TROUT RUN - Although most landowners in the region already have leased their property for gas exploration, they still can make decisions today on future leases.
On Thursday, during a meeting at the Trout Run fire hall, Jackie Root, of Lawrenceville-based R & R Consulting LLC, said landowners may "top lease" their land.
A top lease is a new lease on property that already is under lease. The top lease goes into effect when the current lease expires, Root said.
Article Photos
Root asked the more than 150 people in attendance to raise their hands if their gas leases are set to expire within the next year. The majority raised their hands.
Those landowners may be eligible for a top lease, she said.
A top lease may be offered by the company holding the current lease or a new company, Root said. The current company may offer the lease to give it more time to drill a well on the property.
Drilling a producing well on a leased property automatically extends the life of a lease for the life of the well, Root said.
A new company may offer better terms for a top lease than was offered by the original leasing company, she said.
Typically, the new company will offer a percentage of the lease payment up front, then will pay the rest when the lease takes effect.
For example, a company that offers $5,000 per acre on a top lease may offer 10 percent - or $500 an acre - up front, Root said.
If the company with the current lease drills a well before the lease expires, the landowner does not have to return the up front payment.
In addition to better financial terms, a top lease may provide a landowner with an opportunity to negotiate better non-financial terms, such as setback from structures, the location of roads and environmental safeguards.
Root said most companies will not consider top leasing land that has a year or more left on an existing lease.
Root and Earle Robbins, a consultant with her firm, offered advice on negotiating a good lease and how joining a landowner group provides stronger negotiating power with gas companies.
Always consult an attorney before signing any documents or agreements associated with gas leases, Root said.
