Landowner
Basics
You Have Been Approached to Lease...
- If possible, negotiate with land-man, or join a group of landowners- Land-men work for the gas
companies. They seldom have your best interests in mind, and are usually given "wiggle" room. If possible, have
a qualified attorney review the lease before signing. Groups of landowners have the advantage of expertise and size.
- If you have signed already- A bird in hand is worth two in
the bush. If you are in the core area, your property is likely to be the first drilled!
Drilling:
- First, the gas company obtains a drilling permit from the
State.
- Next, they start constructing
the drilling pad- Note: Unless the pad is directly on your property, you may not know drilling is underway, especially
if you are an absentee land owner. The gas company is not required to notify you that drilling will begin, has started,
or is completed.
- Rig
is brought in and drilling process begins- the hole(s) are drilled (spud), fractured, flared, and finally brought on-line.
Royalty Payment:
- Natural gas
drilling in Marcellus is done primarily with horizontal wells. Six or more wells can be drilled
from a single pad. Your property is combined into a large unit of 640 acres, more or less.
- The royalties you receive from
the “unit will depend on the price of natural gas, production (measured in MMcf/d), unit size, and your number of acres
in the unit.
- Within several months of production "division orders"
will be sent to royalty owners. This document specifies the owners royalty rate, number of acres
in the unit, and where/how to send payment. The first payments come six months after production starts and are for six months worth of production.
