Replies to This Discussion

Permalink Reply by Bernell McGehee on March 24, 2014 at 18:58

I added it yesterday, John Wesley, but it isn't in the right pew, so to speak.

I must have done something wrong.  I'll try to move it and if I can't I'll ask someone who knows about such things to do it.

Permalink Reply by Skip Peel - Mineral Consultant on March 25, 2014 at 0:53

Let me know if you need any help, Bernell.

Permalink Reply by Skip Peel - Mineral Consultant on April 26, 2014 at 2:42

This discussion has been moved to the Amite County Group.

http://www.gohaynesvilleshale.com/group/amite-county-ms

Permalink Reply by Bernell McGehee on October 28, 2013 at 5:12

Mark,

As to the $275/$300 price for a lease...

Most likely.

It is my understanding that when applying for a lease, EnCana testifies as to the highest amount paid for a lease, royalty %, terms...this amount is what they, basically, say they will pay anyone not leased at that point.

I am aware that in some sections EnCana has paid a little more than you are showing above and in some sections a little less.  Depending on the section this is located, this is probably the most your friend will be offered from EnCana...I'm not aware of independents trying to pay more for leases.

If/when independents get involved, it doesn't appear there will be any boost in prices.

Permalink Reply by mark edward marchiafava on October 28, 2013 at 5:22

thank you for being the only person to demonstrate the common courtesy of a reply.

Permalink Reply by Bernell McGehee on October 28, 2013 at 5:32

You're welcome. 

I suspect most folks hesitate to respond to specific circumstances...everyone's situation is different.

I intended to end my response above by saying that until independents get involved, I wouldn't expect an escalation in prices.  So far, I haven't seen any independents trying to get involved...at least not in Amite County.

Permalink Reply by Steve on October 28, 2013 at 8:21

I would wait for a much better bonus offer unless they are offering a 25% royalty. Things are looking better for the TMS now than ever. IMO

Permalink Reply by mark edward marchiafava on October 28, 2013 at 8:23

that was my thought, as well, but I keep hearing about how Encana will "force" you to deal with them on their terms. Who knows.

Permalink Reply by Bernell McGehee on October 28, 2013 at 8:46

You may want to check with a Mississippi attorney, but I can tell you EnCana has actually permitted units with the site set for drilling on property they didn't even have leased...that's how confident EnCana is that they only have to pay the prices they have already offered.

The other option, of course, is not to lease and pay your way down, but that's bigger bucks than most folks want to risk.

Permalink Reply by mark edward marchiafava on October 28, 2013 at 8:50

pardon my ignorance, really, but what do you mean by "pay your way down?"

Permalink Reply by Bernell McGehee on October 28, 2013 at 8:56

Well, you simply don't lease.

Instead, you pay for your part of the drilling/completion costs.

If you have 10 acres in a 1000 acre unit, then you'd only have to come up with about $150,000....up front.... and you get to keep ALL the income from your portion of the production.

Permalink Reply by Steve on October 28, 2013 at 16:17

Since most of the area is already controlled by Encana and/or Goodrich, I doubt you will see many competing offers that are needed to drive bonuses up substantially. But,you don't legally have to put out any money or "pay your way" if you don't want to and you don't have to sign their lease either. This is still a democracy and it is a shame landowners aren't better protected in Ms. You can decline their offer and just wait until they recoup their drilling costs plus the penalty imposed by state law and your share of ongoing well expenses for not signing a lease and then you get 100% of the oil value for your prorata share of the unit, after all the costs are paid. Rolling the dice is a tempting option if you are in a sweet spot and if you don't need the money and you are a gambler. There is a degree of risk if the wells do not payout enough, but, if they do your share could be substantial at 100% less costs vs. 20% royalty. I would have a qualified person evaluate that option for you before going that route. Each unit of 2000 acres has the potential to have 13-20 wells drilled in it, so don't underestimate the potential for considerable income either way you go. Personally I would sign a lease regardless of the bonus offer and  be happy with a 20% royalty to avoid the risks and  the delays and scrutiny required to keep up with your unleased mineral interest in the well. IMO.

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