Legal Learning = Luck

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Responses to submitted legal questions. Primarily Serving Landowners and Businesses in Clarion, Jefferson, Armstrong, Venango, Butler, Clearfield, Elk, Indiana, Crawford, & Forest Counties.

Location: Clarion, Jefferson, & Elk Counties
Members: 27
Latest Activity: Nov 5, 2012

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Discussion Forum

Has anyone signed a lease only to have it fall through?

Started by Crystal G. Last reply by ShaleGasNOW.com Nov 4, 2011. 4 Replies 0 Likes

This is the most frustrating of all. I have signed 2 leases only to have them fall through when it came time to pay. Both deals fell through due to the Leasing Companies and not on my part or have…Continue

What bonus and royalty offers have you received?

Started by Bryan D. Huwar, Esquire. Last reply by Bryan D. Huwar, Esquire Mar 2, 2011. 1 Reply 0 Likes

Here are some of the recent offers: 1. State - PA2. County - Clearfield3. Lease Bonus Offer - $3750 ($750/year for 5 years)4. Royalty % - 18%5. Terms (length of the lease) - 5 years6. Company -…Continue

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Comment by Bryan D. Huwar, Esquire on March 2, 2011 at 11:33pm: You're quite welcome, Crystal. In general, I just like talking about this O&G stuff. If you have any other questions I'd be happy to help you out. Just throw them out there. Thanks.

Comment by Crystal G on March 2, 2011 at 7:36pm: Bryan:

Thanks so much for explaining the Pugh Clause and the importance of it. I have always heard "make sure you have a Pugh Clause" but never the reasons for it.

Thanks again.

Comment by Bryan D. Huwar, Esquire on November 17, 2010 at 11:34pm: Nick, good - and important - question. A pugh clause provides that at the end of the primary term of the gas lease, any lands not included within a producing unit will be released from the lease.
There is a "vertical pugh clause" which states, that "at the end of the primary term, all rights 100' below deepest producing interval, revert to lessor". Horizontal pugh clause states, that "at the end of the primary term all lands not included within a producing unit revert to lessor". The vertical pugh clause can be uniquely tailored to specify at what depth the lands will be released. The purpose for these clauses is so that your gas will not be held by a lease if they are not being drilled for gas. For example, if you have 100 acres leased to Conglomerate Gas Company for a primary term of 5 years and you have the two above pugh clauses, then if 40 of your acres are included in a unit and the deepest well of the unit has been drilled to 5,000 feet at the end of the primary 5 year term this means you get 60 acres released from the lease and all of the gas rights below 5,100 feet are also released. (Note: Even better, if you can swing it I recommend only leasing the Marcellus if possible and restricting the lease to 100 feet above and below the Marcellus if you can.)

Comment by Bryan D. Huwar, Esquire on November 17, 2010 at 11:18pm: Pat, that's awesome news for you and your family. I really mean that. We're all hoping that the same thing happens to us. This forum really interests me because I am "help 'em up to my level" rather than a "pull 'em down to my level" kind of guy. I hope we can all help each other step up a few rungs!

Comment by Nick Frye on November 17, 2010 at 10:57pm: Hello-- Can somebody tell me what exactly a Pugh clause is? I keep seeing this mentioned but cannot figure how it is appliable to the PA landowner>?

Comment by Patricia H. on November 17, 2010 at 10:45pm: very true, great post bryan! This is the best thing that has happened in PA in my lifetime is for sure. My son just signed a lease in West Deer and it has already paid dividends for our entire family!!!!!!!!!!!!!!!

Comment by Bryan D. Huwar, Esquire on November 17, 2010 at 6:19pm: Yeah, the more people we can get on here the better that way everyone will know what's going on in the industry, especially in regard to bonus and royalty payments. The more we all know and contribute the more everyone stands to gain. This is an injection of capital that the area hasn't seen since the coal industry imploded. We need to keep the money here as much as we can so that our communities can start thriving again. Who knows how long it will be until we have a similar geographically oriented windfall - this truly may be once in a lifetime, however, if we play our cards right it may last may lifetimes.

Comment by Benjamin Vrobel, Esq. on November 17, 2010 at 1:49pm: Janet, there a million different variations of price and that is dependent upon several different factors. Location, location, location, as well as saturation of the market in that area, cost of production, price of gas, the market in general etc. etc. etc.... It also depends upon which county/township your property is in. Brian is putting together a useful post regarding bonus/royalties. Check it to see what is near you and if you've heard the company's names in the past. If you hear of anything else, please post...

Comment by Janet R Casey on November 17, 2010 at 8:53am: Is there an average price per acre that land is being leased for? I live in Cranberry, PA? Thanks!

Comment by Benjamin Vrobel, Esq. on November 17, 2010 at 8:47am: Hey Brian, Interesting concept. Folks, we're here to help. If you have a specific question, post away...