Building Success on Leasing Partnerships
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| A completed PGE natural gas well in Bedford County, Pennsylvania. |
Pennsylvania General Energy is committed to the belief that treating
people fairly and honestly is a business principle that leads to a partnership
based on trust and mutual success. That commitment is reflected in our
relationships with people with whom we do business, those who regulate
our operations and the landowners who allow us to develop wells on their
property.
Property owners face an important decision when considering an agreement
to lease their property for oil and natural gas development. We take the time
to listen to landowner’s concerns and answer questions about the lease
and drilling procedures.
The Leasing Process
PGE’s goal of providing landowners with a professional leasing experience
starts with completing a lease agreement that allows PGE to construct
and operate a well on a property’s surface, and to extract oil and natural gas
that may be present in the subsurface.
If PGE is interested in leasing your property, it is because our geologic
research shows that particular area has the potential to yield marketable
quantities of oil or natural gas.
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| A PGE well under development in Huntingdon County, Pennsylvania. |
Questions and Answers about Leasing with PGE
PGE recognizes that people have questions about oil and natural gas leases. The questions below are among those typically raised by property owners:
What is an oil and natural gas lease?
A lease is an agreement between an owner of land and an exploration
company by which the company is given the right to explore for oil and
natural gas. If those efforts are successful, the parties share in the proceeds.
What are the economic benefits for landowners who choose to lease?
Usually, landowners are first paid a bonus consideration for signing
the lease, then receive annual rental payments during the term of the
lease. If a well is put into production, the rental payments are replaced
by royalty payments for oil and natural gas produced and sold.
If I lease, when will you drill on my property?
We base drilling decisions solely on geological evaluation. We might
drill a well on or near your property soon after leasing it or maybe
not at all. PGE does not, however, lease land without a purpose. When
we pursue a lease, we expect that the property has the potential to
produce marketable quantities of oil and natural gas.
How long will the drilling take?
The drilling rig is usually on location for one to three weeks, depending
on the depth of the well.
What will my property look like when you’re finished?
We will reclaim the area around the well to its original condition to
the fullest extent practicable. A finished well site and access road
will generally occupy 1/8th of an acre to two acres.
How long will the well be there?
We will operate the well as long as it produces in paying quantities.
Typically, wells in this area remain productive for a period ranging
from three to 30 years.
What if you drill a non-producing well?
PGE assumes all the financial risk of drilling a well on your property.
If the well is a “dry hole,” PGE will plug the well in accordance with
government regulatory standards and reclaim the property.
When will royalty payments begin?
A well goes into production after necessary pipelines are installed.
Royalty payments usually start about three months after the well is
in production, and are paid monthly thereafter.
Who regulates the exploration and production companies?
The oil and natural gas industry is regulated by state agencies responsible
for protecting the environment. Every oil and natural gas producing state in
the union has specific regulations that oversee oil and natural gas operations,
beginning with permit applications.