Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 20, 2009 at 14:01

michah. It is a low offer and indicates that Chesapeake is not ready to begin development in SE Shreveport. And I doubt seriously that "lots of people are jumping on board" but landmen have to say something to put a positive spin on low ball lease offers. I suggest being cordial and up front with all landmen. I also like to mess with them a little. If you care to indulge in a little back and forth, ask the TC landman where the well will be located that will drill your Broadmoor minerals (I also have Broadmoor minerals). Unless Chesapeake has a well site, TC can not make a believable case that Chesapeake will be the operator of the unit. I like to tell landmen that I would definitely like to be leased but will wait until my section has a HA unit order and a HA horizontal well permit. And would be happy to discuss a lease with them at that time. By then they won't need a five year lease term. LOL!

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Permalink Reply by philpapa on August 21, 2009 at 3:02

Skip. I need a little help if you have the time. Where would I find a current map of what sections, townships, ranges have been released for drilling. Is there one that has the developed and un-developed noted in it? It has been said that I may be outside the core but there is land on all four sides of us that supposedly been released. I am in S3/T16N/R8W

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Permalink Reply by Skip Peel - Mineral Consultant on August 21, 2009 at 5:05

I am unaware of any such map that is available at no cost. Your statement "released for drilling" is unclear and confusing. Do you mean leased acreage? If so, the only way to ascertain that information is by a search of those leases recorded by the clerk of court for the appropriate parish. The fact that leasing is occurring in your area is not necessarily a guarantee of development activity to follow. North Caddo went through a leasing boom until the first wells were completed. Currently I am unaware of any interest north of 18N -16-14W. 16N - 8W has no HA Drilling & Production Units formed at this time. Don't get in too much of a rush. And a lot of landowners will be outside the core but still be in a second tier area of the Play. There is insufficient production on the eastern edge of current development activity to make a determination. Patience.

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Permalink Reply by philpapa on August 21, 2009 at 5:30

Thank you for your time.

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Permalink Reply by kittycatmama on August 23, 2009 at 4:22

We just got offered $4000 an ac. for southwest Shreveport off Colquitt Rd. and $5000 an ac. for north Desoto. We understand gas prices are very low and feel this may be our best offer for awhile. Opinions??

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Permalink Reply by Skip Peel - Mineral Consultant on August 23, 2009 at 4:33

Depends on exact location, total acres, proximal development activity, nature of the surface and what operators are active in the area (is there competition?). Those are the basics which can be ascertained on SONRIS. Other factors such as total acres under lease in your section and to whom require research of public conveyance records. The simplest of questions are, Is your section under HA Unit order and is there a HA horizontal well permitted or spudded in your section?

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Permalink Reply by kittycatmama on August 23, 2009 at 14:46

only 1 ac in north Desoto unleased and 1.5 ac. in southwest S'port (Chesapeake getting ready to drill).

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Permalink Reply by Skip Peel - Mineral Consultant on August 23, 2009 at 14:56

With 1 ac, you may be the last to be approached. That's okay because you won't have to put up with a bunch of low ball offers. With only one acre, you may not be approached until a well is about to be completed in your sections and the operator commences a title opinion/division order. Get good lease terms and don't be unreasonable on the bonus. What is reasonable? You should ask that question when the time comes. The answer now is not applicable to the future.

Permalink Reply by Mac Davis on August 23, 2009 at 13:54

taz, I hope I'm not duplicating anything here. I just skimmed the whole discussion a few times. I see you have only 3 posts, so forgive me if I'm stating what you already know.

You're talking $200,000+ bonus and potentially $500,000 to several $million over the life of the production. Don't skimp on the legal advice. I'm not one of the "get a lawyer for everything" crowd, but you definitely need to get a good lawyer to review your lease, since it's potentially so much money. Hire a good, experienced O&G lawyer to advise you. Be sure he has Oil and Gas experience, not just a shingle.

Pay a lot of attention to the lease terms other than simply bonus and royalty rates. Figure out lease duration, surface access, pipeline access, seismographic rights, vertical depths, Pugh clauses, warranties, automatic renewals, etc. Leases are a REAL minefield.

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Permalink Reply by Henry on August 24, 2009 at 0:43

Another piece of advice.... Your lease will likely live on beyond you. Your heirs will come to own it. Therefore, don't get too complicated. Keep it as simple as is reasonably possible. Ask yourself if something will make it overly complicated on the day in the future when a dozen heirs might each own a piece of the lease. As Mac says, a good lawyer will help you here.

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Permalink Reply by lanadan Ds3 on August 23, 2009 at 22:42

Good advice Mac Davis. I hope taz reads and re-reads it.

However, I still have a burning question. That is, just where is it chisled in stone that if a mineral owner DOESN'T sign a lease he or she will get nothing? All these responses seem to be predicated on that assumption, which is (in Louisiana, at least) is totally false.

All I am saying is that I don't think anyone should be pressured into taking the UMI option off the table.

Where are you E&E, barefoot UMI ? As is sometime reverberated in church " . . . can I get a witness ! . . . "

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Permalink Reply by taz on August 24, 2009 at 0:49

Thanks for the info - we are using a good attorney. Contracts are too complicated for me. I would never sign one without good legal counsel.

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