Replies to This Discussion

Permalink Reply by Joe Deerhunter on February 28, 2011 at 13:10

Polly - Thanks for the comment on the sulfur royalty; I saw the $1/ton offer on our offer and didn't know what to compare that with. I wonder how much sulfur realistically gets produced; this area isn't famous for sulfur mines, is it?

i don't know what to make of the last bit about "unaffiliated 3rd party charges".  We'll try looking that up in the Ark. Leasing Manual and the Lease  Negotiating Checklist, but it doesn't ring a bell at the moment.

My land man tells insists that he's paid a straight wage, no commission.  However you have to wonder where the land company gets its income from; you may be on to it with that "overriding royalty" idea.

(It's probably obvious to the old hands like Skip or the Baron but I'm still learning this stuff.)

Permalink Reply by Dan Arnold on March 3, 2011 at 4:19

Typically an oil and gas company will hire one or more brokers to provide field landmen to do the research and leasing in a new prospect. The broker and landmen generally refer to the company as the “client.” Typically these landmen are self employed and work directly for the broker. Because they are not hired or paid by the client, they may or may not know who the client is. The landman working with the title records in the courthouse does not need to know who the client is. Title work involves finding and documenting the entire chain of mineral title ownership for individual tracts of land. Leasing involves having a landman contact the mineral owners to arrange for the lease of the minerals.

 

Field landmen are paid a daily rate, it is the same rate whether they are running title, leasing, performing due diligence or other activities. Typically they do not get bonuses or other consideration for doing the job well. If they do the job well they get to stay employed. If they perform poorly, they get fired. The more experienced and versatile landmen generally get a higher day rate than the newer landmen, or those who only have experience doing one thing. Being a field landman means being self employed, unsure where or when the next job will be, who you might be working for and if you will have a job next year or even next month. It is common to be working away from home for extended periods. It is common to have a project that was expected to last a year, stop suddenly. It is common to have a project that was supposed to last three months, last for eighteen months. Landmen have to be flexible, self sufficient and versatile.

Permalink Reply by Joe Deerhunter on March 3, 2011 at 4:50

Thank you, Dan - I appreciate the clear explanation.  I think it helps to understand the position of the people we are dealing with as landowners, and maybe it'll settle some of the suspicions many landowners have.  It also gives me some more appreciation for the work my dad was doing when I was very young.

Permalink Reply by Polly Ann Foote on February 28, 2011 at 15:03

Joe:
The following is from the US minerals website:
The contract sulfur prices in Tampa, FL, began 2010 at around $30 per ton. The price increased to about $130 per ton in May and remained at that level throughout July. By November, the Tampa price increased to about $150 per ton. Export prices were slightly higher than domestic prices.

Is there a way to ask Skip or The Baron or Aubrey Sanders about the sulfur produced in conjunction with oil and gas?
Regardless a $1.00 a ton seems a rip off.

Permalink Reply by Skip Peel - Mineral Consultant on February 28, 2011 at 15:26

Above my pay grade, Polly.

Permalink Reply by Two Dogs, Pirate on February 28, 2011 at 18:10

I did a research project on H2S in the Smackover back in the early 2000's and thought that maybe following the money may be a good way to go. Sulfur was a dead end street. It would probably take a crap load of gas to produce a ton of sulfur. I would think that sulfur would be better mined by a different method in paying quantities. I am no expert in sulfur but would think that there is no money from gas wells that produce H2S. Polly you may have raised a good question with the rising price, who knows we may see $1000 a ton price somewhere in the future. I have never seen the price of sulfur being a bargaining point in buying an oil, gas and mineral lease. A hard mineral exclusion clause less and excepts sulphur because sometimes it comes up with the product.

Permalink Reply by riverrock25 on April 15, 2011 at 8:16

Polly:

Hello from the neighboring state of Louisiana.  Interesting discussions about the O & G industry in Columbia County.  I'm Joe Deerhunter's black sheep brother and am also interested in the leasing goingon's in Arkansas.  Thanks for your insights and information.  We haven't heard anything further from Triad, but hope that the rising oil and gas prices will bode well for us sooner than later.  Best wishes.

Permalink Reply by Joe Deerhunter on April 15, 2011 at 11:34

Hi Riverrock25,

Good to see you are on the forum.  Check your personal email for a message from me.

Hopefully all is good there.

Triad's offer is holding steady and is largely based on the amount of acreage offered for lease.

 

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