We've gotten an offer from USG Properties.  Anyone else hearing from them? We're in North Caddo.

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USG has been underwriting several operating companies in townships 17N-16 and 15W and 18N-16 and 15W since early 2018.  First Comstock and then Trinity Operating.  This is the first I have heard of the company seeking leases in its own name.  Previously they have relied on land companies and speculators.  For that reason I suspect that this is not a wide leasing effort but more likely cleaning up some open acreage ahead of plans to drill.  If that is the case and you have a significant number of acres, you may have some negotiating power.  If you own a modest acreage, you might want to just make sure you have a good Exhibit A and try to get the best royalty fraction you can.

What do you mean by Exhibit A Skip?  And why this interest in drilling again?  Doesn't seem to be very high price as it was before 2010.  Just a thought as I am a restarter on this shale stuff.  But I do miss the early days of GHS as there was more a sense of comraderie in its early, early days.  

An exhibit "A" is an addendum to the standard lease form.  It can provide additional lease terms or override a clause in the standard lease.  Many standard forms might have a one eighth royalty clause.  The Exhibit A might have one that stated a one fifth royalty for example.  The "price" fluctuates according to certain factors.  In this particular case, there is no competition to drive up lease offers.  USG/Trinity Operating is the only company interested in this area.  The area is an outlier and not proven across the entire breadth of the area that is being leased.  Only those with large acreage interests would have any negotiating leverage with USG.  The early days are long gone and have zero relevance at this point.


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