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Comment by William C. Morrison on September 9, 2011 at 9:52

Skip, we used a lawyer this  time around.  No increase in royalties or payment but the ground rules are better.  In the past we never used anyone, just did the deal.  Almost all of the leases did not go beyond a year, except one and that was a low ball lease.  The folks ended selling 3/16s of the royalty for big bucks and a year later the well went dry, or sanded over but quit producing.  No rework in those days.  So in the end, the family did okay,  We had leased for $25 an acre and our neighbors got $2,500 per acre.  The up side is that the exploration companies keep coming back to us and that is a good thing,

Comment by Skip Peel - Mineral Consultant on September 9, 2011 at 5:30

Thanks, littleasy.  I work for land/mineral owners, not for the industry.  There really are landmen that do so, we are just relatively few in number.  And being honest on GHS oft times puts me in the middle between the two.  I take the industry to task where I think they are wrong but I don't hesitate to defend them from being demonized by mineral owners over misconceptions.  Entering into a lease agreement is an important business decision.  And a good lease gives both sides what they need to exploit the asset.  And reap the rewards.

Comment by littleasy on September 9, 2011 at 5:21

Yes, I agree but not everyone is as knowledgeable as Skip Peel.  I read with interest his suggestions on leasing for landowners in the Brown Dense prospect.  Honesty is a radical act these days.

Comment by Skip Peel - Mineral Consultant on September 8, 2011 at 13:32

Thanks, A.

Comment by Abington on September 8, 2011 at 12:46

Thanks for all of your replies. Skip, your last comment is a good story for land owners to not be so greedy. There are always a few big acreage people that seem to hold up us smaller position guys from getting our little share. Of course it can work both ways. But when the land man comes knocking, land owners need to be partners not stalemates. Overall it does seem to be a good system. And with internet sites like this, there is a bit less secrecy as more is on the table for all to see - good for fairness for all sides.

Comment by Skip Peel - Mineral Consultant on September 8, 2011 at 11:57

Only if they turn out to be in a productive area.  The other side of that coin are several companies that went bankrupt when their Haynesville Shale leasehold was revealed to be in a non-economic location and they could not generate funding for their Cotton Valley prospects.  Laymen tend to  embrace  perceptions of industry infallibility when such is not the case.  The industry constantly makes mistakes.  The successful companies just make fewer and have the ability to overcome them.  It is a high risk, high reward game.

Comment by Craig Wascom on September 8, 2011 at 10:59

Thanks Skip I can see how legacy positions in an explosive play could be a very nice coincidence.

Comment by Skip Peel - Mineral Consultant on September 8, 2011 at 10:49

Craig, much of the leasehold in the Haynesville Play is a coincidence.  Only Chesapeake and EnCana have units and wells indicating a pursuit of the Haynesville Shale prior to the public announcement (dating back to '06) by Chesapeake in the Spring of '08.  Numerous companies including some very well known ones like Petrohawk were unaware of the developing play until about that time.  They and other operators had legacy leasehold and were adding acreage targeting the Cotton Valley.  Those that happened by chance to be in productive areas were quite fortunate.  Nice coincidence.  Not all were so fortunate.  Devon for example.

Comment by Craig Wascom on September 8, 2011 at 10:29

I don't think there are many coincidences in the oil business just a lot of secrecy. Too much money involved.

Comment by Joe Aldridge on September 7, 2011 at 21:01

Abington,

Thanks for the report on the leasing. My guess is that its just coincidence. I think someone is anticipating something though.

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