oil and gas royalty leases
hello all:
i welcome your help/input here -
within the last few days our family received an unsolicited offer from an oil and gas exploration company, stating that we owned certain acreage in nacogdoches county (to my understanding, consisting of a portion of the j.a. chireno grant, about 18 miles east from the city of nacogdoches), and offering to lease our "non-participating royalty interest" for three years, for $3400 per acre, with our family to retain a 1/5th royalty.
frankly, we were barely aware that we possessed this property interest and, in any event, are entirely unsophisticated in this arena.
so as we were trying to figure out what to do with this offer, meaning how to respond, i happened upon your internet site which seems to indicate that a well hit within the last week or so in or about this immediate area, and that the preliminary data looked promising.
so i assume this explains why the oil and gas exploration company contacted us and, more notably, why they seem quite eager to make a deal here.
so i barely know what questions to ask - e.g.:
how do we confirm whether the well that hit is within versus merely near our property interest?
in either event, what do we do/should we expect from here?
what if anything do we need to do to protect our "non-participating royalty interest"?
how should we respond to the outstanding offer (guessing we reject it if the well is within our property interest, but what if the well is merely near the property interest)?
and finally, assuming that the well that hit is actually within our property interest, how do we evaluate the worth of our "non-participating royalty interest"?
on behalf of my family, i sincerely appreciate any assistance any of you can provide here.
thanks.
i welcome your help/input here -
within the last few days our family received an unsolicited offer from an oil and gas exploration company, stating that we owned certain acreage in nacogdoches county (to my understanding, consisting of a portion of the j.a. chireno grant, about 18 miles east from the city of nacogdoches), and offering to lease our "non-participating royalty interest" for three years, for $3400 per acre, with our family to retain a 1/5th royalty.
frankly, we were barely aware that we possessed this property interest and, in any event, are entirely unsophisticated in this arena.
so as we were trying to figure out what to do with this offer, meaning how to respond, i happened upon your internet site which seems to indicate that a well hit within the last week or so in or about this immediate area, and that the preliminary data looked promising.
so i assume this explains why the oil and gas exploration company contacted us and, more notably, why they seem quite eager to make a deal here.
so i barely know what questions to ask - e.g.:
how do we confirm whether the well that hit is within versus merely near our property interest?
in either event, what do we do/should we expect from here?
what if anything do we need to do to protect our "non-participating royalty interest"?
how should we respond to the outstanding offer (guessing we reject it if the well is within our property interest, but what if the well is merely near the property interest)?
and finally, assuming that the well that hit is actually within our property interest, how do we evaluate the worth of our "non-participating royalty interest"?
on behalf of my family, i sincerely appreciate any assistance any of you can provide here.
thanks.
Views: 519
Replies to This Discussion
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Permalink Reply by reallyoldguy on
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Hi Taboot. THis is an extrememly hot area, at the moment. Ive got minerals located in the R. Totin survey which is located just to the South of the J. A. Chireno survey. Your situation is very similar to mine, in that, I had no idea I owned my mineral interest until I was approached by an oil/gas company to lease my minerals. The BEST advise that I, or anyone on this site, can give you is to contact a GOOD oil and gas attorney to help you negotiate your lease terms, if you so choose to lease your minerals. THere are many imporatant terms to be considered aside from your bonus money and your royalty %. Personally, given the production reports, of the wells in the Chireno survey, I would not lease for $3500/acre 1/5 royalty. You will be able to do better than that. Again, contact a GOOD attorney to ehlp you through this process. Hope this helps...
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Permalink Reply by reallyoldguy on
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Taboot: Also, it is always worth checking out the competition in the area. See if any other oil/gas companies have an interest in leasing your acreage and what they would offer you in terms of a lease. Your offer sounds in line with what EOG Resourses is offering at the present time. EOG does have a pretty good lock on the acreage in that survey. This being the case, other companies might not have as much interest as they might not have enough leased acreage, in the area, to put a unit together to drill a well.
There are very knowledgeable people, on this site, who are far better to advise you than I am. You'll find everyone, here, to be very friendly and willing to help. Knowledge is power!!! Feel free to ask as many questions that you feel you need to! -
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Permalink Reply by DJG on
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Hey Taboot.
Welcome here to GHS and congrats on finding out that your family has some owned minerals that you previously were unaware of.
Agreed with ROG above, that your location in the JA Chireno is likely an attractive one - due to the recent good news from EOG's Crane and Murray wells near there. That JA Chireno survey is a huge one. Do you know the exact location of your mineral interests within that survey?
