Replies to This Discussion

Permalink Reply by jffree1 on August 18, 2010 at 14:27

Keith, I think you did really well on the bonus figure, for summer of '09. Are you sure you only got a 1/8 royalty? I haven't seen one of those in a really long time. The standard lease will very often say 1/8 but when you get to the "Exhibit A" there may be something that says 1/8 is replaced with some other figure like 3/16 or 1/5 or even 1/4. If you did really only get a 1/8 royalty... you should still do fairly well because the first well drilled there was a MONSTER! You are in a terrific spot.

My only advice to you (now that the horse is out of the barn) is to take all legal documents (especially conveyances) to an attorney you trust and have them reviewed BEFORE you sign them.

Permalink Reply by Mister Sunday on August 19, 2010 at 11:13

That bonus figure was actually spring of '10.

Permalink Reply by jffree1 on August 19, 2010 at 11:48

That was still a really decent bonus for an, as yet, unproved area. They may have had some idea, by then, how good the B S A-43 well was but we didn't.

Permalink Reply by jffree1 on August 19, 2010 at 11:45

For those who might be confused by my previous reply, Keith originally posted that he had leased for a 1/8 royalty. He later went back and amended his royalty (wish everyone could do that!) to 22.5%.

Permalink Reply by farmbrad on August 18, 2010 at 14:33

Keith,
A Spear A43 is where we have property, also. The survey has proven itself to be more than productive with the 1st well coming in at 30+million cu ft per day. Your bonus money was on target. Your royalty percentage is a little light compared to others I know of. Who knows, it might get you drilled faster though. I wish you well with your good fortune. You signed with an excellent company in Encana.

Permalink Reply by Mister Sunday on August 18, 2010 at 15:09

I looked at my lease, and jffree 1 is correct, I have a sheet called "Exhibit A" that puts my royalties at 22.5 % , I corrected it in my original post so anyone who reads it now will see that corrected figure.

Permalink Reply by jffree1 on August 18, 2010 at 17:40

Well, that is much better! I'd do like farmbrad suggested and just sit back and relax. You are in a great spot and 22.5% is a decent royalty considering that this area was not proved until just recently.

Permalink Reply by reallyoldguy on August 18, 2010 at 18:00

Keith, Im curious. Did you negotiate this lease out with EnCana? Or was this their initial offer?

Permalink Reply by Mister Sunday on August 19, 2010 at 11:11

This was their first offer. I had no clue what I was in for, thus I really didn't know how to bargain with them. I might have given them a little grief, but I'm sure they could tell I had no clue what I was talking about.

Permalink Reply by reallyoldguy on August 19, 2010 at 11:58

Keith: Im very glad to see that an oil/gas company is stepping up to the plate with decent initial offers! There are many companies that prey on people with little to no knowledge of a very complicated business. I think you got a very fair offer. That being said, in the future, if you ever have the opportunity to lease your minerals again; its ALWAYS a good idea to solicit a good attorney to help you with your lease. I think you can rest well! Sounds like you've got good terms in a VERY good prospect. Best of luck to you!

Permalink Reply by Mister Sunday on August 22, 2010 at 14:10

I wanted to thank you folks for the quick and pertinant replies.