What can the OGM owner do?

General Mineral Rights Discussion
1

I'm looking into purchasing a piece of property in PA that already has a gas lease on it. It is 24 acres and the well is pretty much nearly in the center of the property. The lease was signed in 1990. The owner has said they want to retain OGM rights to possibly sell down the road if they need money. I have so many concerns.

My biggest concern above all else is not having someone come in and change up my land to put in new drilling, etc. I've read that a new well can't be drilled/placed within 1,000 feet of an existing or even a plugged/capped well, but I don't know if that is always true, sometimes true, or true at all. I would prefer no new wells or anything gets done to the property (new access roads, clearing of trees, etc).

They advertise the property as having free gas, but if that lease is with the current owner and I take over the property, would the gas company have an out to say the free gas was only for them? Is there wording in the lease agreement I should look for? I know a lawyer is most likely needed to answer those questions.

My guess is they want to retain the rights in case fracking/horizontal drilling would occur under the property and they could get paid for it, and then if it doesn't happen and they need to, they can sell the rights. I suppose I can live with that. I am NOT a fan of how surface and subsurface rights can be owned by different parties, but that's the world we (or should I say "state I") live in.

It's also been suggested that maybe I could get the OGM rights negotiated in, but I have no idea what to offer with a well already on the property, and if no new wells could be put in, then that really only leaves the chance of fracking. They have told me that their royalty checks are only around $20/month lately, which makes me think the life of the well (and the free gas) is soon to end.

I'm sorry for the long first post, I've been searching the internet for answers and as is the case with the internet, you can get overwhelmed and get all kinds of different answers. SO when I stumbled across this forum, I thought it might be a good place to ask my questions.

Thoughts, answers, or other concerns I should have?

Thank you all in advance.

2

Can anyone at least answer my biggest concern? Above all else is not having someone come in and change up my land to put in new drilling, etc. I've read that a new well can't be drilled/placed within 1,000 feet of an existing or even a plugged/capped well, but I don't know if that is always true, sometimes true, or true at all. I would prefer no new wells or anything gets done to the property (new access roads, clearing of trees, etc).

I know conventional wells are not as popular any more but does anyone know if there is any regulations to stop someone from drilling X amount of feet from another well, producing or not?

3

What county is this...as to the value of the OGM it is very much County....and even township dependent. HBP property is not worth as much as open or even leased property. A lot of that depends upon the royalty rate though.

First things first, get a copy of the lease. Go to the courthouse and get a copy of the 1990 lease. You need to know what surface rights the OG company has written into the lease.

I don't know the PA law for drilling around an existing well. In WV it is fairly common for companies to plug and clear an existing shallow well site and use it for a Marcellus well pad. With the terrain we have to deal with there are not a whole lot of locations. The well pad sites are expensive and the last thing these companies want is a court fight over a location....In my experience the companies usually renegotiate surface deals for shale pads no matter what is in any existing leases. Those original leases were for small shallow wells not a large scale industrial site.

As to working on a deal to buy the OGM and the surface...I understand the family wanting to keep the ogm. You may be able to work something out. Maybe you get an undivided 1/2 interest and they can reserve 1/2? As to buying the OGM and offering them a price...need to know what county and township this is.

Hope this helps somewhat.

4

Like I stated above more than likely Company X is going to renegotiate any new shale pad well sites. In 1990 the lease was for a small shallow well and not a large scale industrial operation. Most companies know this and don't want a fight over well pad sites. There are enough families and land owners willing to get paid for a pad and its not worth the fight. That's my opinion...I worked in house for 10 years at a large O&G company. That being said get a copy of the lease that the well on the property was drilled under.

5

Thank you. What is HBP? It’s in Westmoreland County right next to Allegheny County and in Upper Burrell township. I have a copy of the lease, I’ll have to read through it again.

6

Doesn’t appear my reply posted yesterday. :/. It’s westmorland counter. Upper Burrell twp. Just across the border from Allegheny co. I have the lease and will have to read through it again to see. What is HBP?

7

Never mind. Odd forum layout didn’t realize replies didn’t show in the thread.

8

HBP is held by production. When a company leases the land and drills a well on it...the company has rights to all the other formations (unless there are restrictions in the lease) as long as a well is producing and royalties are being paid. The term is referred as held by production.