Gas drilling

[Shiner1]

Got this letter from a company called "Cherokee Horn". It seems these fellers want to give me some cash to drill for gas. All my neighbors have received the same letter. A few have signed up, some not. Couple of us are a little skeptical. Anyone have any experience with this or this company? What I think is this..These guys are buying up the rights (on the cheap) to sell to the bigger company later on (at a much higher price) So if we hold out we may end up with more $$$. Or am I barking up the wrong tree?

[tiffo60]

It all depends on what they are offering. But I wouldnt sign anything longer than a 12 month lease. Alot of people are getting 22-25% royalties and 20-25k per acre leased. You will talk to alot of people that say you cannot get that but if the landowners pull together and will be patient and come up with a number that everyone agrees on, you can get it.

[BC Lightning]

It all depends on what they are offering. But I wouldnt sign anything longer than a 12 month lease. Alot of people are getting 22-25% royalties and 20-25k per acre leased. You will talk to alot of people that say you cannot get that but if the landowners pull together and will be patient and come up with a number that everyone agrees on, you can get it.

I also know people have waited too long and the $$$ was no longer there and had to settle for less than what they originally offered them

They just started drilling on mine and my dad's property (100acres), so I support whichever canidate who wants to switch from oil to 100% natural :D

[99WhiteBeast]

We waited and banded together as a group and held out for a good deal much like Tifton explained. I have heard some waiting too long to do anything and then being left high and dry since gas production was pulled back somewhat.

[mustgofaster]

Got this letter from a company called "Cherokee Horn". It seems these fellers want to give me some cash to drill for gas. All my neighbors have received the same letter. A few have signed up, some not. Couple of us are a little skeptical. Anyone have any experience with this or this company? What I think is this..These guys are buying up the rights (on the cheap) to sell to the bigger company later on (at a much higher price) So if we hold out we may end up with more $$$. Or am I barking up the wrong tree?

You have to get together as a neighborhood... As many people as possible. I just signed for 26,500 per acre sign on bonus, and 26.5% royalties (gross) Make sure you push for gross... net is nothing.
What we did is we got everyone together & refused to sign... (Some did sign @ a mere 3K per acre & 22% net, saying that was the best offer we'd get, but they were wrong) What we did then is go to all the gas companies stating what we wanted & gave them a deadline to present a counter offer. In the meantime, we activey recruited other neighborhoods, making ourselves larger. So when the offers came back, we said," That is not acceptable, we have now grown to XXXX homes & this is the new offer to counter, a larger take for us of course. We finally grew to over 6000 homes before we got the offer we wanted.
I will say this... very important! We did get offers for slightly more $$$ but we refused, because we had strict rules written into the gas lease, controlling where the trucks can go, what kind of drilling fluids they can use, noise control, etc.. etc... Basically, we made sure to protect our quiet way of life & our property values. Make sure you protect yourself!

I hope this helps.
Steve

[mustgofaster]

And by the way... they are going to sell to a larger company at a great profit. That is where we made our $$$... The big companies don't really have the time to invest in going door to door to get your signature; but if you go to them with a large parcel of land, with a large organized group, they are redy to talk.

[L8 APEX]

Chesapeake said they were not signing anymore leases until the fuel prices went back up. I think leasing is way down currently. Some are not as clean and polite when it comes to restoring sod, trees and whatever else they destroy in the process. Some run trucks at all hours etc..

[WA 2 FST]

I also know people have waited too long and the $$$ was no longer there and had to settle for less than what they originally offered them

They just started drilling on mine and my dad's property (100acres), so I support whichever canidate who wants to switch from oil to 100% natural :D

:hammer: Oil baby... more oil.

Actually as I'm sure you know... there is often both in those reservoirs... maybe not so much around here.

I don't know how it works with small parcels like residential neighborhoods, but it seems like you'll have to do a lot of research. From my experience (not with a gas lease), your chances of getting XXXX # of people on the same page seems very slight...but Steve did it, so he must live in a smart area. ;) The basic law of averages says that 1-2 people out of that many will balk at whatever deal you try to come up with, and then you have nothing. Others just won't show up or want to get involved. I am NOT familiar at all with small, neighborhood parcels to lease, but I would assume that the drilling company would have to have lots of signatures to come in and start doing anything anyway.

This sounds lazy/bad on my part, but I would look out for _yourself_ on this, and not so much your neighbors. Maybe a select few neighbors you know and trust. But there will be a bad apple in there somewhere who will throw a wrench in what the rest of you spend so much time trying to accomplish.

Be happy you've got somethng under the ground worthwhile. It is basically "free" $$ to you, no matter what you get. It's time to be thankful, and yet while being smart and wise about the deal you end up signing, the notion of holding the purchaser "hostage" by trying to negotiate a much higher deal may end up being the greed that nets you zero. It's a balancing act.

As far as a short-term lease goes, from my dealings with this type of thing, the lease will automatically renew once drilling has begun and they are pumping gas/oil out of the ground. These types of leases are just to get things started. It's not like a residential or commercial lease of a building. If they don't do anything, then you keep the signing bonus. If they hit something, the signing bonus is a drop in the bucket anyway b/c the royalties will take over at that point.

The great thing is that this is basically a risk-free proposition...whether you make $10k or $100k or $1M. In today's market (or really any), that cannot be beat.

Good luck.

[Sandman]

The great thing is that this is basically a risk-free proposition...whether you make $10k or $100k or $1M. In today's market (or really any), that cannot be beat.

Good luck.

Careful. Not many things in this world are risk-free or easy. Like some have already said, they can run trucks at all hours, destroy property, etc. I have known people who signed too soon without reading the entire contract. The signing bonus was decent, but the land was destroyed and after all had been said and done, the wells were netting the owner ~$100/month.

Make sure you read the contract. The best thing you can really do is get a lawyer that deals with this specific topic. They can make sure the contract is fair for you. Also remember you can lease to certain depths. The natural gas will be on top. The oil shale will be down below that. You can get two contracts out of it.

[WA 2 FST]

Excellent advice.

And like I said... I meant to hedge everything I said with the comment that I am not experienced with leases in residential areas. Obviously, no one would want to devalue their property to the point of a net-loss, including quality of living.

$100/mo is nothing, and if that's the prospects, then its not worth much at all, even if they write you a $20k check to begin with.