Frequently Asked Questions (FAQs)
Below are answers to frequently asked questions that we have received about the Coalition.
Q: Is there any charge to join the Coalition? A: No, there is no charge to join the Coalition, and there is no cost to you when you sign a lease. We will impose a percentage fee, likely 2%, on the total amount paid to you. Our fee is paid by the gas company. That way, we have an incentive to get you the highest per acre bid possible. We take all the risk in paying consultants, doing the work, and finalizing the lease. We hope to gain your trust so that in the end you will sign with us. You are never under any obligation to accept any offer.
A: You should review your deed or title and look for a discussion of mineral rights with your attorney. Let him tell you definitively whether you have the right to enter into an oil and gas lease.
A: Yes, you are under no obligation to sign with us, and presumably, you are under no obligation to sign with another coalition.
A: Absolutely not. Our fees are paid by the gas company when you sign a lease (see above). We do not think it is fair or appropriate to have any charge on a royalty. That is your money.
A: Yes, we have accepted properties outside of these counties. We want to represent landowners, and if landowners want representation, they will get it with us. We see no company turning down the opportunity to accumulate more acreage outside of our focus area.
A: Yes, we anticipate that we will continue the Coalition in other areas depending on the needs of landowners wanting professional representation.
A: We saw a need for professional representation in Tioga County, PA, and there are landowners in Steuben County that have not leased their land or not signed up with existing coalitions for various reasons.
A: Yes, you always have to pay Uncle Sam, so you should see your tax advisor immediately after signing. You should also consult her or him (your tax advisor, not Uncle Sam) on the royalty payments as state and federal taxation will likely be different.
Q. How do we know if the gas companies are being honest with landowners?
A. One of the reasons that we decided to competitively bid our own lease is that by doing it this way, each of the companies has to put its best offer on the table. Remember that the companies are in business to make money. They do not want to pay any more than they have to. Our approach of creating our own lease and then competitively bidding it creates the competition that we need to maximize the bids. It is this approach that is universally accepted by the companies and the states who lease their own lands in this manner.
Q. Will our lease cover reclamation issues? A. Typically, the plugging of a well and the restoration and reclamation of the site are the responsibility of the state. However, we will include clauses to ensure that the entire site is reclaimed, not just the drilling and production area, and we will include a clause for damages. We will not rely exclusively on the state.
Q. Can landowners make certain addenda? A. Yes, although we think that our lease will be so comprehensive that the need for addenda will be minimized. You can use your own attorney to draft language or use Gilberti Law at a reduced rate.
Q. Can some members offer land for top lease?
A. We can include acreage for landowners if they wish us to include them. Remember that we want to represent landowners who want representation. Understand, however, that we cannot force the selected company to accept a top lease. So the final decision of whether they want top leases will be up to the selected company.
Q. What royalty amount will they offer?
A. We will set the royalty amount based on what we know in the area and what makes sense for the greatest group of landowners. You may want to read Viewpoint 2, comparing royalty rates with upfront bonus bids.
Q. Will the lease allow for gas storage?
A. There will be no provisions in the lease that will allow gas storage. The gas storage rights should be separately negotiated after exploration and development has ended.
Q. Will you offer a no entry lease?
A. Yes. See Viewpoint 4 on the no entry lease. Remember, however, that the bonus on a no entry lease will be half of the amount that other landowners will receive. We will make that clear before the competitive bidding process. From the companies’ standpoint, a no entry lease is not as valuable as a standard entry lease.
Q. Is the ground water protected enough? A. If the drilling of a well is done correctly, there is no way that oil and gas should comingle with the aquifer or groundwater. Virtually all the companies do an excellent job of casing and cementing wells, and conducting operations in an environmentally safe manner. Obviously, there are exceptions, and the regulatory agency must ensure that all wells are drilled, cased, and cemented correctly. No compromises. With regard to an accident on the surface such as a spill, there is always the chance that an accident could occur, but even an accident is a very rare event given the scope of operations in Pennsylvania.