Anybody been approached recently to lease the Natural Gas mineral rights on your property? (how much)
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Anybody been approached recently to lease the Natural Gas mineral rights on your property?
I was contacted not long ago about our mineral rights. They had a so called standard Lease contract they wanted us to sign and a signing bonus of around $2000. Sounded pretty good until I did some research. That so-called standard lease agreement was a bunch of crap. Totally one sided. All rights and protection to the gas company no consideration to the property owner. Please do yourself a favor and contact a lawyer before you sign a lease for your mineral rights. They can totally ruin your property without compensating you. They can tie up your property without paying you a royalty. They can build a gas plant on your property. They can run high pressure gas lines over your property. They can dry up or contaminate your well without compensating you.
On the other hand if you are knowledgeable, you can make sure you are compensated for any damage done to the surface. You can insist on water quality and quantity testing and compensation for water quality damages. You can charge annual rent for roadways, and well sites. Thus guaranteeing an income if they cap your well. You can insist that wells are properly decommissioned after use. You can insist that property and vegetation is restored after surface activity. You can lease for specific depths allowing you to re-negotiate if gas is found at a different depth.
The person contacting you will be a high pressure sails man. He will try to get you to sign for a low signing bonus. Then double or triple the signing bonus. Don’t be fooled. The money is not in the signing bonus it’s in the royalties. Just make sure your surface rights are protected.
They tried to get my Dad to sign a lease so that they'd have rights to drill on the neighbors' land. There is a law that all the neighbors within x number of feet of a well have to be on board. Neither parcel is wide enough for a well, especially Dad's. At most Dad would get a fraction of any royalties while his property would be devalued.
the lease the wanted your dad to sign, did it specifically say they would not drill on his property? probably not. The fraction of royalties is usually 1/8 to the land owner. depending on the well that can be good money. but the wording of the lease contract is very important. minor phrases that are seamingly not significant can have a major impact on how much money you eventually see. get help.
Hmmm, I think this thread is specific to TN because we are discussing TN law.
They wouldn't have drilled on his land because his lot is relatively narrow and the next lot over had been subdivided - all the owners within a certain # of feet need to be on board. I'm thinking 750-800. So he might get 10% of the 1/8 royalties of the neighbors' well with 40% of the annoyance. The royalties are figured by the proportion of the area a circle centered on the well, which might barely clip dad's property line. Clear as mud?
sorry I omitted the most important part. East Tennessee sits atop the southern part of the Appalachain Natural Gas basin which is getting a lot of attention at this time. Buyers have been out and about reciently in east TN looking lease mineral rights and put together Drilling units. This area is basically an untapped gas reserve. Expect to hear more about this in the near future.
Specifically I think the gas companies are taking advantage of rural east tennessee land owners who are not knowledgable and are tempted by the siging bonus being offered.
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