Lease offer??????

We were offered $4,000 per acre and 25%. I have no idea if this is a good deal or not. Can anyone give us a clue as to whether this is something we should go forward with or not???

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Permalink Reply by Mac Davis on August 24, 2009 at 7:56
Be sure it's an experience OIL and GAS attorney.
Permalink Reply by E & E on August 24, 2009 at 3:21
Lanadan,

Yes, you know I agree with all you said. You have done your homework. Taz, you have to decide what is best for you and yours. But you do want to look at all angles and you don't want to leave out the going unleased option(angle). This is a long term investment plan, ie you will be held by production. I for one will not give away my gas for pennies on the dollar. IMHO I have to be a good steward of my land first and then my minerals. They will not give me all the protections to my land either as it has to do with Location, Location, Location. IMHO it would NOT be a good deal for me to lease. I have to add that my decision to go unleased is not for the faint of heart. There was a time that you would lease to "entice" o&g to drill in your unit, those days are gone when dealing with the Haynesville. Right now, I am dealing with 5 different landmen that hunted me down but I will always entertain offers. Earl's not happy about them cuz he feels like he just walked into a pawn shop even tho it is his own home. I will continue to walk barefooted with my dirt between my toes.....smiling the whole time knowing I am doing all I can to protect this precious land that I will leave to my children.

Earlene, the barefooted UMO
Permalink Reply by Dion Warr, CPL on August 25, 2009 at 3:11
Earlene:

For Chris'akes put some shoes on! You're tracking dirt in the house. Parker and Cat will lend you some Choos...
Permalink Reply by lanadan Ds3 on August 26, 2009 at 21:44
Earlene,

You go girl ! ! !
Permalink Reply by The_Baron on August 24, 2009 at 3:47
In LA, the prospect of receiving nothing if you don't sign really has to do with if the operator can make the unit pay off without your tract.

If enough of a unit will not sign, the economics can get bad enough that opertors will not drill. Then you get nothing. No drilling = no money. Its a whole different story in TX or even South LA (where units are rarly along section lines and can be easily manipulated).
Permalink Reply by Mac Davis on August 24, 2009 at 8:04
I'll state my opinion that if you're unleased, you should be prepared to be sure the O&G company isn't cheating you. There's more opportunity to cheat the Unleased Mineral Owner (UMO) than a leased mineral owner.

A UMO with 56 acres is more likely to find it worthwhile to spend the effort and money to assure they're being payed properly than a 1/4 acre UMO.

Others have pointed out that 1) A UMO may get nothing if the well doesn't ever pay itself off when a leased mineral owner will get a bonus and royalties. 2) If enough acreage doesn't get leased in a section, you may not get drilled at all.


(Before the gadflies pop in, 1) No, they won't always try to cheat the UMO. 2) Leased mineral owners may get cheated, too.)
Permalink Reply by E & E on August 24, 2009 at 8:38
mac,
I have to add my 2 cents, the UMO may have a tolerance to being shorted. You would have to run the numbers to see what is tolerable to you(if any). I have run the numbers and there is a certain happy number for myself as I will still come out ahead being a UMO. As you said, both the UMO and the RI may get cheated. I happened to have someone bring me their check stubs ytd to check out for him. He is being cheated on his interest and the amount of mcf's being reported. I told him I would have to read his lease to see if he was allowing certain....umm shall we call them discounts. And of course he signed off on his DO so that is a battle too.

Now to your first point 1, this is a different monster we are dealing with. I would agree with you if this was a cv or a hoss well. Point 2, this is where a person needs to do his/hers homework and know exactly what is what on every lease in their unit.

Earlene the barefooted UMO
Permalink Reply by Mac Davis on August 24, 2009 at 10:04
I think in essence you're saying that sometimes, even a partially cheated UMO may be better than an uncheated RI. I won't dispute that.
Permalink Reply by Elizabeth Porterfield on August 24, 2009 at 6:26
Can someone help us? We just got our first offer on our old family land (20 acres after it's been divided so many times!).

Seems are are close to the Encana wells they are about to start drilling, but that is not who contacted us. Description is S24-TN14-R9W. What would the fair market value be for the area in terms of bonus and royalty share? Can anyone let us know.

Elizabeth Woodard Porterfield
elizabethporterfield@hotmail.com
Permalink Reply by Skip Peel - Mineral Consultant on August 24, 2009 at 6:53
Elizabeth. Considering your location ( ~ 4 to 5 miles east of the most easterly HA wells being drilled) and your relatively small acreage, $4K/25% is not a bad offer if the lease is for no more that three years and will include the basic clauses that protect your interests as the mineral owner. In your township Encana has an HA well drilling in section 8, Forest in section 18 and Samson Contour in section 30. The Samson well is "turned to sales" but no completion results have been announced. If these are good wells, the value of your minerals could increase. If these are disappointing wells, the value of your minerals could decrease. If the lease contains the important clauses, I'd suggest you make a counter offer to see if you could get a slightly better bonus offer. I would think that $5K was an attractive offer for your particular circumstances. Good Luck.
Permalink Reply by Elizabeth Porterfield on August 25, 2009 at 2:52
Thank you, Skip. This information is very helpful.
Permalink Reply by Bar ISW on August 27, 2009 at 12:15
Skip. We are on 7 acres in S20-T17N-R12W and did not lease before the bust. In November 2008, we received notice that we were going to be forced pooled by Encana and recently received notice in July that Petrohawk is going to be working S22 in the Sligo field. Will we have a possibility of being contacted to lease now that all this activity is going on or is it a done deal? Thanks, Babs Roggero

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