Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 20, 2014 at 3:37

willie, the way it normally works is that the oil & gas company decides where they want to drill and then contacts the mineral owners in that area to offer a lease.  In other words, they come to you instead of you going to them.  If there is leasing or drilling activity in the area of your mineral interest you may want to check to see if your ownership of the minerals is clearly documented in the public records.  An oil & gas company decides who they will offer leases to based on the conveyance documents in the Clerk of Court's records usually at a court house.  If your minerals are not located in an area where there is leasing and/or drilling chances are an oil & gas company would not care to offer you a lease.

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Permalink Reply by willie jacobs on October 20, 2014 at 6:34

Skip, I am unleased.  A gas well came in and started producing Feb 2012.  The well is located in the same Section, Township, and Range as my property.  I contacted the Operator who said that royalties will be paid as soon as payout is complete.   When will I  know that payout is complete,  ask the Operator.  Shouldn't the operator be giving me periodic expense reports and keeping me current with that kind of information? 

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Permalink Reply by Skip Peel - Mineral Consultant on October 20, 2014 at 6:56

willie, just because a horizontal well has a surface location in your section does not necessarily mean it is producing from your section.  It is common for horizontal Haynesville wells to be drilled from surface locations outside of the unit being produced.  If you will post your section-township-range location, I'll look at the wells.  If you are acknowledged as an unleased mineral interest in the well you should request, and the operator should provide, quarterly statements showing the well cost and the revenue to date.  If you don't request the information, they will generally not send it.  Once we figure out your specific well I can look to see what the well cost.  Be aware that you can lease at any time.  And that it is likely that you have more wells to come.

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Permalink Reply by willie jacobs on October 20, 2014 at 7:17

Skip, thanks for your help,  Well is Priest 13-11-11H  Serial Number 242667.  My land is N/4, NW/4,SE/4 of Section 13, Township 11N, and Range 11W

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Permalink Reply by Skip Peel - Mineral Consultant on October 20, 2014 at 7:36

The Priest 13-11-11H is a very good well from a production stand point.  It is however also a very expensive well - $15,564,483.72.  Add on LOE (Lease Operating Expenses) and the revenue required to equal the cost is more.  You should definitely request a quarterly report.  Do so by registered letter return receipt requested.  Take note that this is a good reason why it is better to be leased than unleased.  This well has generated some good royalty income for those who are leased, yet none to date for unleased mineral interests (UMI).  There is only one well drilled in this unit at this time though it is a fair certainty that there will be five or six more in the future.  How many mineral acres do you own in the unit.

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Permalink Reply by willie jacobs on October 20, 2014 at 8:37

If I decide to  lease my 25 more or less acres, any ideas

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Permalink Reply by Skip Peel - Mineral Consultant on October 20, 2014 at 8:49

If it was me I'd ask for a contact in the CHK land department and see if they will tender a lease offer.  I'd start now with the idea that 25 acres would be a good addition to a good unit that will see additional development in the near future (+/= 2 years would be my guess).  You're best leverage however will be when an alternate unit well is permitted.  You've missed out on the bulk of production from this well so there is no need to get in a rush to accept an offer that does not include a decent bonus and a quarter royalty.  If you put CHK on notice that you are a UMI interested in entertaining a lease offer they will probably test you with some modest offers but make their best offer only when a new unit well is imminent.  Be polite, be firm, be willing to be patient and play the game with them.  There are significant royalties in the future for this unit.

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Permalink Reply by Ettie Ruth Pate on October 23, 2014 at 2:44

We are negotiating with a land person as of now. Not wanting to give us as much as the two leases we have on other properties that was made several years ago. What would be a fair and decent offer. The land is in San Augustine County. XTO is the company and are putting a gas well on our property. Thanks for any feed back you may have.

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Permalink Reply by Skip Peel - Mineral Consultant on October 23, 2014 at 3:03

XTO is the only company of significant size that is actively leasing and drilling in San Augustine County as far as I know.  Therefore there is no competition.  XTO is the only game in town.  That is why their offer is less.  That and the fact that most of the industry sees a prolonged period of low natural gas prices.  The market for natural gas is significantly different than it was just a few years ago. 

Does XTO want to locate a drill pad on your property?  Or, are they saying your property will be included in a drilling unit?    The difference can be significant.  In what survey is your land located?  I think leasing is just beginning anew in your area so it's hard to have any other offers for comparison.  I consider lands prospective for the Haynesville Shale to be worth a quarter royalty.  The question is the bonus amount.  And if your land is a drill site then that will make a difference.

Permalink Reply by Ezra on October 24, 2014 at 4:31

Willie, my family also owns acreage in this unit and have not been contacted by Chesapeake. There is an existing shallow producing well, Fincher#2 (214995), that I believe includes your land. I had to track down the operator last year to receive suspended royalties. Are you receiving royalties on this property?

Skip, the 1992 lease on Fincher#2 has no "Depth Clause", should we obtain a new lease for the deep, horizontal well?

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Permalink Reply by Skip Peel - Mineral Consultant on October 24, 2014 at 4:35

Ezra, if the Fincher #2 is producing and the lease that it was drilled under contains no depth clause then it holds in force the development rights to "all depths" and you are unlikely to convince the operator to release the "deep rights".

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Permalink Reply by willie jacobs on October 24, 2014 at 11:34

Ezra, NO we are not getting royalties.  Fite has a shallow well (1500 ft or less) NAC RA SUG:MARTIN TIM. #2 in the area also.  No royalties from Fite since 2011.

Who is the operator?

If we are due royalties how do we get them?

Thanks

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