Lease offer is 15% on the gross. When I asked for 18% of gross, I was told by company that all the gross leases are 15%. Is is correct information?
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Which company is this?
From my experience, this is good. I haven’t had any offers based on gross… only net. What company? Which District in Wetzel County?
It’s Antero. And the property is in the Green District.
And I asked my question incorrectly. They’re offering royalties of 15%. They say that it is on the gross but it’s difficult to be certain from my perspective. We’ve not dealt with these before so we’re a bit ignorant on the language. Our Ohio attorney has reviewed it.
Gross is good. Our stake is also in Green District. There have been some offers on ours but we haven’t gone forward due to some of the contract language.
What language specifically states gross not net? Is it generally one of the sections of the lease agreement? Or is the “market enhancement “ portion of the addendum? Our acreage portion is very small and it might just be lunch money but at the same time, if it isn’t, we do not want to be taken advantage of either.
Qualifier: I am NOT an attorney. The lease contracts that have been offered to us referred to the net proceeds [after expenses] in several places- 1) the lease agreement as well as 2) the addendum. Look for a “payments” clause and also a Royaties clause. Aside from several other contract sticking points dealing with length of term, termination provisions,& Indemnity guarantees, the main sticking point has been the issue over Gross vs. Net. Under Net terms, There have been reports of accrued expenses being tallied up and posted against the Lessor’s ledger. Tax issues may also get triggered against the Lessor once a contract is entered into. We have been apprenhensive given the terms offered so far especially with a small, diluted stake.
I’m new to the forum so I wanted to be sure that you saw my reply. The company is Antero and the property is in the Green District.
That’s where we are. The payment section is silent on gross vs net. But the royalties section refers to postproduction which I’m taking to be net. Then in Exhibit A, it changes the royalty from 12.5 as noted in the lease to 15%. There’s also a Market Enhancement (Gross Proceeds) Clause that states “…notwithstanding any language herein to the contrary, all oil, gas or other proceeds accruing to the Lessor under this lease or by state law shall be without deduction, directly or indirectly, for the costs of producing, gathering,…transporting, and marketing the oil, gas and other products…however, any such costs…enhancing the value of the marketable oil, gas…to receive a better price may be deducted from Lessor’s share of production…”. Do you have this on yours?
I’d refer it to Kyle Nuttall, West Virginia attorney. He follows this forum and seems to be knowledgable… If that language were in my lease- I would strike out everything from the phrase “however any such costs”.
That sounds like Antero’s standard gross proceeds clause. I am not a lawyer but have seen a few Antero leases. I think they are more likely to be offering 15% than 18 but not too long ago 18 was being offered. Probably for people with big interests in places the company really wants, 18 is offered. Never a bad idea to get help from a knowledgeable attorney. Kyle is active in this field, give him a call.
I agree with Nancy, there are occasions Gross is offered, however Antero has gone through a major change effective December 31, 2018 and 18 is extremely unlikely to be found under the current market. Your primary lease will almost certainly reflect a 12.5% royalty, but an Addendum will have the higher royalty rate.
Good Luck
The total is 49 gross acres divided by approximately 500 heirs. Thank you everyone for your input and recommendations. I’ll talk to the others in our family and see how we want to proceed. I may try one more phone call to Antero. Good luck with your negotiations, Michael.
Do you have the name of the Landman at Antero that you’re dealing with? I own some minerals in Wetzel as well and would like to speak to them about leasing. Thanks!
The land that Antero contacted me about sounds like the same 49 gross acres that you are involved with. I would also estimate about 500 heirs. I found a lease agreement that my father signed in 1973 where my great grandfather Clarence E Myers owned a 1/2 undivided interest in CBT 14-73 acres, Green dist., Wetzel Co., WV.
Daniel Lambert, representing Antero Resources Corp contacted me regarding mining land that I inherited. His number is 304-887-0728
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