Questions for Skip Peel and Les B.
Skip,
I have followed your posts through this website since I have land in Caddo Parrish. I am hoping you can give me some advice. I also have land in Walker County located in southeast Texas. I was contacted by a landman yesterday wanting to lease my property there for $50 acre and 1/6 royalty on a 3 year lease with a 2 year option. Obviously, this is not anything like what is being offered by oil companies in Louisiana, but my dad leased this property 20 years ago for $100 so I am thinking $50 is not appropriate. Today the same landman came back and offered no bonus on a one year lease with 1/5 royalty. I know you are probably not familiar with the area, but can you give me any advice.
Thanks!
Views: 192
Replies to This Discussion
-
Permalink Reply by Skip Peel - Mineral Consultant on -
Mary. I am unfamiliar with Walker County,TX. but considering that it is in SE TX. , the members in the E. TX. groups may have some idea of what type of development activity is underway. When I have a question about E. TX., I ask jffree1. I suggest that you do the same. Depending on the formation(s) that are targeted to be drilled, 1/5 may or may not be appropriate. Certainly not less. And yes, $50 or $100 is a low bonus offer for any play at current values. Without specifics, my only other comment is to make sure and get a depth clause in your lease. Good Luck.
-
Permalink Reply by Parkdota on
-
Skip, speaking of depth clause I'm of the understanding that many, many people did not have this in their CV leases or other mineral leases and lost out on the HA play. We signed before the big boom in 2008 and by the grace of God had the depth clause due to a smart attorney but my neighbor didn't and gets nothing from the HA. I'm guessing this has happened to many folks.
-
Permalink Reply by Spring Branch,mineral owner on -
Your neighor would still receive royalty income from the Haynesville. He/she just wouldn't have been able to lease the Haynesville rights seperately.
-
-
Spring, I had no idea that they would still get royalty income. I guess that means that the folks that didn't have specific depth clauses, etc. could still reap some benefit...which is good news.
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
Numerous "all depth" leases are still in effect after many years of "shallow" production. The lessees in those cases gets the HS benefits as to royalty differential and any bonus and the lessor receives only the royalty for the HS production at the original percentage in the existing lease.
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
I believe you are correct, Parkdota. At least I run across a lot of :boiler plate" leases that do not contain a depth clause. Some "standard form" leases do contain a basic depth clause limiting the lease effective to the deepest depth drilled and produced within the primary term plus 100'. "Pugh" clauses (vertical and horizontal) have been around since at least the early '70s. Those land/mineral owners who engaged the services of experienced O&G attorneys have had them for years. It is a shame that more lessors did not use a good O&G attorney when executing their leases. Or even consult an experienced landman. Many leases taken for the Cotton Valley Play that preceded the Haynesville Shale Play not only lacked depth clauses but were for royalty percentages less than 25%. A real loose - loose that should be a cautionary tale as far as taking the first offer that comes along, considering any royalty income as "found money" and forgoing the services of professionals.
-
Permalink Reply by DJG on
-
It's not just those older leases that are lacking those clauses as there are many new leases filed currently where the land/mineral owner has not done their homework and/or hired a good O&G attorney to help them with the process. Just check the county clerks office for any given county/parish over the past few weeks and you'll find leases that were accepted for less than 25%. Sadly, I often see leases in my searches of E.Texas leases where the royalty is accepted at 3/16 - now that is really shooting yourself in the foot.
Another very important point is to make sure that the wording of those clauses/addendums that your are wanting to add to your lease actually are worded so that they do indeed offer the protections that you are wanting. I'm seeing many current leases that at first glance appear to be adding the No Cost or Verticle Depth addendums but when you look at the actual wording of the agreement there are serious holes where the land/mineral owner might be horribly surprised down the line that they did not actually have the wording strong enough and, in fact, their lease language did not actually end up protecting those right.
Moral of the story? Do your homework and get a qualified O&G attorney to make sure that you are protecting your interests properly.
-
-
Skip, embarassingly enough I signed before the 2008 boom and figure to have lost out on millions.....which is why I'm trying to learn so much on this site and others. They are drilling and we'll make money, but I wish I'd made more on the front end. I can't get mad though as one of my companies buys real estate low and sells high....I can't be a hypocrite I guess. lol
-
Permalink Reply by Skip Peel - Mineral Consultant on
-
There is nothing to be embarrassed about but hind sight being 20/20 it can seem that way. If the Haynesville Shale can teach a lesson to a new generation of mineral owners, we will derive some measure of benefit. IMHO, the moral of this story is that mineral interests are of significant value and what has come before historically now has no meaning. It's a new world that only requires a basic understanding of mineral management by interest owners who accept the value and the nominal cost of professional council. There are a lot of mineral owners who saved a few hundred dollars in professional fees and lost tens of thousands if not hundreds of thousands of dollars in potential mineral income. Can we say, "Penny Wise and Pound foolish"?
-
Permalink Reply by Jon, landowner on
-
Parkdota, --I also am in 14-14 but have 68 acre left that is not leased ,close to Parkdota plantation---my question who was your attorney
-
-
Jon, my relatives handled it and I have no idea what his name was/is. I can find out though if you need someone. I live out of state and had no clue what was going on, although it was well before the 2008 boom. So, I just let them do whatever, which in hind sight wasn't a good idea seeing as how I should have educated myself more...which is what I've tried to do since.
-
Permalink Reply by Mary Wood on
-
I have heard they have had a big hit in Richards, Texas which is on the edge of Walker County. I need to do some additional research to see how much leasing has been going on. I want to be sure this isn't someone in early trying to take advantage of people like they did in Louisiana. I think many people leased their land in Louisiana at a reduced rate not knowing what was coming. I know Walker County is not the same, but I want to make a good decision. I do very much appreciate the input from everyone on this site. It has been helpful.
Support GoHaynesvilleShale.com
Top Content
Blog Posts
The Lithium Connection to Shale Drilling
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
ContinuePosted by Keith Mauck (Site Publisher) on November 20, 2024 at 12:40
Not a member? Get our email.
Groups
-
Franklin County, Texas
9 members
-
Cass County, TX
120 members
-
Rusk County
97 members
-
Livingston Parish, LA
34 members
-
San Augustine, TX
386 members
-
Miller County, Arkansas
27 members
-
Sabine Parish, LA
455 members
-
South Caddo Parish Group
440 members
-
Natchitoches Parish
400 members
-
Bienville Parish, LA
244 members
© 2024 Created by Keith Mauck (Site Publisher).
Powered by
