Not sure if I'm in right place for this. Please correct me if I'm wrong.
1. We own 2 acres in Doyline and thought we didn't have mineral rights. Now we have been notified that the rights have reverted back to us and Pethawk is asking us to sign a 3 yr lease for 3000/acre with 25% royalties.
The original letter describes our area as Haynesville Zone, Reservoir A, in the Elm Grove field, INSOFAR AS HA RA SU89. They have been laying down pipe lina all around us and are planning on putting in a new well in our neighbors 20 acres soon.
Is this a good lease and what else should I check on?
I won't offer an opinion on whether $3k/25% is a good deal or not. But I will suggest you read the many leasing discussions for ideas as to things you might want to include in your lease. You are not obligated to sign the "standard" Petrohawk lease. You can ask for other terms. Some of the more popular terms include: No surface rights, cost-free royalties, limits on the length of time a well can be shut in, vertical Pugh clause, etc. Read up, and decide what is important to you, before you sign a lease.
Definitely try to negotiate a bit. We're in a different section, etc., and that can make a huge difference in the offer, but last year our first offer was for $1500. When our father (on his deathbed!) found out that his cousins were getting more he called and said bluntly that his cousins got $4500/acre and that's what he wanted too. They met his offer. So check with neighbors or anyone else in that area and make sure your offer is similar to theirs, and don't be shy about saying that "so and so is getting this much" and letting them know you'd like the same amount. The worst they can say is no, the best they can say is yes.
Thanks for all the responses. We are in the rural arean ot in Doyline but mail goes through there. Yes those are the right numbers, they have pretty much gotten leases on 80% and it is already going to happen soon. The major land owners are already leased and we are getting better then them. Petro wants to drill befor their leases are up next May. Yes, they are just tying up the loose ends now and I don't think they care if we sign or not. It want hold them up so they don't have to negotiate. We have decided to go ahead and sign. Hope we don't regret it lateer but, I do know the major land owners are only getting 18%, they just have most the land and are going to have the road on their land which will be even more money.
That isn't a bad deal on your lease, but what Henry said is KEY. You need protective clauses and addendums on your lease. All of the clauses in that lease are designed by the Pethawk legal team to work for Pethawk. Petrohawk is good about allowing the lessor to add some clauses to the lessor's benefit. No surface operations, Vertical Pugh clause, No transport fees clause, Shut-in limits -- all work for the lessor. Ask your neighbors with the majority acreage tracts if you can use a copy of their Exhibit "A" (--attachment to lease: has property description, addendum clauses, and SIGNATURE LINES.) Make sure your Exhibit "A" is referenced in the body of the Lease itself. Also, ask your landman to get you a recorded copy of the lease. The clerks office should put the Instrument File No. on each page of a recorded copy. That way you are insured that its all on record.
If you're not sure you own the rights, be sure your lease does not require you to "defend the lease" or however they word it. i.e. You don't pay any legal bills for them if there's a dispute about ownership. Actually, you should probably not agree to that in any case.
Definitely be sure that they have NO rights to access the surface at all.
Be sure there's no automatic extension clause.
Do not grant exclusive rights to do seismography. In fact, I'd say not to grant any blanket seismographic rights in the lease. If someone wants to do seismography, require them to negotiate with you each time.
If you do not get protective clauses you are asking for, you may be better off to be forced pooled. The amount they are offering you appears to be chunk change. Check some of the coaltions around you such as East 80 Oil and Gas Coalition.
As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More