That’s the $64,000 question! The landman has just left your house after making an offer to lease your oil and gas minerals. You know you can negotiate with the oil and gas company. You know you can obtain a better bonus and royalty offer for your oil and gas. You just don’t know what’s reasonable versus what is way, way out of the ballpark. So, you wonder yourself, what is the going rate for an oil and gas lease offer?
What’s The Going Rate?
When West Virginia and Ohio landowners come into my office after being approached with a lease offer, that’s often the first thing they ask me. What’s the going rate for oil and gas leases in Marshall County, West Virginia? What’s the going rate for a lease bonus in Belmont County, Ohio? What’s the going rate for gas royalty in Wetzel County, West Virginia? Tyler County, West Virginia, Monroe County, Ohio. The list goes on and on….
What I always tell them is that if you’re thinking in terms of “going rates,” you’re playing by the oil and gas company’s rules, and you’re keeping yourself from maximizing your bonus and royalty. Just because they paid your neighbor $3,000/acre and 16% or $7,000/acre and 20% doesn’t mean that you should necessarily be satisfied with the same.
Questions, Questions, and More Questions. . .
What oil and gas companies don’t want you to know is that each lease negotiation is unique! What an oil and gas company may offer you for your minerals is dependent upon the individual factors that are present (or absent) in your case. Does the company need your property to complete a unit or pool? Does the company plan on drilling on or around your property in the near future? Does the company plan on drilling the Marcellus versus the Utica? Does the company need your property for surface uses (like a well pad)? Is a competing company interested in leasing your property? The answers to these questions—and a multitude of others—offer great insight as to what you can reasonably expect for an oil and gas lease offer.
Obtain More Than “The Going Rate”
That’s what I do as a lawyer for my oil and gas clients. Think about it. Why would anyone hire a lawyer like me just to get them the “going rate”? Clients come to me (and keep coming back), because I get them more than what their unrepresented family, friends, and neighbors have received from their oil and gas leases. I bring value to my clients and leave them better off than they would be if they had not hired me.
How do I do that? I individually review the complete circumstances surrounding their property and the oil and gas company’s operations. After completing my research and due diligence, I consult with my client and share my conclusions and provide them with expectations—the good and the bad.
Then I offer advice as to making a demand on the oil and gas company. Clients don’t always accept my advice 100%. In fact, that’s rarely the case, and that’s OK. Each client has individual goals, and those goals might not necessarily match up to what is available in a lease offer. As long as my client is fully informed and knows the risks (and benefits) of any course of action, we’re off to the races. Sometimes deals get done within a matter of weeks, some don’t get done for years. It’s all up to the client!
Whether you choose to have an oil and gas lawyer represent you or not, just make sure you remember one thing. Don’t fall into the “going rate” trap! Please feel free to call me for a no-obligation consultation at (304) 845-9750.