Replies to This Discussion

Permalink Reply by inthestix on June 21, 2012 at 17:01

Not sure what Merit accomplished but it wasn't very much!  Small parcels scattered about in different sections.  Doesn't make a lot of sense??  Playing dumb and not telling landowners what the company they represent is wanting to do and having open ended leases will not get leases from landowners with large acreages. Try again with another broker!   The hillbillies up here in North La. aren't as dumb as you think!

Permalink Reply by Ed on June 22, 2012 at 3:09

to Inthestix: Not revealing the client is a common practice. It cuts down on blockbusters. Also, if peole feel the client is a large company with alot of money, then they would likely try to get more out of them. Smart, not dumb. They amount of thime on the leases is probably needed logistically to get rigs and actually drill such a large area. I do not thnk you are dumb yourself, just il-informed. Possibly they were testing to see how difficult it would be to lease. Negitiations on leases probably took too long. It sounds like some of the large landowners want the sky. Maybe the area was a little too ambitious. They probably didn't think people would be so unwilling to develope the minerals. The royalty was more than fair... and larger than most of the previous leases. Some majors do not want to give landowners 25 percent. They actually want to make the play profitable for the company taking all the risk. The question I pose is this.... do you want to explore for oil or not? If you want such a large profit, shouldn't you be putting up the millions of dollars to drill??? A fair point. There are plenty of ares to drill where the people are more reasonable with leasing. If you are basing your bonus and royalty levels on the Haynesville shale prices, then consider that many of those companies are out of business, and several of those areas are not even going to be drilled. It has to be a fair partnership based on the economics of drilling.

Permalink Reply by GoshDarn on June 22, 2012 at 6:34

Ed, thanks for your insight.  It's always good to read varying views.

You wrote that:  " . . . then consider that many of those companies are out of business . . ."

What companies are you referencing, Ed?  None of the operators who signed my family and friends are out of business, although some have been acquired by bigger companies (yet they're still actually in the O&G business and are paying royalties and are even still leasing in certain areas, last I heard).

Plus, you write:  " . . . It has to be a fair partnership based on the economics of drilling."

Yes, we agree.  So true.  But the key word is "fair."  Now, knowing what many long-term GHS members know, per a lot of folks having darn good radar as to which operators try to be sorta "fair" and which O&G companies are outright crooks (like CHK).

And there's no need to even mention Cobra.  We'll let the postal inspectors and the La. AG keep working on that case of fraud.

Hey, like many of us landowners know -- productive minerals in the ground aren't going anywhere.  In fact, just like land -- they ain't making anymore of it way deep in the formations.  So, if we don't get a lease now, we'll eventually get a "fair" lease one of these days.

We can wait. 

Thanks again for sharing, Ed. 

 

 

 

Permalink Reply by inthestix on June 16, 2012 at 16:25

Skip I haven't heard anything of Miller in T22 in Bossier?? I did hear them mentioned in Claiborne.

Permalink Reply by Ed on June 22, 2012 at 3:01

Permalink Reply by inthestix on June 22, 2012 at 16:43

Ed so if the royalty is fair in T22 then why did landowners in the area just a mile north in T23 get $300 to $400 an acre and 22.5% and why did landowners north of Benton and west of old Plain Dealing road get $ 500 an acre and 22.5%?     Seems you have some catching up to do!   I personally know some of these people and also know several people that got 22.5% 3years ago in T22.   So we should take less now because of the economy, right? lol

Permalink Reply by Ed on June 22, 2012 at 18:58

Possibly a different company leasing. I was aware of the leasing that was going on that was $300.00  to $400.00, but not for more than 20%. It is possible it is different company and they are unwilling to offer the higher royalty. The company that did, sems to have an area that they are leasing, to the North of you? Your prospect may be different geologically. All I am saying is that there people taking leases are not all connected. Companies may lease an area, then another company with different views leases the next. There is no blanket rule.

Well... a good eaxaple is the leasing that was going on down in DeSoto. Started out low....ran up very very high, then... at the end it was $1,000.00 an acre. Based on the price of gas what the company was wiling to pay.

I do see you point of view, though. I was only tring to give likely reasons for why things were going down the way they were.

Permalink Reply by Ed on June 22, 2012 at 12:27

Well, I should have typed, "out of that business", my mistake. Encana jumps to mind. Chesapeake... everyone reads the news. Minerals are not worth a thing without the vision of a company to search for them.

