Oil, gas, and Marcellus Shale lease

[Wvgirl]

I have recently been approached by Tug Hill who said they want to take anything an everything they can get (oil,gas,Marcellus shale) I own 15.51 acres in Marshall County. They have offered $1,500 net per acre at 13% royalty and a re-evaluation in 5yrs. I have done some research and calculations and what I came up with is, since they want all oil, gas, and shale, I was thinking of $8,000 Gross and acre (broke down is $2,667 and acre for oil, $2,667 per acre for gas, and $2,667 per acre for shale.) with $18.75% royalty. And re-evaluate in 3yrs. If I did this would this be a good Deal or should I ask for more?

[sclausen]

How many times have you negotiated a lease and do you know which provisions need to be in it to protect you? You will be money ahead and be much better protected if you hire an experienced oil and gas attorney who knows the area in which your minerals are located. This is not a DIY project.

[M_Barnes]

I am thinking your calculations are a bit high, but it is more of a wording issue. If you are calculating the oil and gas IN the Marcellus Shale, then you need to drop your last term. If you are calculating the oil and gas from another reservoir AND the Marcellus Shale, then you may have OIl and Gas from reservoir 1 and oil and gas from reservoir 2.

Personally, I would not have a five year and then a five year second option. The royalty at 13% seems too low and as just states, the terms of the lease clauses are so much more important. Get legal help!

[dome]

Based on other well leases in the area I would think $4,000 to $4,500 per net acre bonus and 18% royalty would be very good. A 5 year term max and no auto renewal. A lot of leases in Marshall Co are still at the 12.5 % WV minimum. A professional oil & gas attorney is your best bet.