Was reading an article in the Progressive Farmer mag last night, and saw where a bunch of folks are getting good royalties from gas drilling on their properties. It was mainly about up in the Pennsylvania area, but I know its going on elsewhere. I dont know of anyone as of now, but do any of you? I was just curious as to what kind of royalties they are getting?
Gas drilling on your land
- Thread starter Limomike
- Start date
M.Magis
Well-known member
It has gotten very big around here. Most of the “better” leases are between $3k-5K per acre signing bonus and 18-20% royalties if they drill. The person who owns the land they drill on gets and extra $15-30k pad fee.
They “say” the potential here is greater than in PA, but it’s just getting started.
They “say” the potential here is greater than in PA, but it’s just getting started.
Craig Miller
Well-known member
They are probably only paying that much cause its still new up there. Lots of people get less than that. Just remember that pad is there forever. Are you willing to turn 5 acres grassland into a gravel parking lot? And have someone going on there to check the wells daily
Craig Miller":3nttog9h said:
Yes... :nod:
TennesseeTuxedo
Well-known member
Heck, put me down for 10. :D
M.Magis
Well-known member
For the kind of money involved with the royalties, very few people would turn it down. One would be foolish not to, to be honest. Just the pad fee alone is worth more than a lot of land around here. Add 20% royalties every month and you’ve just become very well off.
Yeah, thats what the article I was reading said, this farmer was able to go out and buy some new equipment that he never would have been able to buy had it not been for the royalties on the gas drilling on his property. I say..sign me up
I got another friend of mine who owns about 120 acres, and a satellite company put a tower on his land, with a pad, and fence, and he gets $900 a month as long as the tower is there., In the contract, it states that if they ever quit using it, they will take down the tower, clean up his land, and plant the grass back to originally the way it was. That was over 5 years ago, and he still gets his $900 monthly check on time.
I got another friend of mine who owns about 120 acres, and a satellite company put a tower on his land, with a pad, and fence, and he gets $900 a month as long as the tower is there., In the contract, it states that if they ever quit using it, they will take down the tower, clean up his land, and plant the grass back to originally the way it was. That was over 5 years ago, and he still gets his $900 monthly check on time.
You can make the same deal with an O&G company or pipeline company.
I have seen a lot of hard working people be able to do things they would have never been able to do if it hasn't been for O&G. My favorite is sending kids to college. That is a great place for the money.
I have seen a lot of hard working people be able to do things they would have never been able to do if it hasn't been for O&G. My favorite is sending kids to college. That is a great place for the money.
Craig Miller
Well-known member
The land we were drilling on in texas were getting as little as 3k a pad. Most places get royalties wether they are on your land or not. Just depends on if they are drilling in your section or not. I thought oklahoma was that way?
sim.-ang.king
Well-known member
They have been back around here since oil went back down, but the last time they were trying to get leases they were on at $100 acre and $1000 per pad and 10% royalties. If it goes up to $3K per acre i'm going CRP shopping! ;-)
and you don't have to have a pad on your land at all, if your sure to add that in your contract.
and you don't have to have a pad on your land at all, if your sure to add that in your contract.
Craig Miller
Well-known member
sim.-ang.king":agai2g25 said:
Thats what i was trying to get at sim. Most arent paying the king of money your talking about. Only in areas of new gas plays such as PA. That will die down eventually to where it is paying more of the numbers like you are seeing. I work the rigs and can tell you this, if i can get the royalties without a pad on my land thats what i would do.
There is no set amount of lease money or pad money. That varies all over and from lease to lease. Some of these large shell plays are/ have seen several thousand dollars per acre. Some companies pay nothing per acre but give you a larger portion like say 25%.... 20% is pretty standard... 10% is odd to me unless its an old lease.
The mineral owner can try to get a no drilling clause on the surface.
The money you receive is based on the lease (1/6, 1/5, 1/4), how much acreage you own in the unit, the amount of minerals you own, and what the well is producing.
So lets say they drill a well that you and you neighbor are pooled in to. You each have 100ac... its a 200ac unit. Lets say that under your 100ac you and your sibling each own 50%. Yall have a 1/5 lease. Lets say the well comes in at 1000 bl of oil a day and 500,000 mcf. The oil is bringing $85 per bl and natural gas is $3 per thousand. Some one check this to make sure its right. :)
1000 bl x $85 = $85,000
500 x $3 = $1,500
Total $86,500
Mineral owners receive 20% .... $17,300
O&G Company .... $69,200
Now you and your neighbor split it 50 - 50 because yall have equal acreage in the unit. You percentage is proportianal to the amount of acreage you have in the unit.
$17,300 / 2 = $8,650
Now you and your sibling have an undevided interest in the land and each own 50% of the minerals under the 100ac.
$8,650 / 2 = $4,325 each PER DAY!!!! :D Not bad for a days work.
The mineral owner can try to get a no drilling clause on the surface.
The money you receive is based on the lease (1/6, 1/5, 1/4), how much acreage you own in the unit, the amount of minerals you own, and what the well is producing.