Which company has sent you that original offer and what is the size of the tract?
Seems to be in line from what others have reported in the area, but you might be able to push for a bit more due to the the recent results.
Certainly would want to see them push the royalty up to at least 25% and would even try to push the envelope a bit higher if possible. Not likely that they would agree to anything above 25%, but doesn't hurt to ask. Plenty of other things to consider in the contract that are, in my own and many others opinions, oftimes more important than just looking at the lease bonus amount. Whatever contract terms you eventually agree upon with the O&G are the terms that you and your family will be locked in to for decades to come so be sure you do your homework prior to signing and get that all right.
Good luck to you all. -
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Permalink Reply by Ellis Sowell on
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I have 50 plus acres leased in Nacogdoches County that I know almost nothing about. I recently had an offer to buy the mineral rights for $5000 an acre. A portion of the rights may have a completed well on it. How does one value such an offer and who or where does one go to find professional advice? First time visitor. Thanks, Ellis
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Permalink Reply by ledlights on
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Ellis,
Many of the folks around here believe that you should not sell mineral rights unless you are desperate. I tend to fall in that camp.
I'll let someone else provide information about where to find professional advice. Your question comes up on a fairly regular basis around here. I have listed links to just a few related discussions at the end of this post. Ultimately a very critical part of this whole discussion is determining the value of your mineral interest. You need to know what current production exists if any from your lease, and probably most importantly you need to know what future prospects exist for your property. Although these mineral rights purchase offers come around periodically, they tend to intensify dramatically when hot prospects develop in your area. Southeast Nacogdoches County has gotten particularly hot lately for shale gas and you definitely need to learn if you are in one of those "hot" areas. Can you give us any more specifics about the area where your lease is? part of county? survey?
http://www.gohaynesvilleshale.com/forum/topics/unsolicited-offer-to...
http://www.gohaynesvilleshale.com/forum/topics/value-of-minerals-on...
http://www.gohaynesvilleshale.com/forum/topics/have-anyone-received...
http://www.gohaynesvilleshale.com/forum/topics/someone-recently-sho...
http://www.gohaynesvilleshale.com/forum/topics/2117179:Topic:46931?... -
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Permalink Reply by Ellis Sowell on
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Remijio Totin Survey A-56 and JA Chireno Survey A-17...Thanks very much, Ellis
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Permalink Reply by reallyoldguy on
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Ellis: Thats where my minerals are as well. Actually Im in the R. Totin A-56 and have a very small amount of minerals in the J. Walker survey, on the south side of the Totin.
Who are you leased with? When does your lease expire? -
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Permalink Reply by Ellis Sowell on
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EnCana Oil and Gas
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Permalink Reply by taboot on
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hello all:
thanks for your responses, much-appreciated.
to my understanding, our family sold the actual land, as well as the mineral rights, quite a number of years ago. what we're being told we retained is a percentage of the "non-participating royalty interest" in a 234 acre tract more fully described as follows:
All that certain 234.00 acre tract located in J.A. Chireno Grant SURVEY, A-17 in Nacogdoches County, Texas, more particularly described in Royalty Deed dated June 30, 1960 from Frances Denman, Loran Cornwell, Lousie Denman and FredTalbott (Tolbert), as Grantors to M.W. Sutton, as Grantee, recorded in Volume 290, Page 493, of the deed records of Nacogdoches County, Texas.
any clue whether either of the wells that just hit (crane and murray, i believe) are within this tract?
i doubt it, but thought i should err on the side of asking.
regardless, it sounds like you think we should consult a reputable oil and gas lawyer in or near this area; any suggestions in this regard?
oh, the company that contacted us is david w. potts land & exploration co., out of okie.
anybody ever dealt with them?
thanks for your ongoing input, and assistance.
taboot -
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Permalink Reply by ledlights on
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Ellis,
You've got some learnin to do. You are very close to several of the best looking (in terms of initial tested potential) recently completed Texas Haynesville Shale gas wells. It is highly unlikely that you will want to sell your mineral interest. -
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Permalink Reply by Ellis Sowell on
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You are right about the learning....the problem I have is that I am a long way from Nacogdoches. Is there a source to find out where my tract is in relation to the drilled wells? I have heard a rumor I might already be in a unit with a drilled well.
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Permalink Reply by reallyoldguy on
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Ellis: Contact an EnCana landman and ask him for a copy of the Tobin plat. This will show you exactly where your minerals lie within the surveys.
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