Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on January 6, 2016 at 5:16

lee, you are under no obligation to sign the lease based on a phone conversation.  Kare Sue has taken a number of leases in Lincoln and Jackson parishes and the bonus and royalty is certainly in an acceptable range however it's always a good idea not to immediately accept an "opening" offer.  You want to see the full details of the actual lease form before you make any comment about the offer.or accept the terms.  As Jay correctly states, it's always a good idea to consult an O&G attorney if you have anything beyond a small acreage ownership.  Kare Sue is unlikely to reveal who they are leasing to except to owners of very large mineral interests and would do so in confidence.

If you would be willing to help GHS members in Lincoln and Jackson who are not leased at this time, it would be helpful to know the approximate acres you own and the full section, township, range location of your land. 

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Permalink Reply by bshelby on January 6, 2016 at 9:56

Skip, Just for my info, what is considered a small acreage as opposed to a "very large mineral interest". Curious......

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Permalink Reply by Skip Peel - Mineral Consultant on January 6, 2016 at 10:24

Anyone that can afford the small investment for the services of an experienced O&G attorney should do so regardless of acres.  In my book, 5 acres or less is small.  For some modest leverage in lease negotiations, 80 to 180.  A large interest would be half to a whole section, 320 to 640 acres.  Very large, 1280 and up.

There is no hard and fast rule regarding acreage size and what a company will accept beyond their standard offer.  My rule of thumb above is generally based on drilling units being 640 to 1280 acres.  Obviously once a mineral holding surpasses 1280 single lessor units are a possibility.  Now with the industry transition to Cross Unit Laterals makes those numbers even less hard and fast.

Size isn't all that matters.  In an area scheduled for development, the leasing "hold outs" can have a negotiating advantage if their acreage surpasses what a company is willing to accept as open (unleased) acreage in a production unit.  Plenty of Haynesville "hold outs" with small acreages just got force pooled because the economic projections for the unit did not require having them under lease.  So how does one know who is leased in the area of their minerals?  Hire an independent landman.  Location can also matter.  Operators want to use specific surface locations for multiple wells.  If you have that land, and you know it, you would be in a very good position to negotiate.  How do you know if your land is a prospective surface location?  Hire an independent landman.

Now, having said all that, let me be blunt.  There is little leasing and little drilling going on across most of the producing U.S. basins.  NW LA is indeed fortunate that we have meaningful levels of both in a period of depressed oil and gas prices.  Lincoln and Jackson parishes are an anomaly compared to the rest of the U.S.  Margins are narrow for companies and budgets are tight.  In times like this my advise is to get a good royalty and the standard beneficial and protective lease clauses and be reasonable on bonus demands. Get professional help if you can afford it.  Experienced O&G attorneys normally have relatively modest charges to simply review a lease offer and make suggestions.  Expect to pay more but still a set hourly rate if you want that attorney to negotiate on your behalf.  Keep in mind that real O&G attorneys, as opposed to a regular lawyer, have probably seen other leases in the same general area by the same company or companies.  Knowing what those companies have accepted as terms in other leases makes their services well worth your dollar.

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Permalink Reply by lee on January 6, 2016 at 10:34

Guys, please stop, if the land woman see your posts it is liable to scare her off.  I'm perfectly happy to accept her offer on 4 landlocked acres surrounded by a timber company. I don't need any so called "professional help" I am fully capable of handling this one myself.

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Permalink Reply by Skip Peel - Mineral Consultant on January 6, 2016 at 10:41

lee, nothing on this website will "scare off" any land person or land company assigned to acquire leases.  If you don't want an open discussion you can contact members privately.  Once you start a discussion anywhere on GHS it is fair game for any member to comment on.  For 4 acres it sounds like a good offer so take it and don't stress out.

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Permalink Reply by Joe Aldridge on January 6, 2016 at 11:36

Make sure you include in the lease addendum that you are not conveying any surface rights. You don't want a pipeline of any type or even a power line running across your 4 acres.

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Permalink Reply by john goodday on January 6, 2016 at 12:11

How about a Section, Township & Range

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Permalink Reply by lee on January 12, 2016 at 9:14

As promised I received lease and draft in the mail yesterday.  However I am reluctant to sign lease with Kare Sue (also known as Harold Anderson representing Memorial) for the reason several of the landmen working for Kare Sue that I have met at a local tavern have informed me they have not been paid by Kare Sue in over 3 months, should I accept this draft? Anyone have any problems with them paying, if they don't pay their help why should they pay me.  Will they pay me when Kare Sue sells to Memorial or before?

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Permalink Reply by Skip Peel - Mineral Consultant on January 12, 2016 at 9:19

You accept or reject the lease based on the terms, not on rumors, no matter whether true or not, regarding Kare Sue.  Kare Sue is simply the middle man representing MRD.  MRD will end up holding your lease rights, not Kare Sue.

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Permalink Reply by Joseph on January 12, 2016 at 10:14

Memorial is a reputable outfit, I would not worry about the payment. They may be slow in issuing payments but that is nothing new in our business. They are the most active operator in Louisiana right now and very well hedged for the foreseeable future.

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Permalink Reply by lee on January 12, 2016 at 10:20

Thanks Joseph I will trust your judgment

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