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Permalink Reply by Jaybird on June 10, 2008 at 12:43

We have land in Claiborne Parish and we leased in 2005. We had 3 year primary term and the lease would remain in effect if they drilled on our land. They haven't drilled on or pooled our land with adjascent land so the lease will expire in July. Not enough time to complete the well since they haven't even started any of the process.

I wouldn't tie up my land longer than three years if they don't drill on it! We are fortunate that they haven't drilled or pooled because our royalty was only 1/6 . The norm now is 25% Royalty...which we will seek in the new lease.

With all of the recent news of natural gas shale "Haynesville Shale that is...they haven't had time to start up a new well on or near our land.

Just waiting this one out and then hopefully start the bidding wars for the new lease!

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Permalink Reply by SoBoRes on June 10, 2008 at 15:47

Thanks Geoman and laybird for the responses thus far. Your comments led to this question:

If a company has a rig within the pooled area they have the option of forcing you to continue the existing lease regardless of the expiration?

I ask this because CHK has a horizontal (told it was one of the initial testing rigs in SB Parish) approximately 2500 yards south of my property and if I accepted their offer and my area was pooled based on that rig, would I have to continue to lease my mineral rights to them until it runs dry? Mind you, this rig isn't on my property and I'm not sure of the direction of the bore.

Hopefully this makes sense.

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Permalink Reply by SoBoRes on June 10, 2008 at 16:38

Thanks for the quick response Geoman,

I guess this is why many harp on the importance of royalty percentage as compared to lease bonus.

I take it that the lease bonus (during time entering option years) ceases regardless of the expiration of the contract throughout production? Or does the contract automatically renew utilizing the existing lease (bonus/royalties)?

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Permalink Reply by Jaybird on June 10, 2008 at 16:31

http://dnr.louisiana.gov/CONS/CONSEREN/hearings/pubhearings2008.htm

First look at the website above and then click on one of the "applications". Print one out or just scroll down and view the mapped out areas of where they are asking to put a well. Any of them will explain what I am going to type here next as you look at it.

In Louisiana if they "pool" your land it will be in a 640 acre area. If your land falls in that area of the description of the application for a well and your under a current lease...all mineral owners of the entire 640 acre area will share the Royalty once the well starts producing and will continue as long as that well keep on producing. They could put another well in that same 640 acre tract but that would be ok too...you would still be getting paid.

All will share royalty equally if everyone has the same percentage of royalty ( 1/4 or 1/6 and so on. ) in their lease. If you have 1/6 royalty and your neighbor has 1/4 royalty in his lease and both of you are in the same pooled area...your neighbor will get more royalty money. Big difference between the 2 percentages when royalty is being paid out.

They can force pool your acreage if they can't come to an agreement with you and the state decides what bonus an royalty you would receive based on the going bonus rates and royalty in your area. I believe out of 640 acres the Oil & Gas company need 75% to be able to force pool your acreage. I have never let it get to that point...but one never know when that may happen.

If your land is not pooled within the 640 acres during the primary term and your lease does not have an extention clause in it...you have the right to lease your Minerals to whomever you choose. Any company!

Just make sure you read your lease carefully and understand it. It all depends on what id stated in your lease.

I hope this helps. Good luck!

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Permalink Reply by Greyshades on June 10, 2008 at 16:49

3-year primary term, with habendum clause, with no options to renew is pretty typical.

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Permalink Reply by SoBoRes on June 10, 2008 at 17:09

Appreciate all of the responses, I only own 1.5 acres in an out of the way secluded neighborhood, not much mind you but I love it and it gives my kids plenty of room to play. Surely wasn't bought as a mineral rights investment, but hey if there is a little more coming our way to invest for our futures I won't turn it down.

Apparently Jaybird, I need to find out the coordinates for my property and compare that to the information in the link you provided. I hope that it is on my Flood Cert from FEMA, as my closing paperwork only states lot #'s and most importantly relays my ownership of surface and mineral rights.

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