Gas Leases

From our friends in Binghamton, New York we have more good advice about signing gas leases and a few stories about the trends in royalty and bonus rates. This isn’t the best story I’ve seen but I figured I would pass the information along anyway:

Early on, the “landmen,” usually private contractors, and gas companies had the advantage of knowing what a lot of landowners did not about the potential value of the shale formation. That meant they could offer low lease rates — say, $100 an acre — and the state minimum of a one-eighth share (12.5 percent) of any proceeds, which would be warmly welcomed by farmers and others who could always use some extra income.

But thanks to efforts by the New York Farm Bureau, some landowners who had investigated the process, and now collective groups of landowners in various parts of the region, the landowners are catching up and catching on. Those leases are negotiable, and now there are reports of residents receiving up to $2,500 per acre for a fixed period, plus royalties of 18 percent. And the drilling companies aren’t balking, which is a pretty good indication of their optimism.

So it’s a win-win situation — and it could create a new group of millionaires across the region. “If the wells come to fruition, it will mean life-changing money,” said Nicole Gwardyak, who owns 322 acres in Newark Valley and negotiates lease deals on behalf of energy companies in Pennsylvania.

Via [pressconnects.com]