So lets say they drill a well that you and you neighbor are pooled in to. You each have 100ac... its a 200ac unit. Lets say that under your 100ac you and your sibling each own 50%. Yall have a 1/5 lease. Lets say the well comes in at 1000 bl of oil a day and 500,000 mcf. The oil is bringing $85 per bl and natural gas is $3 per thousand. Some one check this to make sure its right. :)
1000 bl x $85 = $85,000
500 x $3 = $1,500
Total $86,500
Mineral owners receive 20% .... $17,300
O&G Company .... $69,200
Now you and your neighbor split it 50 - 50 because yall have equal acreage in the unit. You percentage is proportianal to the amount of acreage you have in the unit.
$17,300 / 2 = $8,650
Now you and your sibling have an undevided interest in the land and each own 50% of the minerals under the 100ac.
$8,650 / 2 = $4,325 each PER DAY!!!! :D Not bad for a days work.
ohiosteve
Well-known member
Oil/gas leases are very complex, and what is offered Monday might not be available Thursday. It's best to be in contact with your neighbors and be on the same team when your area is hot. More is paid for a drill site, both for spud-fee and usually a higher % around here. I have seen next door neighbors where one took the lease and one refused it and the well was still drilled and one became rich and the other just extremely bitter, so be careful.
greybeard
Well-known member
There is legal recourse to that Steve--here anyway. In Texas, they must pay royalties on a completed and producing well to all in the geographically delineated pool. Those who didn't sign originally will be penalized some (I forget the specifics) but the Tex Railroad Commission is very clear about this, and unless I am mistaken, it has cleared and been re-affirmed by Texas courts within the last 10 years.
I know lots of people in central Texas in the old Austin Chalk that were very happy to quit raising cows and raise pump jacks instead.
I know lots of people in central Texas in the old Austin Chalk that were very happy to quit raising cows and raise pump jacks instead.
TexasBred
Well-known member
Got oil and gas production on three different locations and all leases, bonus monies and royalties are different. Every lease is "negotiated". HIRE AN OIL AND GAS ATTORNEY !!!!! He will earn his fee many times over. Do not try to negotiate yourself....We have royalty rates as low as 12.5% and as high as 25%. "I" negotiated the low rate so you can see what happened. If you actually have a well location on your property, yes there will be a couple of acres tired up but with the income you'll be getting it's well worth that little sacrifice. All the companies we deal with have done an excellent job of maintaining the properties etc. so I can't complain about any of them. Just wish the price of natural gas would go back up.
M.Magis
Well-known member
From what I was told by a law firm specializing in oil/gas drilling leases, is that the penalty for a firm pulling oil/gas from under property (horizontal drilling) without paying a royalty is usually the landowner receiving 100% of the profits from that well. That’s millions of dollars for the Utica wells they’re drilling around here. They said the risk is far too great for anyone to try it, not only in the lost well but also in that these are publically traded companies. They would basically be ruined. In Ohio, every move made by the drill head is tracked very precisely, and that information is available to anyone through the ODNR website. I’m not sure if that’s the case in all states.
And the best advice is just what TexasBred said, get a good lawyer to negotiate the lease. Not only is the money important, but the lease clauses are too. The original drafts are going to be written to favor the drilling company, not the landowner. When things started getting going here with the Utica shale, I went to an open meeting held by a law firm trying to put together landowner groups. It was eye opening to someone that had little experience in such things.
And the best advice is just what TexasBred said, get a good lawyer to negotiate the lease. Not only is the money important, but the lease clauses are too. The original drafts are going to be written to favor the drilling company, not the landowner. When things started getting going here with the Utica shale, I went to an open meeting held by a law firm trying to put together landowner groups. It was eye opening to someone that had little experience in such things.
backhoeboogie
Well-known member
TexasBred":20rk1xw7 said:
Listen up to TB folks. Land men are worse than used car salesman.
Most I have received is $9K an acre chum money for Haynesville Shale land. I will not sign for less than 25 percent royalty - period. I still have land that is not let out because no one has met me on the royalty. Chum money (bonus they call it) is a sure thing. That is why they chum you with it.
Lots of folks taken advantage of by land men. Got aunts and uncles that signed for 20% and $1K an acre chum. I got 25% and 9K as did the uncles who stood with me for the same land pool. The land man stuck the difference in his pocket. That is what they do.
Get yourself an attorney.
You sign the lease, there is no one to blame but yourself. O&G companies and land men are there to make money. They are not a charity.
The thing to watch now with these shale plays is fuel gas. The O&G companies need gas to fuel a lot of the equipment on these locations. Compressors, separators, heaters, valves, flares, ect all use gas. A small compressor can burn 5, 10, 15mcf per day. That should come out of the O&G company's piece of the pie... Not yours. Make sure your lease states that. You need meters on the gas as soon as it starts separating from the fluids. You need meters on the flares. Just because it does not show on the sales meter to the pipeline does not mean you should not be paid for it.
backhoeboogie
Well-known member
Much more. You need the Pugh Clause absolute. You need the delivery clauses and everything else too. Something like 22 clauses in the lease agreement. If they want to strike the clauses, make 'em pay. There is a reason for striking each and every clause.
You need an attorney from your state. Laws and provisions vary from state to state.
You need an attorney from your state. Laws and provisions vary from state to state.
