Frequently Asked Questions

What is horizontal drilling?

Horizontal drilling is a technique that has been developed to allow for more efficient extraction of minerals from the subsurface.  A common well pad is built on the surface which can house 6-10 wells.  Each well is drilled down vertically and then turned horizontally throughout the target formation.  Laterals on a horizontal well can be drilled upwards of 6,000 feet.  For more information on horizontal drilling, see the following link:
http://www.naturalgas.org/naturalgas/extraction_directional.asp

What is hydraulic fracturing?

Unlike the shallow wells that have a long history in the tri-state area, the modern drilling is targeting shale formations that are not porous and do not allow oil and gas to flow freely.  Hydraulic fracturing is the injection of a mixture of fluid (mostly water) and sand under extreme pressure which causes the shale to fracture, creating gaps through which the oil and gas can escape into the well.  For more information on hydraulic fracturing, see the following link:
http://www.epa.gov/hydraulicfracture/

I don’t own my mineral rights.  Is there anything I can do?

Due to the extensive coal mining and shallow well activity in the tri-state area, it is not uncommon for a surface owner to not own the mineral rights.  The ability of the surface owner to get the mineral rights back varies greatly on where your land is located.  You should contact our office for a free consultation if you do not own your mineral rights.

I have not signed a lease.  Can somebody take my gas anyways?

The answer to this question depends on where your land is located.  In West Virginia the answer is no.  A company cannot drill under your property if they do not have a valid lease.  That is not to say that they cannot drill next to your property and perhaps pull some oil and gas from your property, but they are not permitted to make a physical entrance on or under your property.

If you are located in Ohio, the answer is a little different.  Ohio recognizes the same rule as West Virginia – that is, a company cannot drill under your property without a valid lease.  However, unlike West Virginia, Ohio has a Mandatory Unitization statute that enables the gas company to file an application with the state for permission to produce the oil and gas under your property even though you have not signed a lease.  If you receive notice that a company has applied to the state for this permission you should contact an attorney immediately.

How are royalties determined?

The formula for a royalty payment is the following:

Royalty Payment = Decimal interest x total production x value of product

To calculate your decimal interest you first must calculate the percentage of land you have in the production unit.  For example, if you have 160 acres in a 640 acre production unit, you have ¼ or .250 interest in the unit.  In order to calculate your decimal interest, you then multiply your percentage of the unit by your royalty rate.  In our above example, if you have a 1/8 royalty (12.5% or .125), you would multiply .250 times .125 for a decimal interest of .03125.

You then multiply the decimal interest times the value of the total production from the unit.

If you have a net lease, you will be responsible for your decimal interest ratio of costs incurred to produce, gather, and market the oil and gas.  This amount will be deducted from your gross proceeds.