Hi all - I am wondering what the current lease rates are in Belmont County if anyone wouldn’t mind sharing? Specifically royalty % and gross vs. net.
I originally signed a lease very early with Marquette, which ended up with Ascent. That lease was renewed, and since expired with no activity. This week a surveyor came by saying he was working to define a gas unit that would be underneath my property, so I expect I will be hearing from Ascent again soon. Any information would be appreciated!
Welcome to the forum. If you do not get any information on this county, then I would suggest that you contact the president of the NARO Chapter for Ohio. National Association of Royalty Owners www.naro-us.org The Chapter stays on top of things and they may be able to direct you to that information.
Hello, I have a lease with Ascent in Belmont County. I have yet to see a royalty check, tho. The lease rate you are interested in, is that what is negotiated before signing a lease? If so, I negotiated with the Ascent landman, ended up with 15%. He wanted me to accept 12%. Hope this helps.
When you negotiate a lease, it gives the lessee the right but not the obligation to drill a well (unless the lease states otherwise). Royalties do not come unless there is production from a well. It takes months to drill and complete a well. The OH Corporation Commission website is a good place to start to find out if a well has been permitted.
From the communication I have received from the lead landman at Ascent, I am to receive the first royalty check by end of September or October so it must be October. I appreciate the link and I will check it out to learn more. I will say the senior landman is very accessible for any questions, which I have ask many, and replies right away. I’m thinking that is a good sign. If I see nothing by November, I will reach out to ask what is going on. Thanks again!
Lease rates vary wildly.
There are 2 components - the bonus (cash up front - guaranteed to be received) and the percentage (what you get from any profits that come from the ground.
Recent rates - anywhere from 500-1k up to 8500 bonus - granting a 3-5 year period to drill with potential for a 2nd term requiring an equal bonus if the operator has not drilled before end of the term and wants an option on a 2nd term.
Percentage - 15% is fairly common now. Still some 18% leases floating around from a few years ago - but 15% is the “norm”. Biggest question is what deductions is the operator allowed to take in determining what you are getting 15% of. Is it 15% of the price at the wellhead or is it 15% of the net proceeds after deduction for transportation/marketing cost. Those pipelines don’t transport the gas for free and in a weaker market - the pipelines might be the ones making the most money. Gas is a commodity - and like any commodity if there’s more supply then demand the price drops quickly. It’s not like operators can just close the tap on drilled wells and wait for conditions to improve to sell. They can stop drilling (like they did in 2020-early 2021) and ramp up when conditions improve (like 2022) - but it’s not an instant process.
Planning/permitting snd drilling takes many months of not years. There are a limited number of rigs and workers. If gas spikes past $6 - everyone wants to cash in ASAP - likewise when it’s sub $2 - no one wants to lose money on drilling holes that only depress prices more by upping supply in a glut. But you permit today and start tomorrow only to realize markets are sinking - it’s too late to stop. The permitting and securing a rig stage cost millions - canceling may save you only 1/3 or the total cost of drilling and then ensures a loss. Best you can do is keep digging and hope something changes once you in that far. Sometimes a swing in conditions or a 3rd world nation invading a gas rich neighbor changes the market overnight and you get lucky. Other times - it’s a blood bath and the market contracts/consolidated into a few big operators who then can restrict supply and artificially boost prices with their de facto cartel.
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