We were recently approached by Antero to lease mineral rights on a 40 acre tract in Grant district, Doddridge Co. Our mineral interest is 1/6 share. The lease has a clause allowing pooling of all or part of the acreage into other units. Does that mean that if only half the acreage is pooled into another unit, the royalty would end up being only half what it would have been if the entire acreage is pooled? If so, how do lessors protect themselves from reduced royalty payments in these pooling situations?
Yes. That's why you should also request a Pugh clause, which will allow property that is not pooled to drop out of the lease once the primary term is up. Or, if they really badly want your property and they know exactly what they're going to pool, you could tell them you only want to deal on the part that is pooled. This would reduce your signing bonus, but allow you to lease the other acreage at another time. I think they would be unlikely to do this, however. You could also include a sentence in the lease that says the entire tract has to be included in the pool. I think this would be unlikely, also.
But it never hurts to ask.
I'm a WV attorney, and worked as a landman for four years after graduating from law school, so I have an idea what I'm talking about. I highly recommend that if you already have an attorney and they know something about oil and gas that you take your lease to them and have them help you out. If you don't, you can contact me, and I'll represent you in your negotiations. No pressure of course, and I'll do my best to answer questions here on the forum.
Thank you Kyle. I've spent a fair amount of time searching this site and already asked for Pugh clause based on the responses you've given to others here. The landman lived down to the bad reputation people talk about on this site by telling me Pugh clauses don't apply in WV; in the end he agreed to take that and my other requests to the company. I'm wondering what keeps the operators from putting just a small fraction of your acreage in a pool and then sucking out the oil and gas from the entirety.
Kyle, Since there are so many folks out there that are new to the lease process, is there a site you would recommend to them to get info. There are so many people that live out of town who are being contacted about being heirs. Some do not even know what mineral rights are or how they obtained them. These folks are the ones who fall to the land agents and end up signing a lease that has no protection amendments for them . I am glad you are on the site to give guidence but you would have to write a book on the oil/gas leasing to cover it all.
DT, this website has a lot of good information.
There is the National Association of Royalty Owners (Google it) that has some good resources for sale, including a book on leasing.
The West Virginia Surface Owners Association also has some information, including for royalty owners since some people own both surface and oil, gas and mineral rights.
There are other good websites. Read as much as possible. However when it comes down to it, I think it is best to have an attorney who knows the topic and the area to review your lease. I know that from learning the hard way.
And maybe Kyle can write that book for us. I'd buy it!
Thanks Nancy for for the good info. I should probably state a comment on here that disrupts all leasing. There are heirs, which are almost always family members, who are going to lease mineral rights. You almost always have someone in that group who is only in it for the quick cash. That is a problem for those heirs who are wanting to get a fair lease with provisions. If heirs would stick together as a group they would benefit in the long haul with better terms and royalities and bonus money. I know everyones situation is different but when it comes to real estate, level heads need to prevail. One thing for sure, when you are leasing mineral rights, it will show where you stand with your family. As mentoned, folks need to read all you can and ask questions if you don't understand something. Most of the people on here have some very good info from their experiences dealing with leasing. Those folks who have had no dealings and are new to it can benefit from those sites.
Nancy Mosley said:
DT, this website has a lot of good information.
There is the National Association of Royalty Owners (Google it) that has some good resources for sale, including a book on leasing.
The West Virginia Surface Owners Association also has some information, including for royalty owners since some people own both surface and oil, gas and mineral rights.
There are other good websites. Read as much as possible. However when it comes down to it, I think it is best to have an attorney who knows the topic and the area to review your lease. I know that from learning the hard way.
And maybe Kyle can write that book for us. I'd buy it!
I'll second what Nancy said.
I'm in the process of writing a blog post that will cover lease clauses, what they mean, and what changes to request. I'll post it here at MRF when I'm done. It's a subject that definitely deserves a book, but that's a long ways off at this point.
You did not say in your post if you are a surface owner or mineral owner or both. Did you sign any type of lease to give them permission to be there? Please give the details on how this all started so others can be more informed. Thanks
Replacement value of mature trees is in excess of $10,000 each. I would also be looking into the law enforcement angle, criminal trespass and destruction of private property. I hope those watching your land got photographic evidence. If you have evidence, you need a lawyer to sue now.
tired of antero said:
i am a surface owner and signed nothing.not one thing.they wanted my land to assecc a well site.come to find out antero sent a crew out this past wed.and cut my trees down and was going to back fill my land. my land is being watched and i was informed of this matter.dave pasty knew from the get go i wanting nothing to do with antero.apparently someone from antero gave them the impression i was all in...you bet im angry.now tell me how am i gonna replace those mature trees.and they tryed to cover up those cut.they chip and back filled. left some logs, took others. once again where are those permits that wv are at least a year behind on? the folks that want them in also affects us that dont.so the ones that dont are getting the shaft.what if the tables were turned. this company isnt here for just a year they are gonna be coming and going for at least 5 years.if i wanted traffic,stranger and trash i would have bought property in the city of new york!
