oilwell

[nicolaas]

I am going to be getting a oil well drilled on a 1/4 section of mine. It will be located near the fence line with the lease road going across the top of the 1/4 for nearly 1/2 a mile, so it won't affect the land too much in terms of farming it. Just curious what the going rate for oil wells is, and what should I be aware of.

[cowman]

Sounds like a pretty big lease. If you have a surface rights group in your area contact them immediately. They can give you prices for your area. The farmers advocate can also be helpful.
Don't sign anything until you understand completely what the deal is?
Don't let them pull that old BS about hay/pasture being worth less than grain land! Offer to run the cultivator over it if it will make them feel better!
In my area a lease like that would be in that $15,000/$16,000 range for a coalbed lease(smaller) with an annual rent between $3,000-$3,500.
If you feel uncomfortable ask the company to pay for a lawyer/consultant...at their expense! The landman is a professional and knows his stuff...you are an amateur and don't? Get some help if you think you need it.

[cowman]

If you have cattle make sure they install and do upkeep on a fence completely around the lease and lease road. Also, ensure that there is a clause in the contract about noxious weed control. If you do not want chemical sprays you must include that in the lease.

[farmers_son]

Cowmans advice was very good. I found a website with good info at:

http://www.strathcona.ab.ca/NR/rdonlyres/e335egloqulzdv55mrshmfdqjzqo3ip256ugnomxo6tz3n2tmu ucelz3dctr6xtkbf4mbadwkwxlpicbkagf3mqjxye/Attachment-EEP-Energy Exploration-Appendix1-Negotiating Surface Rights.pdf

You can see actual Surface Rights Board decisions in your area at:

http://www.surfacerights.gov.ab.ca/SRB/decisions.aspx

Cowman has already said it but the best advice is not to sign anything until you are happy with the completed deal. The company will seek to get your approval of the location so they can get a well licence from the EUB which is much more important to them than the Surface Lease. Your approval of the location should be withheld until you approve of the compensation. Even though it sounds like the location is not too bad it is just the way the game is played.

[cakadu]

If you do go to a surface rights group and/or a lawyer that specializes in oil and gas law, ask them about a clause or clauses that have to do with the company selling out and transferring the rights to another company. You may find that the company you are dealing with today - if they happen to be decent to deal with - will sell out to someone else who may not be so good or easy to negotiate with.

I know that others have gotten clauses inserted that have to deal with transferring the company and getting something in writing about it. Generally you don't even know that the company has been sold (sometimes several times during the course of a lease) and in the event that something goes wrong, you want to ensure that you can follow the trail and have some recourse available to you.

[cakadu]

Good advice Linda. Also one thing to consider is ensuring that a clause requiring the company to conserve all topsoil prior to commencing lease construction is important. Some companies strip the topsoil and others just pretend they do. This isn't an issue until the well is abandoned and then when the company doesn't have ample topsoil on site to reclaim the lease they will want to bring it in .

[nicolaas]

thankyou for all the info.