Be sure to check out page for advice for common situations for any updates on leasing!
WV SORO is primarily a surface owners’ organization. However, 30% of our members are also small mineral owners.
Recently we have been getting more and more questions about leasing. Based on those questions it is clear that landmen for oil and gas drilling companies from all over the country are aggressively trying to lease up all unleased mineral interests they can find in West Virginia. In doing so are taking advantage of our citizens’ lack of knowledge about what can be struck out of, and added into, the oil and gas leases offered by the drillers. They are also taking advantage of citizens’ lack of knowledge about how much money the companies are willing to pay. And finally, they are in some instances playing neighbors against neighbors to rush people to sign leases before they can get more information about what they are doing, when the best thing that neighboring landowners can do is to share information and even bargain together.
In response, we prepared the first document below that is specific to West Virginia. It contains a general encyclopedia of information about leases and leasing.
Also below that are links to a variety of other information we have collected that should be helpful.
Although landowners who own their unleased minerals are in much better position to protect their surface than landowners who are only surface owners or whose minerals are already leased, we think that those of you do owner your minerals and are considering leasing will find that you will still want to join us in your role as surface owners.
General information for West Virginians about leasing.
This article, Information about Oil and Gas Leasing for Surface Owners Who Also Own Their Minerals, was prepared the author of the West Virginia Surface Owner’s Guide to Oil and Gas. This article is a starting collection of important information for you if you are approached by an oil and gas company about leasing your minerals.
The article above was written in 2008. It is still a useful guide to oil and gas leases. However, as the Marcellus Shale boom evolves, industry practices and strategies and the bonuses and royalties paid etc. have evolved. You can look for other more recent leasing resources on the Internet, but we recommend that before you sign anything you should get the advice of a lawyer who is knowledgeable about leasing (or lease amendments) and these changes. Think of the cost as insurance that you do not get burned when you sign a lease — the way you have fire insurance on your house.
Mineral/Royalty Owner Organizations
- West Virginia Royalty Owner’s Association
- West Virginia Land and Mineral Owners Association
- National Association of Royalty Owners
- What Land/Surface Owners Should Know When a Landman Shows Up And Wants an Easement/Right of Way To Put a Pipeline Across Your Land (updated 8/27/2014)
- More on pipelines.
How much are oil and gas companies offering?
Article on how much companies are willing to pay for leases! (Jan. 28, 2015)
Pennsylvania offers may also be helpful. Some of them are $1,500.00 an acre and 15% royalty, which is confirmed by news reports (March 13, 2008). They are probably leases intended to use to drill to the the Marcellus formation which is hot right now, and this map of the thickness of the Marcellus shale formation shows that the seam is up to 150 feet thick in that area, and not so thick generally here.
Find out about and report on good and bad landmen! Go to this site and report on good or bad landmen experiences. Participating in this will hopefully improve their behavior!
Related news: Owners have way to fight landmen
Also, oil and gas leases can be set aside if the landman said $25 is as high as the company will go and that they will lease neighbors’ property and drain the gas out, if those statements were false, according to a Pennsylvania federal trial court judge’s decision.
Are my royalty checks right? (Information on court cases related to royalty payments)
At least one Supreme Court case and one jury has found that some oil and gas companies are underpaying royalty owners by deducting unjustified expenses or using market values for calculating the royalty that are not the proper market values.
Here is an update on the Tawney class action against Columbia Natural Resources, LLC (formerly Columbia Natural Resources, Inc.), NiSource Inc., Columbia Energy Group and Chesapeake Appalachia, L.L.C. (“Defendants”)
Here is a September 20, 2008, newspaper article explaining that the class action against Dominion has been settled. If your are a mineral owner with Dominion wells, you should go to the settlement web site to keep up on what is happening and what you need to do.
Circuit Court Decision on Flat Rate Royalties. We think that the “contemplation of the parties” theory that is only mentioned in this decision and also contract theories might be good theories for a lawyer to pursue in a court case.
Other information related to leasing.
WVSORO’s relaible information as of, October, 2012, is that the Utica Shale will not be such a big play here in West Virginia as the Marcelluls Shale has been, or as big as teh Unitcal Shale will be in Ohio. This is because teh Utica is thinner here and does not have the oil found the formation in Ohio. For more information here is an early assessment done by teh United States Geological Survey.
If you own a fraction of, or know the name of one owner of a fraction of, the minerals under your land, you may be able to find on line who owns the other interests in the minerals. Contact the other owners and negotiate together with the drillers/landmen.
I signed a lease that allows for injection of fluids and maybe other materials into the ground into the ground. Are there any controls over that?”
Maps of Oil and Gas Wells. Find what oil and gas wells are in your area, or another area you care about.
Chesapeake Leases Voided: Middlebourne Couple Out $100,000 October 31, 2010
Morgantown Dominion Post article on Marcellus Shale August 16, 2009
Identification of major leasing companies in an article with tips on leasing
Pennsylvania Attorney General press release with advice
Lease clauses and other forms from the web site of an organization of oil and gas industry landmen.
Natural Gas Lease Forms and Addendum. This document was drafted for Pennsylvania law and conditions. However, it is useful for West Virginia for the most part in explaining the major terms of leases, how addendums work, and things to consider in signing a lease. We do not know whether or not the signing bonus amounts mentioned are justified in West Virginia — based on what this says about free gas, the pressures may be higher there. The problems this mentions with free gas and gas pressures does not apply here, whether because their pressures are higher or they are not accustomed to free gas like we are here. Also in West Virginia there are statutory provisions for surface damages even without a lease provision, but a side agreement in an addendum would also be legal. Also there are revegetation requirements, but the State would probably not interfere with provisions in an agreement that are different so long as they prevent soil erosion and sedimentation. Finally, limiting the depth of formations drilled is one thing, because a really deep well, around 10,000 feet, takes a lot more surface area. More importantly is the number of different formations to which they may drill. Lots of formations means lots more wells if you are a surface owner. Consider leasing to only the formations they say they want to drill to, and negotiate up.
Oil & Gas Mineral Services – Website featuring information of importance to oil and gas mineral owners