Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on January 15, 2010 at 8:28

The expiration date for this permit is 10/12/2010. It is a twelve month permit from date of issuance. The well may be spudded at any time prior to the permit expiration date.

Permalink Reply by Les Bamburg on January 16, 2010 at 4:44

Billy, as Skip said the drilling permit will expire in twelve (12) months if the well has not been spudded (drilling started). In many cases the operator will simply re-apply for a new permit if the original one expires and be assigned a new serial number.

I wouldn't worry too much as your section is in the heart of the Haynesville Shale play and Samson has been very active in the area. In fact they have drilled an excellent well one mile east of you that tested at over 19 MMscfd.

Permalink Reply by Sam Scott on January 19, 2010 at 13:34

Got some pieces ( small) in 171410 ; 171415 ; 171426 Have been contacted to lease at $4000/ ac with 25% royalty.
But they want a 5 yr with 5 yr option. Does anyone have some in site on this? Is anything Happing in these areas? Should I ask for a shorter Lease period? Thanks Sam

Permalink Reply by Skip Peel - Mineral Consultant on January 19, 2010 at 13:43

Sam. A 25% royalty is a must along with a "no cost royalty" clause and a vertical Pugh clause. $4K ain't bad for small mineral tracts but I'd ask for $6K and accept $5K. I would advise against signing a 5 year lease and a 5 year extension. That's not the norm. Counter with a three year term with no extension. If you want or need the up-front cash, I would have no problem with a four year initial term for a bump in the bonus. After the 25% royalty with the protective clauses I mention above, the dollars are totally up to you.

Permalink Reply by Sam Scott on January 19, 2010 at 14:06

Thanks, Skip. Do you know anything about those areas I listed? Have they already started to drill them? I have @ 30 properties @ 5ac total scattered around Shreveport & a couple in Bossier, what about an all or none deal?

Permalink Reply by Skip Peel - Mineral Consultant on January 19, 2010 at 14:16

No Sam, not yet. The closest current development activity is further south in !6N - 14W. As 17N - 14W is very urban, it may take some time and an operator will need to find a qualifying location for a well site. I'd advise against an all or none deal. Though it will take more of your time, the best terms will come for one at a time leasing unless the lots are close and in the same section.

Permalink Reply by Sam Scott on January 19, 2010 at 17:14

I see that they have drilled a well on Blanchard RD at Russell RD. Do you know what that section that is for? Also How do you know if they are getting the Gas from the properties you own or not? They can drill a mile in each direction from any well site.

Permalink Reply by Skip Peel - Mineral Consultant on January 19, 2010 at 17:56

Not off the top of my head, Sam. The members in the North Caddo Group can tell you and there is probably a discussion thread on the group page discussing that particular well. Operators submit a well plat detailing where they are drilling to get a permit and then must submit third party tests to the state confirming that they are drilling where they were permitted. Only mineral owners within the unit being produced receive royalties.

Permalink Reply by Sam Scott on January 20, 2010 at 13:52

Skip, you said I needed a "no cost royalty" clause and a vertical Pugh clause. What is that and how or what do I ask for.
Sam

Permalink Reply by Skip Peel - Mineral Consultant on January 20, 2010 at 13:58

Sam. Go to the Main Page. Look in the left hand column under "Quick Links" and click on "Leasing and Shale Information". Then click on the link for "Leasing Basics". Both clauses I mention are explained there along with other helpful leasing basics. Let me know if you have any questions.

Permalink Reply by Sam Scott on January 21, 2010 at 16:58

Skip, I did not find the information on the "no cost royalty" can you tell me how it works?

Permalink Reply by Skip Peel - Mineral Consultant on January 21, 2010 at 17:08

Sam. "No Cost Royalty" is short hand for "No Transportation Charges". Actually no transportation or treatment charges although most Haynesville wells require little if any treatment as the gas is "dry" and contains low concentrations of H2S. If you do not have a "No Cost Royalty" clause the lessee can deduct from your royalty for any treatment or transportation costs to render the gas marketable.

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