Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2013 at 10:26

Jay is correct.  The details are important to the negotiation strategy.  Firing blind is a bad idea.  Okay, here it comes again, hire an experienced O&G attorney.  One who has experience with determining those details and with negotiating a surface agreement.

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Permalink Reply by Henry on November 11, 2013 at 13:25

At the risk of sounding like Skip's yes-man here, I will (again) note he is right, and say get an attorney to help you with any surface agreement.  I have very bad personal experience here.  These leases can go for 50+ years, and it can be nearly impossible to ever get them off your land.  They can trickle out production so slowly as to never have it stop.  You need really good, clear rules by which the agreement will end someday, and really good clear rules as to how your land will be cleaned up and restored.

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Permalink Reply by P.G. on November 11, 2013 at 13:55

50 years wouldn't be so bad if they had to pay you rent on a regular basis and adjusted every so often for inflation.

Permalink Reply by Henry on November 12, 2013 at 1:43

P.G.,

You are right.  Alas, the surface lease that encumbers my land does not allow for annual payments.  My parents (and I, today) would have benefited greatly from good legal advice when they signed this agreement decades ago.

Permalink Reply by Henry on November 11, 2013 at 13:22

cheap shot,

Think of my agreement this way.  I will not "unreasonably" withhold permission for them to drill.  Therefore, if they want to drill, they need to come with a fair offer for compensation, that a reasonable person would accept.  If I don't think the offer is fair, I can say, "No, that is not a fair offer. You may not drill."  At that point, they have 3 choices:  1.)  Up their offer, 2) Find another drill site, 3) Take me to court for being unreasonable.  I would think (hope?) the costs (and delays) of taking me to court, would lead the driller to make a fair offer.

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Permalink Reply by 1kw6x71km1v37 on November 11, 2013 at 17:32

It is doubtful you would be bound by such contract language. Reasonable just too vague as to be enforceable. A judge would throw the case out and everybody is back to square one. I think landmen and O&G companies like to get that language in a lease, however, because they know it makes the average person feel somewhat obligated to them. Then they can negotiate endlessly, knowing that eventually most folks will cave in at some point if hounded enough.

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Permalink Reply by JR on November 14, 2013 at 9:05

I would insist on a consent to assign clause and/or an abandonment bond.  Big companies often sell their interest in old fields to small operators that don't have the resources to clean the property up at the end.

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Permalink Reply by 1kw6x71km1v37 on February 10, 2014 at 14:35

Wow. Right off the bat, you are eligible for treble damages on the timber theft if the wood was physically removed from site. The LA Office of Forestry has criminal investigators who will tally the volumes and pursue the perpetrators free of cost.

EXCO owes you for value of the building demolished.

Your road has a rental value, and they are on it.

No wonder they sent in a landman to lease you retroactive to their exercise of your mineral rights.

Push comes to shove, engage the Sheriffs Office to remove the trespassers and charge them. Not sure that this is entirely correct, but there was a thread here recently on the necessity for the operator to have at least 80% of acreage within a declared unit lease before he can make works. Maybe this law has changed, I really wasn't paying enough attention when that thread came up.

Personally, I might propose a good lease with a $5000 per acre first year bonus and $2500 thereafter for three years total. And they pay for the timber, too. I mean, you don't wanna rake 'em over the coals like they tried to do you. Just rough 'em up a little bit.

Then again, I might just decide to go down hole as a carried interest compliments of the operator. Operators hate this. Unless the well comes in a dry hole, in which case you ain't got squat on the deal. Been there, done that. Keep some Vaseline around handy if you try this.

This is a game of hardball. And now, you appear to be "Batter Up".

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Permalink Reply by Joe Aldridge on February 10, 2014 at 15:59

Cindy,

You and your family are in the driver's seat. Go back and read some of the comments to this thread. I would go for damages, a commercial rental rate of the surface and an ORRI in any production from any of the wells that they make. Whatever you do find a good lawyer that knows both Real Estate law and Mineral law. 

My feeling is if you and the family can come to a consensus that is within reason then settle. If not then you are going to have to let a Judge settle it for you. Hope this works out for all involved.

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Permalink Reply by Max on February 11, 2014 at 4:06

Cindy, looks like you may be able to use "greed" to help you out.  Figure out how much it would take (dollar amount), for everyone to sign, and if everyone agrees to, say, $1,000,000.00, then tell them the only way to get anywhere close to that would be to hire a good attorney. 

Most folks will invest $5000.00 (or a lot less) any day for a return of that kind of money, but the biggest thing is that a company will take notice when they're dealing with an attorney.  If that same company had four or five of the heirs calling them with their wants and numbers, they'll play around with the whole bunch and drag this thing out.

I would contact an attorney and if some of the others don't want to help out with the cost, that's too bad, they're cheapskates, and will ride on the others backs whenever they get a chance.  You have to look at what you will receive in the end.  No one knows any outcomes, but I would say you would double or triple what you will get by using an attorney. 

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Permalink Reply by tc on February 11, 2014 at 5:28

I am confused.  How is EXCO liable?  The have a signed lease from the executors, who usually have this type of authority.  People are saying to get the family together, but from my reading of Cindy's post the 2 executors who agreed to the lease are family members.  I think Cindy has a better case of executor's fraud than EXCO fraud.  Also EXCO could sue the estate, heirs and executors for fraud, under the theory you sue everyone and let the courts decide who is guilty.

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Permalink Reply by JMan on February 11, 2014 at 7:45

If I understand Louisiana law correctly, the executor must do what is best for the estate as a whole and cannot do anything for personal gain.  They are merely representatives of the estate and must abide by the rules the state grants them.  The family could sue the executors easy enough in my opinion.  Also, it is EXCO's duty to perform due diligence on all leases they sign.  It is EXCO's responsibility to ensure they follow all legal channels and if they don't, they are liable.  

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