Replies to This Discussion

Permalink Reply by Laurie on June 16, 2009 at 11:13

I am in Shelby as well and received an offer today of $300 (3yrs) and $500 for the 2yr option with 1/5 royalty from Family Tree. I was going to post here to see if that was fair as well but seems you have started a conversation about it so lets see what the "in the know" people think about these offers..

Permalink Reply by king john on June 16, 2009 at 14:42

i can only offer my personal opinion in this case. i beleive a few years into the future there will be another land grab. one just has to ponder the question "will we have cheap fuel forever?" if ones answer is yes then 300 might be a great deal for those people. if one answers no then the thing to do would to be to wait for improved market conditions. also i can add from personal experiance that the wells decline at such a rapid rate that after the first 5-6 months the royalty income is considerbly less than one might expect. in my opinion this makes the bonus/lease money all that more important.
kj

Permalink Reply by king john on June 16, 2009 at 14:51

also in the east texas group i revived a post from a year ago pointing out what some analyst thought about the value of mineral acres in the haynesville shale area.
kj

Permalink Reply by intrepid on June 20, 2009 at 17:38

i can add from personal experiance that the wells decline at such a rapid rate that after the first 5-6 months the royalty income is considerbly less than one might expect. in my opinion this makes the bonus/lease money all that more important. - kj


Good point to keep in mind when the leasehound says, "Remember, the real money is in the royalty."

Permalink Reply by RBH on September 27, 2009 at 5:16

I noticed that Family Tree had taken leases then they leased minerals to big guys. Make sure leasing with the land broker representing the driller/operator.

Permalink Reply by John Schmid on October 7, 2009 at 15:38

Got an offer yesterday from a major player in the area for $2,500/acre bonus to sign, 25% royalty, three-year primary term, and a two-year option. Is this a good offer?

Permalink Reply by king john on October 8, 2009 at 6:55

john,this offer seems worth considering given the leasing climate at this time. there are two things i can think of in regard to the terms you have mentioned that would improve your standing.
i would tell them to drop the two year option. if in three years your not drilled, you get full bonus again. second, i would put a pugh clause in , to restrict or limit to, certain specific zones. this reserves other formations for additional bonus money and leases with other companies. the pugh clause is somthing that is probably gonna make them flinch. at the very least it is a strong negoating tool . good luck john, and keep us updated.
kj

Permalink Reply by Adam on October 8, 2009 at 7:31

Thats an amazing offer considering what I have heard recently.

Where?

Permalink Reply by king john on October 9, 2009 at 0:10

adam, i have the impression you work within the industry, in the land department perhaps... how does your company react to pugh clause demands by mineral owners?
kj

Permalink Reply by Adam on October 9, 2009 at 1:53

HAHAHA...yeah I guess it is pretty obvious that I am "in the industry"

The pugh clause is built into our lease form. Not added to an adendum. It is in all of our leases. It gets scratched/replaced occasionally when a small landowner wants to be assured that his entire tract gets unitized.

A slight exception to that is we have purchased some leases from other companies that may not have had pugh clauses in their lease.

Permalink Reply by king john on October 9, 2009 at 3:49

thanks adam, so are you saying your company preffers to lease specific zones? are is the pugh working the other way in that it states the company has rights to all zones?
is your company an operator ? thanks in advance...
kj

Permalink Reply by Adam on October 9, 2009 at 4:57

Some clarification to start with...

When talking to someone "in the industry" a pugh clause means that at the end of the primary term, we will release any acreage that is not currently held by a well.

What you are talking about is what most people refer to as a depth clause. Some have started calling them horizontal & verticle pugh clauses. But this can be confusing as their names arent very clear as to what they are doing. They can be interpreted either way.

Now to answer you questions. No, we lease everything & at the end of the primary term, whatever acreage is not held by a well gets released.

As far as depths or zones go, I dont have a problem including a depth clause in the right situations. It is not something that I will always allow to be negotiated.

We currently do not operate wells in Texas.

• ‹ Previous
• 1
• 2
• 3
• Next ›
• Page