Replies to This Discussion

Permalink Reply by Polly Ann Foote on September 15, 2010 at 8:57

Thanks for the comment on the land - that is my main concern. their lease authorizes 3-D seismographing and the reasonable use of one's land including employee housing - why should the surface owner have to donate their land? As in the Brammer ruling even owning all the underlying minerals does not protect you from having to lease if the whole section is unitized. We do not own all the underlying minerals.

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2010 at 11:49

I recently performed research and wrote a report for the owner of substantial acreage in Columbia County, AR. That mineral owner received a lease offer from Triad of $300/acre and a one-fifth royalty. Although I would caution that the size and location of a mineral tract are significant value factors, leasing companies tend to exhibit flexibility when a mineral owner is knowledgeable and is an experienced negotiator. The mineral owner mentioned had a well known and respected O&G attorney. The mineral owner has not leased at this time.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2010 at 2:51

Nope, wrong attorney.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2010 at 3:04

Don't know j.w. or c.c.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2010 at 3:38

I don't have all the pieces of the puzzle yet. If "they" have already leased 200,000 acres, it may be nearing time to start development activity which will reveal the operating company or companies and the prospect they are targeting. Then the cats out of the bag. Depending on the prospect being conventional or unconventional, royalty could go to one-quarter and do so rapidly. Bill Meany has previously mentioned that this is a conventional play not an unconventional or "resource" play. If speculation is correct concerning the bulk of that 200,000 acres being under 4 + 4 lease terms, owners of significant size tracts in desirable locations could well demand and get 3 year lease terms. The operator or operators have a lot of scheduling flexibility included in those 4 + 4 leases and they have to start drilling somewhere first. Though I did not keep a copy, my report included a copy of the unit application by Brammer and Anderson which contained the previously discussed blanket lease offer to unleased interests within the unit boundary of $250 and 1/5, if memory serves. That is the new minimum.

Permalink Reply by Joe Deerhunter on February 8, 2011 at 17:08

Hi folks,

I'm new to the forum but have been reading it for a few days since finding it.  Very helpful, thanks Keith for putting it up.  Anyhow I have lots to learn yet.

I've also inherited some mineral interests, mostly in Columbia county, due to an ancestor's fore-sight.  The old folks are gone now but I remember them speaking of the boom/bust cycles in that area, and now it looks like my turn -- a brother and I each got a lease offer from two different Triad landmen, they overlap but are different parcels and different terms.

I saw Skip's mention that if unitized, the area will have $250 and 1/5 as "the new minimum" -- which is more than I've been offered so far.  I've been advised by another to hold out for $300 and 1/4 royalty.  Some of our interests are over near Bayou Dorcheat and I read in the Magnolia Reporter that Bonanza Creek had several wells producing over there.

What seem to be the going rates now (February 2011)?

I've lived in the Magnolia area as a kid, but not for quite awhile now.  I'd appreciate advice regarding a good OG attorney to work on my side in Magnolia area, but expect the forum doesn't allow that kind of advertising.  Any PM would be welcome though.

Permalink Reply by Polly Ann Foote on September 16, 2010 at 1:49

les
did you see that comment by the independent landman who said Triad has offered a very large landowner in Columbia County $300 and a 1/5th?
polly

Permalink Reply by North LA on September 16, 2010 at 6:57

Do you know it's a good well or is it just speculation based off the increased leasing. Thanks.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2010 at 7:14

It's unlikely that the well has been completed since Mr. Meaney's post on the 7th. I believe. From his statements I have the opinion that a frac operation is planned. The frac design of this well will be a first and hopefully a successful attempt. This isn't the Haynesville Shale. The frac designs for those wells have no relevance for this well. I hope that Brammer takes their time and gets it right. Only after frac and flow back will anyone, including those drilling this well, know the productive potential. IMO, any change in lease offers is relative to the short time remaining to lease before the players and the prospect are made public.

Permalink Reply by North LA on September 16, 2010 at 7:41

Good points Skip. Little by little the news keeps getting better.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2010 at 12:44

Lease language concerning property descriptions and acreage affected most often use the master tract being the one that was last owned with verifiable good title by a single individual as opposed to attempting to list the actual undivided ownership interest of each lessor and current heir. The level of title review common to offering leases is quite low for good reason. Running title can be expensive beyond the wildest imagination of mineral owners. Cursory review is performed to lease. If and when a well is completed and productive, the cost to conduct a more thorough title review for creation of a title opinion upon which a division order will be based and royalty will be paid is acceptable. It is simple logic not to spend more than the minimum on title pertaining to leasing before the well is complete and production can be estimated. Savvy operators do not waste money on title work for unproductive wells.

Permalink Reply by R Adams on September 16, 2010 at 3:09

ok now i'm extremely confused. we have mineral rights only to properties in columbia from an attorney ancestor. quite a bit by our calculations. contacted by triad to lease all of it. haven't seen first lease yet but ya'll have me a tad concerned. what should we do?

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