Replies to This Discussion

Permalink Reply by tony allen on August 10, 2013 at 11:27

GoshDarn, as you say ,it depends on an individuals situation. I have a very small position in Claiborne and I turned down the initial offer from SWN. Not because of the offer but they would not give me the same clauses that the other mineral owners had in their leases. I do not like the potential of 7 years before I get drilled if I ever do. I also think the 20% could change to 25% if any of the 3 companies drill a few successful wells. I am not planning to sign any lease. I will take Mr. Sanders route and participate with free use of their money and do a little gambling. If I had 150 acres I am sure I would look at it differently. I think the $150 is just a lowball offer that SWN hopes a percentage of the people will take and be glad to be given anymore money due to the fact that the play has not reached commerciality ..yet.

Permalink Reply by tony allen on August 10, 2013 at 17:04

GoshDarn,  I don't know if the will get posted, I broke the rules on another thread, SWN is offering less than many independents will pay for better terms. There is a stacked play along the stateline trend. Many of the small companies will lease with Pugh  clauses from 6k up, Now you still have the Cottton Valley. Smackover and LSBD rights.

Permalink Reply by GoshDarn on August 10, 2013 at 17:58

Tony:

Usually, the moderators will only delete posts which cross into personal attacks (and/or other blatant rule breaking).  And many times it's more than one GHS member doin' the mudslinging, so to speak.

But some threads are monitored more closely than others, and it's a fine line at times.

Anyway, it seems that you're doing your due diligence via properly managing your family's mineral estate.  That's the right thing to do. 

In one respect, SWN is clearly discounting the production potential in certain areas by dropping the lease offers so darn low.  It taints their prospects, if you ask me.  Yet as you know, from their point of view it's smarter to lease up vast areas at bargain prices, then later only specialize the focus once the IP's prove whatever locations.

I would advise to be civil to the landmen and clearly state that you're a reasonable man and that you simply want to sign a lease at better terms than the first offer.  Don't give 'em ultimatums or hem yourself in in a corner with too high of demands.  You want the landman to write you down as a future callback, not as an tough-guy UMI/UMO.

So be clear that you want a lease and that you want them to come back with a better offer in the future, being as you are not in any hurry to ink a deal.

Finally, I do know that some landowners, with a bit of decent acerage (in recent months) have been able to negotiate WLL up to better lease terms (than those that you've posted and which took months of work to negotiate up) . . . and that they could sign and which, to me, sounded somewhat reasonable.  Of course, there was drilling near the land and WLL was motivated to ink the deal.  Plus, the terms were probably what you yourself might agree to, also.

Yet having stated that, the location wasn't near you and you simply may be stuck with SWN (for now).

So, per your thinking and situation, it looks like you need to just wait it out until there's more drilling and/or more operators (if you get so lucky) . . . or until the offers eventually go up (if that ever happens).

As to the addendum clauses, getting favorable exhibits can be negotiated with some effort.  In general, per normal leasing with a motivated operator, the key landowner gotta-have clauses  tend not to be deal breakers if both sides keep cool heads and want to ink the deal.  And not all of the good clauses are as vital as some might think.  To me, the most important clause is the "free royalty clause" to avoid the cheating deductions that CHK is notorious for.  Some of the other clauses are nice to have, but for small landowners the key is the better royalty and no deductions and the Pugh's (kinda) . . . and dealing with a reasonable operator.  

Like I stated, there are no easy answers when it comes to this situation with SWN.

 

Permalink Reply by tony allen on August 11, 2013 at 6:21

GoshDarn, excellent advice. Thank you.

Permalink Reply by Skip Peel - Mineral Consultant on August 12, 2013 at 6:16

The majority of leases taken by multiple land companies on behalf of Southwestern Energy include lease extension clauses.  There was much discussion in the early leasing days about the fact that lease offers were for a primary term of 4 years with an extension option for 4 years.  Although some leases may have had slightly different terms, all that I reviewed and all that I heard of contained extension clauses.  SWN will either exercise the option or decline to do so allowing the lease to expire.  The cost to exercise the option was quite low, $150 - $250 per acre.  SWN will make the decision based on their data and experience. 

Permalink Reply by Polly Ann Foote on August 12, 2013 at 8:25

Our lease with SWN expired on August 11,2013, and they have not opted to exercise the extension.

Permalink Reply by obed w odom on August 12, 2013 at 8:45

Polly, could you give us the location of your property?

Permalink Reply by Polly Ann Foote on August 12, 2013 at 9:07

The lease included minerals in Townships 17, 18, and 19  and Ranges 18-22.

The option was $350 @acre for two years.

Permalink Reply by obed w odom on August 12, 2013 at 9:23

Thank you for the info.

Permalink Reply by Doug Boone on August 12, 2013 at 12:16

Polly. When did u execute your lease and what was the primary term. Thanks for the information.

Permalink Reply by XAM on August 12, 2013 at 13:23

Heard SWN is pulling out after the first of the year? Anyone else heard the news? Going around downtown Houston?  Maybe a rumor.

Permalink Reply by william mitcham on August 12, 2013 at 14:27

They are comitted to buying surface water from  01-2014 to 08-2014

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• …
• 8
• Next ›
• Page