I have seen the state get annual rentals but have not heard of an individual land owner getting this. Has anyone heard of a land owner getting an annual rental? That would be an interesting avenue to explore...
Not usually. Typically the lease is a "paid up lease". That means the signing bonus functions as the "rent" for the primary term of the lease. You do not get any more payment until a well is capable of producing in paying quantities. Then you get royalties unless they shut in the well. If they shut in the well you will only get shut in payments if it is negotiated into your lease.
In some cases, it is a gift, because, like has been pointed out here, many sections in the Haynesville Shale will not get developed within a 3 year lease term. That's the one thing that is sometimes not considered when people are talking about leasing vs. not leasing, the fact that some sections may not get a well in them at all.
For a standard lease, that would be true. However, each contract can be tailored to the needs and desires of the parties involved. By adding a rental clause in the contract, you can secure (rental) payments from non producing wells.
Most South Louisiana lease forms provide for yearly rental payments, I have taken leases in North Louisiana using the South Louisiana lease form but only when asked to do so by the mineral owner and approved by the company.
Po Boy, look at the top left hand corner of the lease form it will say paid up or rental. That dollar a year stuff was just like Mr. McConnell said, long ago. The last lease that I took in South Louisiana, a long time ago, read something like $100 bonus with $100 rentals each year thereafter. If this would happen in North Louisiana then the tax burden would be spread across several years. The co's buying the lease could spread their money out over time making it a win win situation for both you and them.
I found interesting that ther actually was a seperate contract guidline for South and North Louisiana, Annual rentals do occur but are a accounting nightmare and and ,I would think, something the O/G companies would seek to avoid. none of the contracts on my desk mention a "Rental".
As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More