Gas Leases

This story comes from The Daily Citizen and outlines the results of not getting professional advice when dealing with leasing your land for gas:

Kathryn Hastings of Plainview regrets not exempting her best property from the mineral rights lease she signed with Chesapeake Energy four years ago. As a result, she gave the natural gas giant permission to locate a well anywhere it wanted and that’s just what is happening.

Located near Highway 13 and Hastings Road next to the old missile base, the property is already the site of three two-acre lots and seven one-acre lots sold in 1977. In the 1980s, Hastings planned to use the adjoining seven acres for two 1.5-acre lots and four one-acre lots. That plan has been scuttled now that Chesapeake has notified her it plans to build two natural gas wells on one pad there.

“They say they’re only taking 3.5 acres,” Hastings said. “As far as I’m concerned, that will be a washout. They’re going to ruin the whole seven acres.”
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When Hastings signed the lease, she had the right to exempt any property, and Chesapeake also had the right to not sign the lease if property upon which they wanted to build was exempted.

“I did it because I was ignorant,” Hastings said. ‘I’ve lived out there for 50 years and gas companies came by and paid $1 an acre. When they came by and offered me $50 an acre I took it.”

Hastings leased 79 acres for $50 an acre up-front money, receiving $3,950, and 1/16 royalty. She did not consult an attorney at the time she signed her lease.

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Gas leasing and the rumors about it are more talked about in country circles than today’s sky-high corn prices. But Pennsylvania Ag Secretary Dennis Wolff points out in his weekly column, “While natural gas development presents a tremendous economic opportunity, it also comes with the potential for many unconsidered issues.”

Knowing those issues, and planning accordingly, can mean the difference between prospering from a good opportunity and having to live with a decision made in haste, he warns. “I urge farmers to plan ahead and consult with knowledgeable professionals before signing a lease. The relatively small cost of planning properly will pay dividends throughout the life of the lease.”
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When domestic gas prices spiked during an energy crisis in the early 1980s, prospectors came into the western part of the Quad- state region to acquire drilling rights. With oil at $130 a barrel and natural gas prices headed above $11 per thousand cubic feet, they may return.

Exploration and production companies are looking for huge reserves of natural gas in Marcellus black shale in the northern Appalachian region. New drilling technologies for extracting gas from shale, coupled with historically high oil and natural gas prices, have triggered a land rush for drilling rights.

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Alice Berger over at the blog Going Green has a post up regarding her concerns about gas leasing/drilling and it’s relation to the environment and is looking for input.

In January we received an unexpected letter from a gas company, asking us if we wanted to sign a lease. We ignored it. Then the news exploded around here, with numbers flying around fast and furious. Our heads began to spin with all the possibilities.

One thing we kept thinking was - how will this affect the environment? We love our nice little property, and we didn’t want to screw it up. Unfortunately, if we don’t sign a lease, we’ll just miss out on the money, since our neighbors have all signed. Our peaceful little area will be forever changed.

I know we have a lot of readers, so why not stop over and talk to her: Going Green: Natural Gas Drilling.

The Haynesville Shale is likely to become America’s largest natural gas field and perhaps the fourth largest in the world, Chesapeake Energy Chairman and CEO Aubrey McClendon disclosed Wednesday in a conference call with its newest partner, Plains Exploration and Production Co.
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Oklahoma-based Chesapeake is so committed to development of the deep underground natural gas reserve spread across several parishes in northwest Louisiana and into east Texas that it so far has invested $2.5 billion, McClendon said.

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It was a year ago, when men from the oil and gas companies knocked on the door of Stephen Woloszyn’s dairy farm in the small Cattaraugus County village of Delevan.

They wanted to drill for natural gas on his property.

“They showed up at my house, and told me who they were,” said Woloszyn, whose farm has been in the family for more than 50 years. “I had two different outfits asking me for a lease.”

Soaring oil and natural gas prices have the industry turning over every rock in search of promising new deposits. But what’s really captured the imagination is a giant natural gas reservoir running beneath four states, including New York’s Southern Tier.

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The folks over at the Wetzel Chronicle have written a great article about mineral rights owners and the relation to the gas lease boom. It’s a great article (but I will admit I am somewhat biased since they were nice enough to include information about my blog!)

The days of the $5 per acre lease are over,” said a Wetzel County energy company representative who wished not to be named. He said most people are getting more savvy about what’s under their land or the mineral rights of which they may own all or a portion, and people will not simply sign a contract for the first terms they are offered. Local attorneys are deluged with lease customers, and heirs to local mineral rights scattered across the country are being sought so that drilling can commence. Some owners are getting hundreds of dollars per acre now locally and with energy costs expected to double or triple in the coming years, the quest for gas and oil will only accelerate. Potential royalty recipients wonder, “This lease may be my one chance to improve my life and make some extra money. How can I get my slice of the pie?

Read the rest over at the Wetzel Chronicle.

According to Scranton’s Times Tribune, there is going to be a gas leasing workshop in Clarks Summit, PA on July 8th so I will pass along the information to our Pennsylvania readers.

The Penn State Cooperative Extension is holding a workshop titled, “Managing Natural Gas Lease and Royalty Income” on July 8 at the Newton Recreation Center on the Newton/Ransom Blvd in Clarks Summit. The workshop starts 7 p.m.

The workshop costs $10 and will cover these topics:

• Ideas For Managing Your Gas Windfall
• Tax Consequences of Gas Lease and Royalty Income
• Gas Leases and Estate Planning
• Basic Steps to Investing Gas Income

For more information or to make a reservation call: the Penn State Cooperative Extension office in Lackawanna County at 963-6842.

The Cost of the Workshop is $10.00 per person, payable at the door.

You could have taken a nostalgic drive through the past on Thursday night, through the dreamy green landscape at the outer edges of the Catskills, past sleepy fishing towns like Roscoe and Downsville, to the lovingly restored Walton Theater, built in 1914 for vaudeville acts, honored guests like Theodore Roosevelt and community events of all shapes and sizes.

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Natural-gas drillers seem to be taking “a wait-and-see attitude” right now, according to Ken Balliet, a Penn State Extension director well versed in gas-lease issues.

If exploratory wells being drilled this summer are productive and some state regulatory issues are ironed out, gas-lease offers could jump, he said.

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