I was contacted this week about leasing property in the W. White survey off FM705. The initial offer is $400 p/acre bonus w/ 20% royalty. I politely countered with something more acceptable to me (if bonus is lowball, royalty will have to dramatically increase). I am not familiar with the company offering the lease. Another company (Red Hat) inquired about my A. Spear survey properties this week & an offer is forthcoming. Who else is getting contacted & what are reasonable expectations in the current market? In 2008, there was a wave of lower offers before the better offers came though. Could this be a similar situation?
I would move slowly and ask questions. Much of the leasing activity targeting the Haynesville Shale in NW LA and E TX is by "investors". 2017 leasing that I tracked was predominantly speculative dollars looking to lease areas adjacent to areas that received little or no drilling after the initial land rush and the severe downturn in natural gas prices. Most active HA operators are drilling where they can produce an mcf for the lowest cost. That means predominantly infill pad drilling and not much in the way of step out drilling activity. The major operators, at least those I track in LA, are likely to have limited interest in areas, no matter how prospective, that require investment in a comprehensive infrastructure build out. At least until such time as the price of natural gas improves.
There are some active "mineral" companies that are looking to put together enough acreage for a drilling program but they will not be doing the drilling. They will likely participate as a working interest. Getting a low royalty is key to being successful in that regard as long as their subsurface due diligence turns out to be accurate. Many will insist on an extension option or a longer primary term so they are prepared to wait out stagnant gas prices.
Thanks for the insight! I'm in no hurry to lease. I can't help but notice the activity increase in A. Spear. They're drilling again within 1.5 miles from me in Blackstone interests & trucks/equipment on roads daily. I understand your message totally.
I was contacted by Casey Jones (Landman) with the same offer today. He did not say what company he was with. The bonus is about 25% of my lease in 2008. I think I will wait.
Jim, if the offer was for a 25% royalty, that's as good as it comes for most folks these days. Of course the royalty is just one of the important lease terms but it's pretty much the top of the list unless there is some unusual situation. The bonus is well down the list of important terms.
No, the royalty was 20% and he wanted me to sign that day. He never told me his company name, and I can't find him on any media search. Not sure about the terms, I'm thinking about asking for a copy and send it to my lawyer. My last lease was in 2008, really bad timing for producer and me. They only produced one well near San Augustine, Tx. to the best of my knowledge.
I just had a offer to buy my mineral interest in the lister unit on 21 west offering 150 times my monthly check. that would take them 12.5 years to get back the money they are offering me. Sure is tempting as broke as I am. BUT I am thinking something big is coming.
Doug, suggest that you call them on it. Tell them the amount of your last check and see if they will honor the 150 times offer. It could be a fishing expedition. Most Haynesville/Bossier units will get more wells and possibly full development at some point in the future, the question - is that this year or ten years from now.
If you don't mind sharing the company name, I'll tell you if I am familiar with them.
Chloe, lots of us would like to know what Blackstone would offer. It won't hurt to call them back and see. I'm sure curious.
I got a call from them, it was Blackstone and XTO and they were offering $7500 a mineral acre. I should add I am in Keydets as well.
Mister Sunday, to put the offer in proper perspective fair value wise, can you tell us the royalty in your lease? The value of a net mineral acre depends on the lease terms, must importantly the royalty fraction.