Surface Revenue

[farmers_son]

I am wondering what people’s views are on compensation for surface leases and pipelines. Is it fair or is it not fair. What is being paid in your area. I am sure whatever you are getting is welcome but that may be more a reflection of the general farm economy than if compensation has kept up with the times.

[SASKFARMER3]

The older leases in this area are paying considerably less than the newer ones, however, I will say that Penn West has been going around re-negotiating the old leases and in some cases paying the increased rental retroactive to the anniversary date.

I have a 7.4 acre lease on my property and receive $3600.00 annual rental.

If your municipalitiy happens to have leases on land owned by the municipality you can obtain copies of their surface lease agreement and use it as a benchmark.
In this area the surface leases on county land were paying a pittance when I was first elected so we struck a committee to renegotiate them, and brought them up to current rates.
Some of the resource companies screamed bloody murder but they had not choice but to agree.

Land values play a huge role in the lease compensation, so of course land in cowmans are will bring more surface revenue than in more remote areas.

[cowman]

Hmmm...$3600 for 7.4 acres is around $486/acre rent? Well sure beats growing barley I guess?
In my area, the price is rising fairly dramatically due to rising land costs. I would say the newer coalbed leases are getting close to $900/acre/yr.
The CBM wells are very easy to deal with. A goat trail into the 10ft. X 10 ft. well head. No soil disturbance.
Alot of people go on and on about how do I farm around a bunch of well heads...but doesn't really wash...as here they farm around bluffs of trees and potholes anyway?

[cowman]

Farming around leases is a given in many areas of the Province. The most important thing will be to ensure that any fencing, texas gates etc. are a criteria of the surface lease agreement.

In areas where livestock are going to be pastured or equipment will need to be moved across lease roads etc., its important to assess what sort of fencing and access gates will be necessary. I agree cowman, people farm around sloughs etc. and don't give it a second thought.

[JD4ME]

I think the qurstion was has the compensation kept up to the other costs in society, try and get a landman to tie your lease to the price of BOE and you find out real soon. The landowner is the poorest paid of all involved with the process, the guys the build that approach and put in that texas gate are paid far more than you are for the entire lease. If you think you're getting paid well good for you, but when the amount of gas that is needed to pay you for a year comes out of that well in less than a day I think your dead wrong.
THe prices of the leases have not increased in any true amount in 25 years, can you say that about any other non agricultural product or service in Alberta??

[drome]

This should be a hot topic as in Manitoba, Enbridge Pipelines has refused to pay a yearly rental. They want only to pay for the original easement and damages for digs. The Act clearly states that yearly rentals can be paid. For the most part, farmers don't know their rights and have been happy to receive a one time payment. They have not taken into account the revenue earned on an annual basis by Enbridge on product flowing ( in as many as 5 pipes) under their property.
This is an issue that farmers across the prairies should address as a group. Enbridge has taken unfair advantage of farmers dating back decades.

[cowman]

Very few companies pay yearly rental on a pipeline? Nova pays on its high pressure lines...the rest... generally no.
At the last Surface rights group meeting we had a representative of the Surface Rights Board who said they are just waiting for the right case to come along and will rule in favor of yearly rent. Now this will be on pipelines built after they make their ruling, but the fact is that will be also challenged and older pipelines will also be included...only somewhere down the road!
This is why it is important to get a "grandfather clause" written into any pipeline crossing your land...stating that when yearly rental becomes the law you are paid back rent to the day the pipeline came into existance. The gas companies are doing that here now in Central Alberta. They know its coming.

[farmers_son]

I do receive rental on a Trans Canada (formerly Nova) Pipeline R/W. Amounts to $1133 per year to go across one quarter section. Trans Canada has tried to buy out the rental agreement and a few people who were desparate for even a little money did accept the buyout. They no longer receive rent. If I recall the buyout amounted to about two years rent. Obviously I did not take it.

We have other pipelines that do not and never did pay annual rent. One company has approaced me recently to put a pipeline across a quarter, they offered $900 per acre. I have had another pipeline a couple of years ago that paid $1150 per acre so I see no reason to accept the lower offer. Even at $1150, on 3-4 acres it does not amount to much money if the pipeline is only crossing one quarter.

The best well on my place pays $2800 per year rent on a 4 acre site. I think there are a few who get more, quite a few wells get less.

Certainly in this area rentals have not kept pace with our expenses although to be honest they have kept pace with our income.

This forum provides an ideal way for farmers to share some information on what they are receiving for surface revenue. Thanks Emarld1 for putting up your numbers. That information would be a very powerful tool to use to slowly increase what the companies pay. Cowman: $900 per acre, how big a site would that be? Is that first year or annual rent?

[cowman]

FS: Oh no annual rent. Get $2700 for a 2.8 acre site...anually. Recent surface leases are being offered on pipeline and leases at $2500/acre(initial payment) which is too low for this area? Many people are holding out for $3000 as that is generally what land is trading for here(two bare quarters sold at auction last week averaged slightly higher). The neighbor is negotiating a pipeline right now, up one side of quarter and down the other side, and is hitting some stiff resistance to $3000! I believe they are offering $2500 which comes to around $17,000 initial payment? The company is also resisting the "grandfather clause" on this one although they have done it on some other pipelines in the area. My neighbor has a lawyer.
Every five years you can renegotiate a wellsite lease? Usually the company just claims nothing has changed! I believe grassfarmer was renegotiating one last year...you might want to ask him how that went?
If you have a surface rights group in your area, join them...the membership fee is well worth the money!

[cowman]

I also receive an annual stipend from a company that was ordered to come back in and clean up an old gas well site. The well was drilled in the 60's and the previous owner had signed a reclaimation agreement, but I was able to get action under the EPA. The company paid me damages plus 1200 annually until they get a new rec certificate, and at the rate they are going it will be 100 years !!
In addition to that they paid to have my corrals cleaned and the manure hauled out and spread on the site one fall.

farmers_son the Warburg Surface Rights Group covers a wide area, and you could get some assistance from them in negotiating leases. The Chairman is Vant Hayes from Breton.

[WRAPper]

Something I have noticed happening which isn't good is the trend towards lower land values in leases. When we first signed leases in 1989 we were buying land for 400- the lease paid 800, double.
In 1996 we were paying 800 for land leases were 15-1600 on land value. Still roughly double.
In 2004 we were paying 1200 for land and the leases were then 2000 for land value. Starting to slip.
In 2006 they are back we paid 1400 for land last fall they are still at 2000. I won't sign at that some are though.
I hear that in areas around Olds land is trading near and above 3000.
Land companies are offering land value of 3000 sometimes less.
Why????? The industry always cites precedent when dealing, well the precedent was set years ago 2 times land value for leases. 2800-3000 closer to 4500-5000 near Calgary. Is where it should be, I agree they have a right to work their minerals but I didn't go to them they came to me.

[Horse]

When I renegotaed my last time they offered a sighing bonus of 1500$ I told them to just add that to the rent anualy and I would sign but they wouldnt because that would set precedent in rasiny the rent by $300 per yr so we went to arbitration and lost the signing bonus but the chair agreed that a sighing bonus was just a way around raising the rent but they knows who butters thier bread but in a yr it will be time to try again so if anyone has any ideas I would like to hear them.

[cowman]

Again Horse, join the surface rights group. You will find out exactly what other people are getting? If you can do better then share that info!
I find it funny how people are so secretive with the neighbors, don't want them to know what they are getting or something? The landman just loves that attitude, gives him lots of room to play his games!

[cowman]

And landmen hate to have the local surface rights group lease form waved under their nose because they know the farmer has a lot of background info on lease compensation !