Received an inquiry this week from Antero regarding royalties I inherited from my dad's will. I've been paying yearly taxes on the property since 2002. The property is located in the New Milton District around Toms Fork? I have Map/Parcel data from the tax records, but other than receiving small annual royalty checks (about 120.00 per year) from Energy Corporation of America, I have little knowledge about any of this. Sure would appreciate some advice.
Thanks...
Mr. Smith, Antero Resources is doing a lot of leasing in New Milton, Tom's Fork Area, you might want to contact Energy Corporation to find out if they are doing anything with Antero in your map area. One thing is for sure, getting Royalty from a Horizontal well will get you lot's more $ than from a Vertical Well.
Antero has acquired rights to a lot of older leases held by Energy Corporation of America, for Antero to drill in the Marcellus. Probably the original lease has no mention of pooling acreage to create larger areas for drilling which is mostly how the drilling in the Marcellus shale is done. Probably Antero wants you to modify the lease to allow pooling. Any time a person signs a legally binding document it is good to go over it thoroughly and probably to have a good oil and gas attorney review it. Sometimes the wording of the modification changes more than the right to pool your acreage.
There is a lot of information on this forum about leasing and activity in West Virginia including Doddridge.
As I understand it, Antero initially offers no or little monetary compensation for this modification but if pressed will offer somewhat more. They stand to gain a lot so can offer something to the royalty owners. However sometimes there are other things, such as lease wording, that can be even more important than a little money.
Thank you for the information. The lady who contacted me said that I need to sign a lease after consulting with a lawyer. I've considered the small ECA royalties more of a tax nuisance than anything...
Maybe sign a lease to ratify it? If so even more reason to consult a lawyer. I have used Kyle Nuttall (of this forum) and like him quite a lot. Very well qualified. Other people have recommended other names.
And, the small ECA royalties are indeed some trouble for small benefit but if they drill a Marcellus well, you could get more than that. Also there are formations below the Marcellus that sound promising in most of Doddridge County.
Thanks again, Nancy. It appears I have much to learn...
I received, in this afternoon's mail, a modification of oil and gas lease for parcel 6-14-19. This modification, as I understand, "provides necessary language to allow for modern horizontal drilling technology." It also refers to this as a pooling clause. Also enlosed, are two Affadavits of Heirship which require my signature and notarization.
No percentages are mentioned; only that I agree inconsideration of the sum of $1.00 the mutual desire of the parties to amend the lease.
Does this make sense?
Thanks again, in advance for your expertise and guidance...
Mr. Smith, Most, including me, will advise you to not sign anything until you have legal representation review it. If you have been receiving $120 a year for one or more old vertical wells, that means that you probably have the ownership of enough mineral interests to make hiring a lawyer worthwhile. I will also recommend Kyle Nuttall
Thank you, Mr. Robinson. Should the package have included info on royalty percentages? I'm trying to figure out why the only monetary reference was the $1.00 to amend the lease?
Per the info I received today, the parcel is/was bounded by A.W. Robinson. Would you possibly be related?
Richard G. Robinson said:
Mr. Smith, Most, including me, will advise you to not sign anything until you have legal representation review it. If you have been receiving $120 a year for one or more old vertical wells, that means that you probably have the ownership of enough mineral interests to make hiring a lawyer worthwhile. I will also recommend Kyle Nuttall
Yes that looks like mine, at least what you shared. I think it is the standard Antero modification form..
The "$1.00" is standard language and can mean any amount of money. You should get some. I have heard of $500 being offered, and if pressed $1000 being paid, for 1 net mineral acre in a large tract. So if you know how to figure your net mineral acre, you can get an idea.
Do you know your other mineral owners? I was able to look up some things in a service I have for tax information (2012 is the most recent). The owner of the surface of that parcel also owns 1/2 of 3/4 OGM and acquired it at Deed Book 211 page 650. If you want, I can try to find the other owners (probably relatives of yours? ) Send me a friend request if you want.
Let me recommend again getting an attorney to double check this. If you don't have a copy of the original lease, ask Antero to send you a copy. You need to know what you are modifying.
Also, make sure that the affidavits of heirship are correct if you are going to sign and notarize them. They will be filed in the courthouse.
I wish I had known more when I signed a few things, so it is better to know too much than too little. You will probably make some good money for the new well or wells, so it is better to be careful now so you can get a fair deal.
Mr. Smith, I would assume that is their attempt to get you to agree to the pooling clause as written by them. If you do, then the royalty percentage would stay the same. But the size of the area covered could be vastly enlarged. Most pooling agreements start out this way. The Company that holds the lease wants to drill a horizontal well. It is not legal to drill through someones mineral rights without their permission. Therefore, they cannot drill a horizontal well out side the boundary of the mineral rights they have leased. Once you are in a pooling agreement, You share with others in the pool the proceeds according to your share of the pool. This is the way it works. Probably your acreage will be divided into different Pools. Divide your acreage in the pool by the total acreage of the pool. That will give you the percentage of the total that your lease is worth. Since your interests are already leased for some percentage of proceeds you then multiply that percentage by your interest as defined in the original lease. So; if you own the total mineral rights to what is covered in the original lease and your percentage is 12.5% and you had 100 acres in the pool and the pool was 320 acres it would go like this: 100/320 = 0.3125*.125=.039063 Therefor for every $1 paid for the oil/gas/other products you would receive $0.039063. However, if their are others who own a share of said mineral rights, you have to reduce the amount you would receive by multiplying by the percentage of mineral ownership you own. And there are other things that can effect what you actually get. Fortunately this website can calculate all this for you. Go to the NATURAL GAS ROYALTY CALCULATOR and/or the OIL ROYALTY CALCULATOR AND ENTER THE ABOVE AMOUNTS AND IT WILL CALCULATE YOUR INTEREST. Something of interest that I have not seen addressed here is the fact that the larger the pool the better for the operator, but not necessarily for you. If the size of the pool is doubled, the amount of production must also double for you to break even. Ask your Lawyer why you should not just sign and return. Ask what other options you might have.
A.W. Robinson would probably be a first or second cousin of my Grandfather. I can’t remember which. However, I would have none of the mineral rights to that property. A.W’s Grandkids and Great Grandkids would be the logical owners of those mineral rights. If your property borders H. G. Robinson that was my Grandfather and we would probably be in the same pool.
Thanks again to both of you for the great advice. I feel fortunate to have happened upon this site in my early research efforts.
We're quite busy with church activities today; I will follow up with the friend request and additional data tomorrow as I try to sort all this out.