Input on Mineral Drilling & Habitat/Wildlife Effect

[Suburbhunter]

I have been looking for the right piece land for over a year. I am considering purchasing a property, 133 ac, in west central ky for hunting, habitat improvement for deer and turkey and very likely relocating to live on in the next 6-8 years. It has what I am looking for, some tillable acres for planting/orchards, thick cover, water, good access points, electric on property, road frontage, etc...
My only hangup is the mineral rights lease was just renewed with an oil company for another 3 years by the current owner. No drilling or exploration was done during the first lease term. The land has not been touched by the oil company so far. I guess the land owner wanted to squeeze a few more dollars out of it before it sold by renewing the lease. The owner is a timber company and it was select cut about 5 years ago. The current owner is willing to let the mineral rights go with the sale of the property. A few folks have said they would not be worried about future drilling and if they haven't drilled it by now chances are small on future drilling, I'm not that naive.
So my concern is I would hate getting a property just the way I want it with sweat equity and money or worse, building a house/cabin then a drilling rig show up to drill. I feel like I would have little if any say about their operation. I know every company is different and I have been educating myself prior to pulling the buy trigger.

Who has experience on working with mineral drilling companies and what should I expect?

Do they work with landowners or do they say this is where we are drilling and placing the holding tank and that's it, regardless of where or what you have done to improve a property or plan to do in the future? I know they have to/should/suppose to/repair surface damage.

What effect may it have on the wildlife use and movement?

Thanks in advance. D

 

[Tree Spud]

... they say this is where we are drilling and placing the holding tank and that's it, regardless of where or what you have done to improve a property or plan to do in the future? I know they have to/should/suppose to/repair surface damage.

Their mineral rights will trump any other lease ... unless their are restrictions in the mineral rights lease governing their activities, expect them to do what is in their best interests.

 

[chickenlittle]

Have your lawyer review the lease. That will tell you whether you have any say if they decide to drill, where they drill, and what happens after they drill.

 

[Weezy]

I had a lease for natural gas on 31 acres and now collect royalties from 4 wells that aren't on my property. I would ask for a copy of the lease and have a lawyer review it. Find out how far away the wells have to be from water sources and housing. Know what % royalties you collect if they do drill. Decide if the income would be worth the destruction and disturbance.

 

[Diesel5610]

As has been said, have a lawyer who has some experience in Mineral Right leases review it. Only way you are really going to get your questions answered. Your concerns could be warranted or nothing to worry about depending on the actual piece of land and how the lease reads. A lawyer with experience in mineral right leases will actually be able to tell you what could or couldn't happen on that specific property.

 

[Tap]

Diesel5610 is correct about choosing a lawyer that has experience in mineral leases. Stay away from lawyers that specialize in other fields like divorce, personal injury, etc.
Something else to find out is what the ordinances are in your township about mineral development. Set-back distance is a big argument here. As is zoning...residential, commercial, or agricultural have a bearing on what practices are allowed and where they can take place.
I'd highly advise going to some township meetings and get informed about the development situation in your area.

Just because leases have been signed, doesn't necessarily mean development will happen. There are some powerful "environmental" groups that are fighting tooth and nail to end gas development. They throw everything against the wall and see what sticks. They'll use any avenue they can that will allow them to steal your property rights from you.

And the gas developers are spreading themselves thin these days. They are in a race to lock up properties but a lot of their budget is going toward acquiring leases and less toward actual development. Make sure that they aren't just drilling a non-producing hole in the ground to lock up your lease.

My lease is a non-surface lease and doesn't allow surface development. They can send laterals under me, but they can't do anything on my property.
The current plan for the well pad is 10-13 acres located about a mile from me so the well pad itself won't effect me.
But what will effect me, and hopefully in a good way, is the installation of some gas lines. They're going to go through my neighbor's place (we manage our properties together) and so, they will be creating some food plot sites for us. They'll lime, fertilize, plant and install gates for us. All for free, or actually, they'll be paying my neighbor to allow them to plant plots for us.

 

[Lee Haakenson]

I backed out on buying a 2nd property for this reason. Wife and bank gave a green light. Found out mineral rights were sold off in 1930. It gave me an uneasy feeling and I walked away and never looked back!

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[Bill]

I backed out on buying a 2nd property for this reason. Wife and bank gave a green light. Found out mineral rights were sold off in 1930. It gave me an uneasy feeling and I walked away and never looked back!

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Man that's dated. Not related to OP's question but my farm had coal rights sold to company that went of business in the 60's. My lawyer asked the title insurance co to contact the court house and have it removed. It was, and "they" insured it so my deed is clear.

Like stated already a good lawyer is a good thing...

 

[Tree Spud]

I backed out on buying a 2nd property for this reason. Wife and bank gave a green light. Found out mineral rights were sold off in 1930. It gave me an uneasy feeling and I walked away and never looked back!

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How did you find out about the mineral rights lease?

 

[Lee Haakenson]

How did you find out about the mineral rights lease?

These were permanently seperated out of the deed. It was on the sellers disclosure report.

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[Bowsnbucks]

My camp property is in a gas lease. There's good and bad with them. First - don't sign anything without a lawyer who has experience in mineral rights. As Tap said, our lease doesn't allow for any surface disturbance on our property, or storing any equipment or supplies on it. Subsurface laterals are already drilled under part of our property, and more are supposed to be drilled in the future, but from a pad site about 1/2 to 3/4 mile away. We get royalties, but here is the snag. The original lease said we'd get 12.5% royalties. But the gas companies conveniently left out that " gathering fees ", " transmission charges " and a list of other fees would come out of that 12.5%. All landowners ( with Marcellus or Utica shale below them ) in Pa. are trying to get the legislature to pass a law that gets us the 12.5% that was named in the leases. The state representatives in the Marcellus region are Republicans who got a ton of money given to their election campaigns by the gas companies, and they aren't touching the proposed legislation to get landowners their fair %. That is FACT. Our LLC and many others have tried to get this ball rolling to no avail. It's falling on deliberately deaf ears. Corrupt and paid for.