Minerals do move, they are liquids and gases. It is possible that one day someone will give what you deem as fair, true, but if the lands have already been leased over and over, what would cause the terms to improve each time it is leased? I have been very curious about that belief. I am just being objective.

Fair 25 years ago may have been 1/8th of 1/6th. What has driven that up is the unification of landowners to force the royalty up. At some point it becomes unattractive to investors, in certain areas. Do you see what I am saying? As energy prices waver or go down, why try to keep production away in the hopes that in 50 years you will get a better deal?

Respecfully.

Permalink Reply by GoshDarn on June 22, 2012 at 14:26

Ed, I greatly appreciate your civility and straightforwardness; but it seems that you may not fully understand the point of view of many of the landowners these days.

First, shale rock does not move anywhere.  It's hard rock.  And the NG is only released per the application of fracking (or per some other such technology).

Second, oil does migrate, but this concern is factored into the equation by the DNR and most savvy landowners.  Hydrology.  The water table.  Etc., etc. 

Also, many on GHS have had their families leasing their vast farmlands for quite a long time.  In my family's case, it's probably been over 100 years of inking deals in Bossier Parish.  So, yeah, we kinda have been educated to all of the various scenarios of lowball leasing, peanut lies, hbp, high-bonus HA shale, BO shale, SMK, BD, etc., etc.

Of course, we've also talked to some very experienced leasehounds and landmen (over the years) with many decades of work on their resumes -- and some who are La. respectful and spot-on honest -- and, to be blunt, we've also had our share of wet-behind-the-ears kid landmen who come around and try to con folks with lies.

Yep, it takes all kinds.

That said, to get back to your concern about what's best for our mineral estates -- the unvarnished truth is that the well-educated in my rather large family, along with some of our friends and also a certain number of GHS members who have hired the top O&G lawyers to be had in La. -- well, our lease terms and exhibit A's and addendums have greatly been improved compared to the horrible terms of only 6 or so years ago.

Hey, and yes -- we're talking land that's been leased repeatedly.  Happens all the time where we come from.  Over and over again.

In other words, when our families go all the way back to the very first Caddo Pine Island oil boom (around 1905) and then the associated leasing in NW La. and the ARK-LA-TEX -- we kinda have seen the shallow production and the deeper production and then the much deeper production and the parallel leasing come and go.

Yep, so we're always learnin'.  Gotta stay up to speed, Ed.

Take care.

 

 

 

 

 

 

Permalink Reply by inthestix on June 22, 2012 at 16:16

Amen Goshdarn!     I can understand some of Ed's points but leasing is not $50 and 1\8 and hasn't  been in years. Oil prices aren't 12 dollars a barrel now either are they Ed?  No landowner is asking for ridiculus royalties and percentages by any means, just something that is fair.  

When a landman cannot tell you what depths or zones that the company wants to drill it throws up an immediate red flag.  When they send a lease contract and a draft in the mail and want you to sign it and collect the cash in 30 days without contacting you personally it further adds to humiliation of just being a piece of meat and not a person who cares about the land that has been in their family for many years! When they call you with scare tactics like the price of oil is dropping and it may be years before someone else knocks on your door ( he should have told my friend - no

one calls you on the 

phone or sends you a contract and draft in the mail- because the guy never showed up at the door! lol) ,  

Permalink Reply by Ed on June 22, 2012 at 19:08

Seems likely. The client probably required a high level of leasing. those scare tactics are true though.

They may not have known the depth.

The depth was no secret for you... Smackover. No secret.

 

If you are local... I feel like they should have met you face to face. I would have.

Although, I have leased many people through the mail. But, not anyone local.

Most of the Area is in the midst of other producing (CV, Petit, Smackover) areas. But.... they either no longer have production or had dry holes. They are not being produced, and most of the last units were put together in the 80's. So how many years were gone before the next prospect knocked on the door?

I have never had the luck to lease my minerals. Of course I wish you all the best. If noone got wells, people in the business wouldn't have any work.

Permalink Reply by Ed on June 22, 2012 at 19:14

If your holdings are that vast, perhapse you will get special terms. Such as the Police Jury would.

I only want to present the fact that, not all landmen are bad, sometimes companies do odd things, and people need to be flexable. Companies tend to bend alot for the landowners. Yet, there is always a grumble that someone else somewhere got a better deal.

 

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