Replies to This Discussion

Permalink Reply by Ron Jon on October 24, 2009 at 13:29

Hard to say, depends on what is going on in and around the county. It's unlikely you'd see anything like Haynesville lease terms in KS.

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Permalink Reply by JHH on October 24, 2009 at 14:07

Ron Jon, thanks. I might suggest 25% royalty and a three year term. I've seen some good oil and some coal methane gas. You're right, nothing like Haynesville or Bossier. Can't figure out if they've discovered some new untapped minerals in Ellsworth County. The state's web site has been sort of helpful. thanks again, jhh

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Permalink Reply by DJG on October 25, 2009 at 14:07

They can laugh all they want. Worst thing that could happen is they say no. Or, perhaps, they negotiate something in between.

In my current research in E. Texas I am finding many recent contracts filed for 1/8, 3/16 or 1/6 royalty where the O&G initial terms were never challenged by the land/mineral owner.

I have also found contracts where the O&G Co did agree to 25% just across the street from their neighbors who took that initial offer at crappy terms.

I even found one property where 4 unrelated heirs had an undivided interest in 199 acres. 3 of the parties challenged the O&G terms and their individual contracts each were settled at 25% royalty. The fourth individual didn't challenge anything and signed away at 3/16. All of this on the very same piece of property.

Point being, don't be afraid to challenge the initial offers. The company is not going to walk away just because you asked for better terms. They might counter, or they might not.

Even if they say no, you're not going to be in any worse position for at least challenging their initial position.

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Permalink Reply by JHH on October 25, 2009 at 14:41

Thank you... very good advice. jhh

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Permalink Reply by DJG on October 27, 2009 at 2:01

Yes, it is different than Texas and LA, but it wasn't too long ago that the leases in Texas and LA were getting settled at 1/8th. I am still seeing recent contracts in TX and LA where the terms were not challenged and the O&G walked away with 3/16 royalty.

I'm not saying that it is likely that, at this point in time, any O&G company will accept 25% terms in Kansas. I do, however, suggest that JH's friend spend some time at the Ellsworth County Clerks office (either online or in person) and search out the records on recent lease contracts filed in the County. I'm sure that he will find many records that are settled at that 1/8 rate, but he is just as likely to find others where the initial offers were challenged and the land/mineral owner was able to negotiate a better deal.

Don't blindly sign this initial contract without first doing your homework. Perhaps you will discover that 1/8 is indeed the best deal being offered at this time or perhaps you will uncover other contracts that prove you can get more.

The point is do your homework and then don't be afraid to ask.

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Permalink Reply by Skip Peel - Mineral Consultant on October 27, 2009 at 3:04

Ditto, D. Gaar.

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Permalink Reply by Wildcat on October 27, 2009 at 10:56

Here is the website for Kansas Production Info. The CBM production is in eastern Kansas, the Ellsworth area is along the Central Kansas Uplift, known for arbuckle oil production, with some gas mixed in.

http://www.kgs.ku.edu/PRS/petroIndex.html

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Permalink Reply by Wildcat on October 27, 2009 at 10:52

That is really good deal for Kansas. I'm from the Ellsworth area, most leases are for $20/acre for 3 yr with 12.5% royalty. I have leased in that area for several years and they never give anything more then a 1/8th royalty. The success rate is not very good on wells so companies don't give more royalty. I've never paid more then $30/acre for a 3 year lease. I can't believe how crazy the money has made everyone, $500/acre in Kansas is a ridiculously good deal.

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Permalink Reply by Skip Peel - Mineral Consultant on October 27, 2009 at 11:01

It is relatively simple to review O&G leases recorded with the county clerk In Kansas or any state for that matter. Considering the long term implications of an Oil & Gas Lease, I highly recommend that members take this step when considering entering into a mineral lease. A small amount of time spent performing your own due diligence will help you decide just how ridiculously good the lease terms are and give you some peace of mind going forward.

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Permalink Reply by JHH on October 27, 2009 at 13:47

Thanks everyone. She settled... depending on the actual words on the lease and other conditions. jhh

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Permalink Reply by Wildcat on October 28, 2009 at 10:43

Did she really get $500 an acre? I'm just curious, because like a said before Ellsworth isn't known to be a prolific area for oil or gas. Maybe someone has discovered something worth while.

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Permalink Reply by JHH on October 28, 2009 at 22:41

I think so... unless she's feeding me a bad bag of popcorn. Have not seen the actual paperwork. Don't even know the company yet. Will H
hide and watch for now. thanks, jhh

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