Replies to This Discussion

Permalink Reply by Mike C. Miller on August 18, 2009 at 4:23

I was contacted by a landman wanting to buy my deep rights where Sandridge is holding the Cotton Valley by production. Offered $300 and 3/16 for three years. He was apparently working for NFR. I didn't counter. I'd be interested in hearing what others are doing in this area.

Permalink Reply by Larry Bailey on August 23, 2009 at 13:05

Guy's trying to get something for nothing. Just hold off; happy days are coming...

Permalink Reply by Mike C. Miller on August 23, 2009 at 14:35

I going to counter with a substantially higher demand.

Permalink Reply by Skip Peel - Mineral Consultant on August 23, 2009 at 14:44

Mike. Acknowledge the communications but put the landman off. There is little chance of getting serious offers until such time as development in your section/survey is imminent. If they are persistent just tell them that you will be willing to discuss leasing further when there is a drilling unit/well permit that affects your tract. Until that time, all you will get is exploratory offers. The last to lease will get the best offers as long as no proximal wells are completed and produce disappointing results prior to your execution of a lease agreement.

Permalink Reply by Mike C. Miller on August 24, 2009 at 13:46

Let me ask you this. I have co tenants on the tract in question who failed to get Pugh clauses in their leases. Their deep rights are being held by Cotton Valley production. I am concerned that the producers will simply redraw the lines for shale production around our 280 acre tract and because my co-tenants can't lease because their rights are being held by CV production, I will be frozen out and whoever gets leasing rights will just adjust the lease lines to avoid our tract. Your thoughts?

I'm also in the same situation in a 290 acre tract between Hallsville and Longview.

Permalink Reply by Skip Peel - Mineral Consultant on August 24, 2009 at 14:37

Mike. I am not sufficiently familiar with Texas mineral statutes to answer your question. I limit my land work to Louisiana.

Permalink Reply by Todd M. Baker on August 24, 2009 at 15:47

MCM:

I couple of things are at work here. If Sandridge owned your co-tenants deep rights, and NFR bought them from Sandridge, they (NFR) now own the same rights that you do, as your co-tenant. They can add this tract to the "unit" for the Bossier/Haynesville. You can be left out of production should you decide not to lease to the party that is granted operations. You won't be entitled to any production revenue unless the wellbore intersects your tract of land in the producing interval or comes within 437' of your tract boundary line at the producting interval. If there is encroachment and you are unleased, you are entitled to back-in after a payout penalty of usually, but not always, 200%.

You are correct that a new unit could be arranged that leaves your unleased minerals out all together but that scenario is not highly likely.

Although Skip is well versed in LA mineral title & regulations, as stated below he doesn't "mess" with TX. His advice above is risky in part. A unit can be formed at anytime without much hope for recourse for those unwilling to lease. Even if a better offer comes in from another company and you take it, the eventual Operator can treat your lessee the same as you. This does not mean that you shouldn't do a little bit of research and try to negotiate yourself a better deal as Skip suggests. All they can do is say NO, something most of us men have heard before, if you no what I mean. But that doesn't keep us from "asking" again.

The giant land grab is over and Texas law allows the O&Gs to use a "take it or leave it" approach to lease offers.

With your interest being part of a fairly large tract, I would think you have some room to negotiate as that is a good sized tract for much of Harrison County and NFR to find 280 adjacent & contiguous acres to replace yours would probably be difficult.

I hope this helps you some.

Todd M. Baker

Permalink Reply by Mike C. Miller on August 24, 2009 at 17:49

I'm meeting with my O&G lawyer Wednesday afternoon and we'll go over all of it. I'm a lawyer, but I don't do O&G. But this problem was the reason I was considering leasing. Unfortunately, I can't control my co-tenants.

Permalink Reply by jerry smith on August 27, 2009 at 5:48

do not lease to nfr i heard they have problems

Permalink Reply by Todd M. Baker on August 27, 2009 at 6:02

Please expound on your comment. "I heard and they say are the two biggiest liars on the planet".

Todd M. Baker

Permalink Reply by adubu on August 27, 2009 at 6:38

NFR brought SD deep rights in east texas including location in Harrison, Plano, and Rusk Counties total of 22,000 acres. The acres are all HBP thru the Taylors Sands of the CV, SD will continue as operator for surface thru CV sands. Price was $58 Million ($2636/ acre)NFR has rights below CV includind the Shale (Bossier and Hynesville) and below the Lime, etc. I have acres in gas unit Rusk county-Minden Field and very happy that NFR has the rights. Great to have another money pocket to drill. They are excellent operator and will aggressively drills some H shale and lime wells in my unit. They are selectively leasing deep area around these properties to fill out more units.