$2,000,000 lost because he wanted $2,400,000 in Sabine

So I'm in the Desoto courthouse today and a young guy (I guess about 24) sitting in the hallway on a folding table working on his laptop gets a cell phone call. It's like talking in a library, you can hear conversations no matter how low somebody tries to talk. He goes on to tell his friend on the phone about how he was working on a 200 Acre tract of land in Sabine. He offered $10,000 an acre on behalf of Chesapeak. The land owner said he wanted $12,000 so the guy says he would take that offer back to Chesapeak. I didn't catch in his story how long this process took but after he called in the counter offer his boss told him that they weren't taking any new contracts in Sabine. If there wasn't already a signed leased they weren't making new offers. The land owner called him and said "so what about my $12,000 an acre?" He told him they couldn't do that, so the land owner said "ok, I'll take the $10,000". He says "no, you don't understand, we aren't even offering that now". In telling the story to his friend on the cell phone he was taking great joy in the fact that the entire $2,000,000 was now off the table. I got the feeling he is tired of working all the back and forth negotiations.

Don't ask me any details because I do not know anything more than what he was saying on his end of the conversation. I would guess the land owner will get another offer from somebody at some point. It was just very interesting to hear such numbers. That guy was going to bed one night thinking he's got at least $2,000,000 in the bank and then the next day he's got nothing. I'll be looking in the newspaper to see if some wife killed her husband because you know he was saying to her "don't worry, I know what I'm doing."

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Thanks for the link.
Folks -- if you do happen to forgo an offer like the lead posting in this discussion, you may not want to tell any friend or relative about it. They may never let you forget it - "Yeah, we could have sent every grandkid to college and given them a nice house if old Frank here hadn't blown off a lease offer for 2 million back in '08. Right Frank?"
Or...

"I sure an glad ole Frank was wise enough not to fall prey to those mean oilmen...now, they work for us. Life is great, thanks to good ole Frank's perseverance"


Sorry, I could not resist the temptation to add a little (very little) bit of humor.
Very nice touch Grice ! Your humor is no match for your knowledge but good work none the less ! HA!HA!
I can only hope you're right!
aka Frank.
It's about time someone read the LA Mineral Code:

LA RS 31:6 -
"Ownership of land does not include ownership of oil, gas and other minerals occurring naturally in liquid or gaseous form,.... The landowner has the exclusive right to explore and develop his property for the production of such minerals and to reduce them to possession and ownership."

LA RS 31:8 -
"A landowner...may reduce to possession and ownership all of the minerals occurring naturally in a liquid or gaseous state that can be obtained by operations on or beneath his land even though his operations may cause their migration from beneath the land of another."

The gas does seem to be there covering an amazing area in NW LA. In LA legally, it really doesn't belong to anyone until a well is drilled, completed and the gas is brought to the surface and put into a pipeline. So what good is the operator to the landowner. The landowner owns the exclusive right to explore for natural gas, but rarely has the expertise or means to produce the gas. The operator has the means and expertise to "reduce the gas to possession" which gives the gas value - for both parties.

In case you haven't noticed, there seems to be a trend where the major players are now concentrating on cleaning up areas where they have leases, trying to maximize their ownership in sections they want to operate. That's great for those unleased owners in these areas; its not so good for landowners in less strategic areas.

I'm not going to waste my time (or yours) discussing what some unscrupilous lease broker promises verbally. Good written contacts make good relationships - get it in writing.

The bottom line is that there must be cooperation between the landowners and the operators. Historically, the realtionships have been good and beneficial to both. As the amount of bonuses offered has skyrocketed, landowners have naturally questioned the process and it seems to have evolved into an "us v. them" scenario (as is evidenced by some of the posts here). That is sad since both are benefitting from this.
Nice post , The only problem with this partnership is that people are really finding out how wopsided it has been for many years and they are beginning to have a difficult time trusting someone so powerful with such a piece of crap track record!
ok--Just making a point of what I said mths ago--greed will get the best of some people. These guys will get the gas, with or without your consent--just a roll of the dice..good luck---I know ya hear me snake--where ya at :)
Hello Kenny ole boy , Good morning or afternoon to ya. I agree with ya 100% ! We just don't happen to be anywhere near that point yet. We aren't seeing priceing for Barnett ground much less H/Shale ground yet. Heck we haven't even gotten close. 5 X bigger should warrant some king of increase in the top spot shouldn't it ? Just my thoughts Kenny ole boy. Good to see you ain't been fed to them Tigers yet !
Agreed--This play is the biggest thing since Wal-Mart,
"In case you haven't noticed, there seems to be a trend where the major players are now concentrating on cleaning up areas where they have leases, trying to maximize their ownership in sections they want to operate. That's great for those unleased owners in these areas; its not so good for landowners in less strategic areas."


This is exactly what happened in my section. I'm an unleased landowner in a section that has been majority leased since last March for sure, maybe longer.
Hello Ms. Sharon , I agree with what you are saying about cleaning up these areas but I don't feel its bad news for everyone else. The longer this play takes , the more info will be out there for the unleased to use against O&G's. I would bet that Uncle Floyd rues the day that Al Gore invented the internet ! HA! HA!

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