Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2012 at 3:10

To bring the discussion up to date, Strata Acquisitions, LLC has filed about eighty leases with the Caddo Clerk of Court through May 24.  Not a significant number until you do sufficient analysis to recognize that Strata is one of at least four land companies taking leases in the same area.  Those private leases filed to date and the 6,000 acres of state leases lie in an area with many HBP acres which could be assigned from local operators and not appear in the public record. 

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Permalink Reply by H P Bryant on August 2, 2012 at 3:46

 Do you think that all this activity by Strata has brought their credibility up since all the "bad mouthing" they got back in JAN AND feb? 

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Permalink Reply by Skip Peel - Mineral Consultant on August 2, 2012 at 3:52

I think that Strata was an unknown in the early discussions because they had no history and had not filed any leases.  Yes, I find them credible now that I can associate their leasing with the other companies and they have nominated mineral tracts for the state auction.  The bottom line is, what are the lease terms?  A valid lease must be honored by whatever company eventually develops the minerals.  If you've been offered terms which you are willing to accept from Strata don't let the earlier discussion keep you from accepting.  Of course much more will be known in the not too distant future as to the target and the operator.

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Permalink Reply by Andrew on August 2, 2012 at 8:53

I agree with this. The party taking the lease is virtually never the operator, it is usually a broker who will take leases in their own name so as not to disclose the identity of the operator. Even the length of time the LLC has been active isn't necessarily a good barometer for whether you should lease with someone, because some brokers set up a new LLC for every client. Unless the identity of the operator is especially important to you, the main questions should be how good are the lease terms and is their money green? 

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Permalink Reply by GoshDarn on August 2, 2012 at 9:42

Andrew:

Considering the circumstances of the CHK scandal, the identity of the operator is, indeed, important to a lot of savvy lessors/landowners these days.

From decades of experience, those who mange mineral estates have woken up to the variations in operator follow-through. 

Yep, spend four years reading the posts on GHS, and many members soon realize that a reputable operator tends not to try to sneak bad clauses in the lease terms or outright lie about the important stuff.

GD

 

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Permalink Reply by Andrew on August 2, 2012 at 12:19

Right after I wrote that I started thinking about CHK...The problem I see is that often the broker won't give the identity of the operator even if the mineral owner threatens to hold out. In fact, if this is something that is important for you to know, your only recourse may be to hold out and wait for the operator to contact you.

How much land you have has a big impact on your negotiating leverage in this respect. If I had a majority of a potential unit I would insist on knowing the identity of the operator, but if I had a small interest and could not control who operated the well I'd be less likely to push on this if my lease had good terms.

On any lease I make my consent required before any assignment, or the lease is null (I've seen some people put stipulated damages in for assignment without consent as well). Having that option continues to give you control over who the operator is.

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