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Monday, June 16, 2008
Penn State's Wiki page
Penn State Cooperative Extensions have started their own Wikipedia page to educate landowners about natural gas drilling. The page features links to an "E-Classroom" and even a royalty calculator. Here's the link: http://naturalgaslease.pbwiki.com/
Where the gas is greener: property owners' groups
Several property owners contacted me for information about the deal struck by the so-called Greenfield Gas Group. The group of property owners leased gas rights for 25,000 acres to an exploration company at rates and terms pretty favorable for property owners considering leases penned in the Marcellus Region at that time. They got $2,100 per acre and 18 percent royalty on gas removed.
Some observers out there think that must mean $2,100 and 18 percent are the going rates, but not necessarily.
Getting a deal like the one Trevor Walczak and his several hundred closest friends scored isn't as easy for the average property owner as calling an exploration company and saying “I'll have what they're having.”
Mr. Walczak will be the first to tell you that they were able to get that deal because they banded together and hired professionals. They also had a core group who did their own research and kept everyone informed and educated. They were able to collaborate on the lease addenda they really needed without overloading on them.
They were able to give the natural gas companies something of value, too. The company got 25,000 acres of largely contiguous land governed by a single lease and a major foothold in the Marcellus region. The deal saved the company untold hours and expense negotiating with hundred of individual property owners to get a similar amount of leased land.
There are some intangible benefits for the companies, as well: a clean lease and relatively sophisticated property owners who know what they are getting into.
The typical owner of 20 acres just doesn't have that sort of leverage to prompt a company to pay anything beyond the prevailing rate, whatever it is today.
For Mr. Walczak, the solution for individual property owners considering dealing with large, distant companies is clear: they should start talking to their neighbors and patch together as large a tract as possible to make a lease more worthwhile for companies.
-- David Falchek
Some observers out there think that must mean $2,100 and 18 percent are the going rates, but not necessarily.
Getting a deal like the one Trevor Walczak and his several hundred closest friends scored isn't as easy for the average property owner as calling an exploration company and saying “I'll have what they're having.”
Mr. Walczak will be the first to tell you that they were able to get that deal because they banded together and hired professionals. They also had a core group who did their own research and kept everyone informed and educated. They were able to collaborate on the lease addenda they really needed without overloading on them.
They were able to give the natural gas companies something of value, too. The company got 25,000 acres of largely contiguous land governed by a single lease and a major foothold in the Marcellus region. The deal saved the company untold hours and expense negotiating with hundred of individual property owners to get a similar amount of leased land.
There are some intangible benefits for the companies, as well: a clean lease and relatively sophisticated property owners who know what they are getting into.
The typical owner of 20 acres just doesn't have that sort of leverage to prompt a company to pay anything beyond the prevailing rate, whatever it is today.
For Mr. Walczak, the solution for individual property owners considering dealing with large, distant companies is clear: they should start talking to their neighbors and patch together as large a tract as possible to make a lease more worthwhile for companies.
-- David Falchek
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