Apparently, my grandfather had 190 acres in Wetzel County West Virginia that my dad just found out about that were passed down to him and he received an oil and gas lease offer from Shenandoah energy partners. What I’m looking to gain information on is what is the basic language mean? This lease offer was for $4500 for each net acre for five year term and then 18% royalty on production. I’m trying to understand how much money is this worth and is it guaranteed that you’re going to get anything and is it absolutely necessary to have an attorney review the lease?
Hi and welcome to the forum. The $4,500 per net acre offer is very good. That is the one time bonus that you receive for signing the lease. Do you know how many net acres of the 190 your father owns? Are there other owners/relatives with a share of the 190 acres. The landman should be able to tell you how many net acres you own. Multiply the net acres times the $4,500 rate and that is the bonus you should receive. The 18% royalty rate is also very good once they drill and go into production. Try to get a no cost clause included so they can’t charge you for transportation, compression, gathering, marketing etc after the gas is recovered. Also a depth clause should be considered to limit to just the Marcellus level. If you have a large portion of the 190 acres it may be wise to consult an oil & gas attorney. Good luck.
Hi there. Thanks so much for the input. I do not know how many net acres but that’s a great question to ask!
My dad owns the land solely. He is the only land owner. I’m an only Child so I guess that makes me the one who will inherit the land. His brother inherited his own 65 acres so I guess he doesn’t have to share with him?
I think since there is somewhat a handful of acres it is best to seek legal advice. That may be a good chunk of money in the bonus alone.
It sounds like your dad is in a great position to negotiate a great lease. If he has all of the 190 acres of mineral rights (which is extremely unusual here in WV), then they can’t cotenant him, and they may not even be able to force pool him. That means they have to negotiate with him, or go around him. Stranding 190 acres of minerals is not something they will do lightly.
So, first step. Ask the landman how many net mineral acres your dad controls. The landman will know, and will tell you.
Also, as it’s Shenandoah, I know for a fact you’ll be able to get a lot of concessions as far as terms go. However, you won’t be able to push them on the bonus. I’ve tried in Ritchie County and haven’t gotten any movement at all.
Hi! I actually called your office to set up an appointment. I imagine this is a chunk of change so I want to make sure we’re doing this correctly. I also worry about what the liability is and loopholes they can use. I’ll be in touch!
Thanks! RC
Oh, awesome! I look forward to talking with you in person! I really hope you guys have control of all 190 acres. That would be a very fun negotiation.
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