Replies to This Discussion

Permalink Reply by Hunter on November 15, 2009 at 8:04

get a oil &GASLAWYER

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Permalink Reply by Checkmateking on November 15, 2009 at 9:34

They were paid much more in the Haynesville shale, which does not extend into Claiborne parish.

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Permalink Reply by Mac Davis on November 15, 2009 at 9:48

Why would anyone agree to ANYTHING that would potentially affect your land forever for $200 an acre?

Are you familiar with the lease terms to avoid?

In general, if someone is leasing, you'd want

No surface access
No pipeline rights
No seismic survey rights.
No right to locate a well on your property

They may need these rights to produce. If so, make them negotiate them separate from the generic mineral lease at the time of the need. If you do give such rights later, you can get very specific terms, such as the road or pipeline goes here, the exact dates at which certain things will be done.


No automatic extension clause
No "defend the lease" clause
An explicit "no warranty" clause

They may try to scam you with a phony check. (A "bank draft" or some such thing that is only valid if certain other things occur.) Get a valid check when you sign the documents.

All of these things are scams the leasing companies have pulled on the people they consider "dumb country hicks."

How many acres do you have?

I must reluctantly agree you probably need a lawyer. There are a LOT of snakes out there in the oil and gas and leasing business.

By the way, don't assume the lawyer knows or will negotiate a good price for you. The lawyer is there mostly to watch out for legal loopholes, not necessarily to negotiate the best price for you.

Plenty of folks took $300 per acre offers or lower and saw their neighbors get $20,000+ per acre. That probably won't happen quite that bad again, but it should make you cautious.

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Permalink Reply by zzblues on November 15, 2009 at 13:44

Thanks for the reply. Very informative. They are interestwd in 80 of 183 acres I have there, the 80 being in the unit. My old lease expires this month. They drilled(and dry holed) a well on the unit during fall of "08". People working the rig said they messed up the hole by getting 6 "collars" hung up. They left them and the bit in the hole they said.

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Permalink Reply by Mac Davis on November 15, 2009 at 15:27

For 80 acres, get a good lawyer.

However, it won't hurt to do your own research to get an idea of what you need to watch out for.

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Permalink Reply by papaw-Cb4 on November 16, 2009 at 12:30

zz We have property in R6 T19 that was leased in 2007 for $1300/acre and 25% royalty. I personally would not accept their offer. There have been some GOOd gas wells drilled in the area we are in. I'm fortunate that one of the wells is in one of the sections we have property. They are drilling in the Hosston formation thete and in the northern part of Bienville Parish. Good luck.

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Permalink Reply by Mac Davis on November 15, 2009 at 9:50

Is there "gas shale" under Claiborne county? It seems to be out of the Haynesville shale on the map I looked up.

SONRIS seems to be taking a weekend siesta right now.

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Permalink Reply by Checkmateking on November 15, 2009 at 11:01

No one in Claiborne parish ever got anything close to 20,000 and acre becasue there never has been nor will be haynesville shale leasing in Claiborne parish. Is 200 dollars an acre a good price in Claiborne? Maybe maybe not, I would worry about royalty percentages more than anything, there has been many a millionaire made near the Arkansas/Claiborne state line with prolific oil production.

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Permalink Reply by Cheerleader on November 15, 2009 at 14:37

IT GREEN,
I have been thinking about this issue all week. It would be most helpful if attorneys would register on this site, both Texas and LA. It would also be nice if attorneys would offer so many hours of their time, on a sliding scale for those folks who can show a financial need. This legal assistance could be on a flat fee basis for negotiating the lease. NOT A PERCENTAGE.
In the meantime, the best source for an oil and gas attorney is Martindale-Hubbell [www.Martindale-Hubbell.com] You can enter the appropriate category, city and state or an attorney's name you are attempting to investigate or locate. Most libraries will have a set of Martindale-Hubbell books. You can look through the Texas or LA book and look for oil and gas attorneys. It is very important to look at the rating. AV is the best. I personally would not retain anyone with less than an AV rating. But, that is my opinion and others may think the B rated attorney is OK. I would not hire anyone that is Not listed in Martindale-Hubbell. Also, another potential problem is a conflict of interest as so many firms have worked for the OGs.
Good Luck. I hope Keith structures a way for attorneys to register.

