely some clauses that you need to be wary of. In your situation, you should especially be wary of any clauses that hold you responsible for title issues since you were unaware of the interest before the landman approached you.
I strongly advise against seeing this as free money. Like dome said, there will need to be taxes paid and other consequences down the line. Spending effort and possibly some money now will benefit you in the future.
At a minimum, as the landman about the interest. Is it undeveloped or are there currently wells producing? You also might benefit from speaking with other relatives who purportedly own an interest in the same minerals or neighbors who own adjacent minerals.
Hope this helps!
~Rachel
If you’re still working on this, here’s my two bits. In Tyler County right now you can get a signing bonus of $3K-$4K/acre. That’s about $1500-$2000 for you. Counter at $5K/acre. Five years is normal. Don’t give them an automatic extension, though, unless they agree to pay a higher bonus. The royalty should end up around 15-18%. Counter at 20%. Make sure you get gross proceeds (don’t pay any post-production costs). Get a No Warranty of Title clause (they’ll probably add this as a paragraph in Exhibit A, as they will probably do with a lot of these changes, and that’s OK). Get a Hold Harmless clause. Get a formation limit that gives them only the Marcellus Shale. Those are the basics. Don’t be afraid to ask, these guys hear far crazier all the time. They won’t even laugh at you for this stuff. Good luck, and have fun!
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