Tired of Antero, get in touch with me privately. Let's talk about what can be done for you legally. One thing that's not in your favor is that you own surface only. One thing that is in your favor is that Antero doesn't have a well work permit. This could get interesting. It doesn't matter if the DEP is a year behind on permits, they can't just go starting work on a project without the permit. r w kennedy is right, you can go after them for criminal stuff as well as civil stuff.
r w kennedy, how do you arrive at a value of $10K/mature tree? I haven't heard those kinds of numbers thrown around before. I'd love to be able to hit an o/g company for those kinds of damages.
This is an interesting site for tree valuation: http://www.treebenefits.com/calculator/index.cfm
You'll be amazed at the values they come up with.
Kyle Nuttall said:
Tired of Antero, get in touch with me privately. Let's talk about what can be done for you legally. One thing that's not in your favor is that you own surface only. One thing that is in your favor is that Antero doesn't have a well work permit. This could get interesting. It doesn't matter if the DEP is a year behind on permits, they can't just go starting work on a project without the permit. r w kennedy is right, you can go after them for criminal stuff as well as civil stuff.
r w kennedy, how do you arrive at a value of $10K/mature tree? I haven't heard those kinds of numbers thrown around before. I'd love to be able to hit an o/g company for those kinds of damages.
I said replacement value and not timber. I have had experience in the replacement of an 8 inch diameter tree and the tree itself six years ago was $7,500, add in transportation, digging of a hole large enough to hold the root ball a reputable licensed ground specialist to oversee the transplanting of the tree. Trees need special care after they are transplanted to assure they live. Did you know that 60% or more transplanted trees die if you transplant them at the wrong time of year? The ground specialist explained to me that the trees hibernate in the winter and there is less shock to them being transplanted then but it's still risky the older the tree is. That's for an 8 inch tree, the price goes up almost exponentially the greater diameter of the tree. Call a tree nursery and tell them you want to buy an oak tree, or any other tree for that matter, 12-18 inches in diameter and see what they say. They might tell you it can't be done. The logistics of transporting such a tree alone would be daunting because you can't cut all the limbs off and expect it to live, the twig sized tips of the limbs are where the tree converts nutrients into food to live and grow. If I remember correctly, a large tree was moved in Austin Texas and they had to use a flying crane because you can't just trim them to fit on a truck.
Kyle Nuttall said:
Tired of Antero, get in touch with me privately. Let's talk about what can be done for you legally. One thing that's not in your favor is that you own surface only. One thing that is in your favor is that Antero doesn't have a well work permit. This could get interesting. It doesn't matter if the DEP is a year behind on permits, they can't just go starting work on a project without the permit. r w kennedy is right, you can go after them for criminal stuff as well as civil stuff.
r w kennedy, how do you arrive at a value of $10K/mature tree? I haven't heard those kinds of numbers thrown around before. I'd love to be able to hit an o/g company for those kinds of damages.
R.W., that is very interesting and I would imagine readers who are surface owners would think so also. The oil/gas companies figure that trees just hinder them from getting from point A to B along with rocks, dirt and such. The only thing they might invest in to help "spruce" up the area might be some grass seed. I hope that folks come on the site to give everyone a broader view on what is going on out there. I just wonder how many physical altercations have occurred because of shady dealings and work going on without proper paperwork?
DT, I see the point of the oil company needing to destroy trees to gain acess to the minerals.....after they have the paperwork drawn up. Before they have the appropriate agreements/ court orders in place, they are simply criminals if they damage private property, with no more right to remove valuable "ornimental" trees than I would have to bulldoze my neighbors house. Tired of Antero obviously does not consider their trees as mere timber so timber prices shouldn't be applied. BTW, I did not destroy a tree, one merely had to be removed for some work I was doing and it suffered some damage while being moved for me. I just had plenty of time to learn something new while waiting. You never know when a little knowledge will come in handy. I found the method of removing a tree that you would like to survive interesting also, but a little far afield and off topic of what we are discussing right now.
DT said:
R.W., that is very interesting and I would imagine readers who are surface owners would think so also. The oil/gas companies figure that trees just hinder them from getting from point A to B along with rocks, dirt and such. The only thing they might invest in to help "spruce" up the area might be some grass seed. I hope that folks come on the site to give everyone a broader view on what is going on out there. I just wonder how many physical altercations have occurred because of shady dealings and work going on without proper paperwork?
r w kennedy, you have done a great service to all WV surface owners. This one bit of information will greatly increase the number of surface owners who can take oil and gas companies to court because they'll be able to hire attorneys.
Marlene, thanks for the link. That will be useful, too.