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Permalink Reply by jeff on November 15, 2009 at 15:59

I have been a landman for the past 33 years working the North Louisiana area. I have worked Claiborne Parish many times over the years and I am working a prospect right now in Claiborne and $200.00 per acre, 3 year term and 1/5 royalty is a very fair rate in Claiborne. I would like to comment on what some of these Oil and Gas Experts have said:

1st. "They were paid much more in the Haynesville shale, which does not extend into Claiborne parish."

You are correct in saying that the Haynesville shale does not extend to Claiborne Parish so why point out that they are paying "much more" in the Haynesville shale. Location does matter in the Oil and Gas business just like real estate. In real estate, a lot in downtown shreveport might go for millions, a lot in Southern Trace might go for $125,000.00 and a lot in Benton, la. might go for $5,000.00. The Oil and Gas business is no different, its location, location, location.

2. "Why would anyone agree to ANYTHING that would potentially affect your land forever for $200 an acre?" Well, again, if that is what it is worth, that is what it is worth. But, you cannot look at it as just getting $200.00 per acre. You have to look at it as a partnership with the oil and gas company. Most landowners do not have the money, or the know how to drill, or willing to take the risk to drill their own well. The Company has those things but does not own the rights to drill without the landowner/mineral owner. In your case, if you have 80 acres in a 640 acre unit, they are putting up at least $125,000 as your part to drill the well with no risk on your part. Everyone out here acts like the companies have no risk and hit oil/gas with every well they drill. We all wish that was the case. You even say they have already drilled and something happened to the well and they could not complete it. Well, that did cost money and did you lose any money? No!!!! You will get 1/5 of the production with no risk on your part. The Company will get 4/5 of the production since they put the money up and took all the risk. They must also get back the money they paid for dry holes and drilling mistakes like the one you claim. The bottom line is if the Company makes money, you make money and if the Company loses money, you still make money.

3. "Plenty of folks took $300 per acre offers or lower and saw their neighbors get $20,000+ per acre. That probably won't happen quite that bad again, but it should make you cautious." You are talking about something that has happened only a few times in the last 100 years. I will not go into why the people who got $300 did not get screwed, but I can say, over the past 33 years, that 95% of the time, the people who held out leasing the prospects I have worked, have ended up with nothing. This even happened last year when I was working in an area that was thought to be part of the Haynesville shale when a family with 2,700 acres in North Bossier turned down $5,000.00 per acre, or 13,500,000.00 in July of 2008. In November of 2008 they called me and said they would take the 13 million and the company I worked for said no, they would not lease it for $150.00 per acre. As of this date, those people have not gotten a dime and it appears they will not get Haynesville shale money as they are too far north.

I really don't have the time to go into the rest of the "good advice" you have been given but I will say I never mind if a landowner gets an good oil and gas attorney to help them with the lease but just make sure it is a "good" oil and gas attorney.

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Permalink Reply by Mac Davis on November 15, 2009 at 21:24

How do the people who turned down leases 10 years ago for $100/acre and 1/8 royalties and found out they're in the Haynesville shale in early 2008 feel?

You bring up a good point, and I think you're missing part of my point. You don't lease for the $200 per acre. You lease for the potential royalties that may come.

Actually, you might lease for the $200 per acre if the land is not where your home is, if the land is not worth very much per acre, and especially, if you don't give them generic surface rights. Make any surface use be for specific areas and limited activities.

It's also a lot more attractive if you have 80 acres of land that's "just" timber land or pasture land. It would be different if it's the 3 acres where you have your home.

If you've got 80 acres for $200/acre, that's $16,000 up front. You can afford to consult with a good O&G lawyer. I'd be very careful to not give them any rights or terms you don't have to. Be especially careful to not give them any terms that can bite you later, such as pipeline rights, defending the lease, etc. without carefully considering the potential consequences. The "standard" lease forms are designed to screw the mineral owner out of as many rights as possible.

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Permalink Reply by DJG on November 16, 2009 at 2:25

The items listed in the "lease details" section here are a good starting point:

http://www.gohaynesvilleshale.com/notes/Natural_Gas_Leasing_Basics


And this checklist from the Texas Land & Mineral Owners Assoc is invaluable:
http://www.tlma.org/oilgasleasechecklist.pdf

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