My advice is to make sure your lease has language that states the percentage you get does NOT include having fees and charges taken out of it. The cost of the gas companies doing business should fall to the gas company, not be absorbed by the landowners. Get a good attorney with lots of experience in mineral rights. If your lease says you get " X " %, make sure that's what you actually get. Remember one thing ......... the gas/oil companies are looking out for their interests - not yours. Whatever they can pawn off on a landowner - they will.

 

[Bill]

We get royalties, but here is the snag. The original lease said we'd get 12.5% royalties. But the gas companies conveniently left out that " gathering fees ", " transmission charges " and a list of other fees would come out of that 12.5%.

I bet one of these big class action firms would love to get that!
In reality though you would just be giving them the $ instead of the gas co keeping it.

 

[Bowsnbucks]

It's not the lawyers who are the villains here. It's the gas companies and their deceptive language. Lawyers become necessary when some slime-ball pulls sh like that. There's doing what's right & honest - and there's deceptive BS that warrants the use of attorneys. I guarantee this .......... If anyone on this forum was told you had GOBS of gas under your land, and were told you'd get 12.5% royalties in a lease, and then got about 5% - you'd be pissed too.

Incidentally ........ this affects landowners across the entire political spectrum. R's are pissed-off at R legislators for inaction on this issue - lest anyone think this is a political rant. This is a right - vs. - wrong problem.

 

[Diesel5610]

I bet one of these big class action firms would love to get that!
In reality though you would just be giving them the $ instead of the gas co keeping it.

We are part of a class action lawsuit against Chesapeake that is looking to stop Chesapeake from assessing these ridiculous gathering fees. It isn't how the royalties were originally paid and was just a money grab by Chesapeake. If they get it fixed the lawyers can get their not so fair share. Chesapeake are a bunch of greedy crooks that can rot in hell. What they are doing to property owners is criminal in my opinion. Last report I received was the case should see a courtroom in 2018. We will see. I have another property that deals with two other gas companies that aren't pulling most of the crap Chesapeake has. That property is a lease I signed and had protections and 18% royalty fees placed in it by my attorney, the Chesapeake property I inherited and the lease was signed by someone else and was never looked at by an attorney. Royalties are 12% and doesn't have any of the stipulations my lawyer negotiated in my lease.

 

[Tap]

We are part of a class action lawsuit against Chesapeake that is looking to stop Chesapeake from assessing these ridiculous gathering fees. It isn't how the royalties were originally paid and was just a money grab by Chesapeake. If they get it fixed the lawyers can get their not so fair share. Chesapeake are a bunch of greedy crooks that can rot in hell. What they are doing to property owners is criminal in my opinion. Last report I received was the case should see a courtroom in 2018. We will see. I have another property that deals with two other gas companies that aren't pulling most of the crap Chesapeake has. That property is a lease I signed and had protections and 18% royalty fees placed in it by my attorney, the Chesapeake property I inherited and the lease was signed by someone else and was never looked at by an attorney. Royalties are 12% and doesn't have any of the stipulations my lawyer negotiated in my lease.

Our 1st lease was with Chesapeake. It was for 5 years and they never drilled. We got $2,500 per acre and our gas lawyer told us that the wording in the agreement was fair.
The fact they never drilled ended up in our favor. Another developer contacted us after the Chesapeake lease expired and we got yet another signing bonus.
We were also told by someone that Chesapeake was more interested in signing people and thus, having the appearance of being aggressive developers just to BS their stockholders and they had many, many leases expire because they seldom kept their promise to actually drill. I don't know if that's accurate, but they didn't drill ours.

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[Diesel5610]

The wording does appear fair in the lease, Chesapeake started making their own rules later and assessing fees to the royalties to basically withhold part of the property owners royalties. This isn't in the lease. Chesapeake started this funny business after they had been paying the way the lease was written originally. As has been said, the property owner is only getting a fraction of what they were promised. If it can ever get in front of an objective judge they are going to lose. The politicians sitting on their hands and letting this continue to happen to their constituents that they reportedly represent is a whole other rant.

 

[Suburbhunter]

A little amendment to my original post. The lease was for 5 years and 2 1/2 years have passed. 2 1/2 to go. I checked the state records for active wells and permits issued and there is little activity in the county and in the part of the county where I may buy.
What's the experience with leases expiring then renewing? This particular lease is renewed at the option of the lessee for X amount of dollars per acre for an additional 5 years. (Basically self renewing at the discretion of the lessee). I know anything could happen within the next 2 1/2 years but are leases typically renewed or do they lessees just let them expire? Or is it more complicated than that? Thanks.

 

[Bowsnbucks]

Diesel and Tap - Yep - Chesapeake is a total P.O.S. Their CEO has gotten himself into some real legal swamp-muck and that company may end up in the toilet. They had partial rights on our property along with 3 other companies. Anadarko was the biggest player, but they just sold their share to Alta. Chesapeake had been late on their payments for a few months, but seems to have righted them recently. Like you, they started out paying us the agreed-to royalty, but then made " adjustments " to our payments and even went back to past payments and upped their " gathering fees " retroactively. We are looking into legal action as well.

Suburbanhunter - I would just say get a good attorney with experience in mineral rights. Best of luck fellas.