Replies to This Discussion

Permalink Reply by Ray on August 13, 2010 at 5:33

Thanks everyone for all the information. Researching and learning is all I've been doing for a week. I've talked to about 3 attorneys, read tons of posts and reviewd many websites.
The attorney sent me the addendum, which I have read every word of. I understand the shut-out, the pooling, the transportation fee, the ya ya's, and the bla bla's.

Permalink Reply by DJG on August 13, 2010 at 5:24

Regan,

Jffree1 is not saying that you wait for a new evolution in leasing. We are both just saying that you should not let the landman push you to be in a hurry to get this signed TODAY.

Take the proper time to make sure that the contract WORDING and CLAUSES for your deal are thought through properly and that either your, or your QUALIFIED OIL AND GAS attorney, have negotiated a proper Schedule A addendum to your lease.

Whatever terms you work out for your Schedule A, are the clauses that will be added for YOUR protection.

Permalink Reply by jffree1 on August 13, 2010 at 5:30

I'm saying don't be in a hurry to sign the lease. There may be additional i's to be dotted and t's to be crossed. And... as long as they are rushing YOU, you have a bit of leverage. You were smart enough to take the lease to your attorney. Let him do his job and be patient so that you can take advantage of whatever leverage you do have because being an undivided 1/8 in Texas doesn't leave you with much to bargain with except for the fact that operators would rather have everyone leased.

Permalink Reply by DJG on August 13, 2010 at 5:17

The PRIMARY term of your lease offer is for the 3 year period. Once they put the first well in, however, whatever terms you sign at today are the terms that you will be living with in perpituity as long as there is production from your unit.

There are many people in E.TX today who signed leases 50 years ago who signed at poor terms, had one well put in decades ago, and have seen no further activity on their property.

You want to make sure that you don't end up in a similar situation of getting that 1st well producing, getting your minerals "held by production" (HBP) and then seeing no further activity on your property for years to come.

There is wording that you can get added to your contract to help protect you from these type of problems if you take the time to learn what is important to have added then demand that these protections be included in your contract.

If Encana is already in the process of moving forward with the first well for your unit, then they will not be scared off by you wanting to some time to make sure you get the proper protections included in the "Schedule A" addendum to your contract agreement.

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