General questions about San Augustine O&G activity welcome here.

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I'm getting calls daily, but only getting offers in the 2000 range. My acreage is chopped up, all over the county, but a good bit of it near town and in the North end. I hear that the Kardell is not doing as well as it was, but that it's still a heck of a well. I'm getting top lease offers from Petrohawk for $3000. When I called Fossil, who currently has it, they say they'll re-lease it. BTW, Fossil sold out to XTO, who was just bought by Exxon.
Anyway, I'm just looking for all the info I can get, to maximize return for my family members. I was in the business 25 years ago, so know a fair amount.
George---where you get info that Fossil sold out to XTO? When? Family has wells that Fossil is operator that family leased to and are presently still drilling. I would be like to know about it please
Google Fossil Resources, (I don't have their number handy), and call them. I was calling because of a top lease situation, and in asking about my leases, I was told it would take a while, becuse XTO has all the files now. Maybe they didn't "sell out" to XTO, but sold all their San Aug. leases to them. If you learn anything, please let us all know. I'm still trying to get info, but they are hard to get in touch with; nothing but voicemails, and they don't call back. Sometimes I just keep dialing extensions to get somebody to answer. Good Luck!!

What is the deal with an operator cutting you out if you don't make a deal with them. If you are in the proration unit, they have to make a deal, or when the well pays out, you get 100% royalty, instead of 20 or 25%. Am I wrong? Someone please educate me.
If you are dealing with Fossil good luck. Think of what reasons they might not be answering or calling you back and you are probably correct. If I could choose one company that I would not want to be involved with right now it would be Fossil from what I have heard, and what I have heard comes from pretty much the horses mouth. They have not sold to XTO for probably the same reasons they do not answer any calls. Kind of like looking up a CarFax report and seeing that the vehicle has been flooded, totaled, and caught on fire. Fossil = Run, and fast.

Just Saying
They may not have sold to them, but they did tell me XTO has their leases now. What IS their deal? What specifically have you heard? Please share!!
Here is the assignment from Fossil to XTO. I would think everyone will be ok that is now in the hands of XTO.
maybe time all go see lawyers
Mr. Hartley:

This is not entirely correct. If you are an unleased owner in the unit, and your tract is a drillsite tract within the unit, you will receive 8/8's of your royalty when the well pays out. At current pricing, even with the good wells you might be looking at a 2-5 year payout.

On the other hand, if you are an unleased owner in the unit, and your tract is not a drillsite tract within the unit, you stand to receive bonus, no royalty, no nothing. Many folks holding out for thousands upon thousands of dollars per acre are going to get a rude awakening when this happens to them...actually, it is already happening.

This doesn't sound right ogml, at least not in Texas. Unleased mineral owners IN a unit have standing and will get paid for the mineral production. They may have to be proactive and pursue their interest, but they'll be paid if they own the minerals.
j garrett is 100% correct. Your statements are, as ususal, I BELIEVE, to be misleading and an attempt to intimidate Texas particularly, San Augustine unleased mineral rights owners.
Review Finley Resources vs unleased mineral rights owners. [Docket 09-0252375]
All Texas mineral rights owners should periodically review John Mcfarland's web site. [] These wells are NOT taking 2-5 years to recoup costs!!

First of all, I don't appreciate being called a liar. If anyone is engaging in harmful dis-information, it is you. Secondly, kindly read the article below, which was pulled directly from the website you suggested everyone go to educate themselves:
By John McFarland on December 7, 2009 4:02 PM | Permalink
I have recently received several inquiries about the rights of unleased mineral owners whose tract is included in the boundaries of a pooled unit. There seems to be some general miss-perception about this issue.

A typical oil and gas pooling clause allows the lessee to combine separate tracts covered by separate oil and gas leases into a single pooled unit for purposes of exploration and production. This allows the lessee to treat the pooled unit as a single lease. Wells drilled anywhere on the pooled unit are considered to have been drilled on the leased premises covered by each separate lease in the pooled unit, and production from the pooled unit will keep the lease in force beyond its primary term, just as if the production were from each tract in the pooled unit. Production from wells on the pooled unit is allocated among the tracts in the unit, for purposes of paying royalty, on an acreage basis. If a tract in the unit comprises 25% of the total acreage in the pooled unit, then 25% of the unit production is allocated to that tract for royalty purposes, and the mineral owners in that tract receive their royalty on production from the pooled unit just as if 25% of the unit production were produced from the tract.

What happens, then, if the lessee has acquired oil and gas leases on only a portion of the minerals in a tract? Can the lessee include that tract in a pooled unit? If so, how are royalties paid to the owners of unleased minerals in that tract? Do the unleased mineral owners have the right to share in production from the pooled unit?

First, the lessee has the right to include a tract in a pooled unit if the lessee has leased any mineral interest in the tract. The lessee need not have under lease all of the minerals in the tract in order to include the tract in the pooled unit.

Second, unless the unit well is located on the tract, the unleased owners in the pooled tract have no right to share in production from wells on the pooled unit. The unleased mineral interests are not pooled into the unit.

Third, the unleased mineral owners still have the legal right to drill for and produce oil and gas from the tract in which they own an interest. The fact that the tract is pooled does not impair the unleased mineral owners' rights as cotenants to produce their minerals. They have the obligation to account to the other mineral owners -- in this case, the lessee who has a lease on the other mineral interests -- for their share of production from the tract. As a practical matter, this legal right may not be a solution, unless the unleased interest is substantial and the tract is large enough to justify development.

Under Railroad Commission spacing rules, any well drilled by the lessee on a pooled unit containing unleased mineral interests must be located a legal distance away from the tract contataining unleased mineral interests -- just as if the tract were not included in the pooled unit. Usually, this is 330 feet. For a horizontal well, the horizontal leg of the well must be located this distance from the boundary of the partially leased tract.

Finally, the owner of an unleased mineral interest in a tract included in a pooled unit may have the right to "muscle in" to the unit under Texas' Mineral Interest Pooling Act. This involves filing an administrative proceeding at the Railroad Commission and is a time-consuming and expensive process. It may not be practical for small mineral interests.

It is my experience that most operators prefer to have leases on all mineral interests in a pooled unit and will lease unleased interests if the mineral owner is amenable. The unleased mineral owner may have little bargaining power to negotiate favorable terms. Moreover, because of the formula used to pay royalties on each tract within a pooled unit, the lessee benefits from having an unleased interest in the pooled unit; the lessee does not have to pay royalties to the owner of the unleased interest even though the lessee gets the benefit of including the tract in the pooled unit. Some operators will take advantage of this and intentionally leave unleased undivided interests in the pooled unit.

Everyone always likes to site MIPA as their personal protection from being drained within a unit...but cases where the MIPA is successfully used are extremely rare (prove me wrong Cheerleader!), and as the above mentioned article states, it is very expensive. The Finley case Cheerleader sited had far more to do with getting Rule 37 waivers than unleased minerals.

In addition, my information on well payout is accurate. At current pricing, the James wells in the area might take 5-10 years to payout, and the HS wells are all over the map, with the best payout time being 2 years and the worst being never.




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