I am new at this and have a question. I have been offered a paid-up lease. Terms : 425/ac bonus and 21%.
Lease also wants :

"lessor.......herein grants, leases and lets exclusively unto lessee the lands subject hereto for the purpose of investigating, exploring, prospecting, drilling and mining for and producing oil, gas (including all gases, liquid hydorcarbons and their respective constituent elements) AND all other minerals, (whether or not similar to those mentioned) and the exclusive right to conduct exploration, geologic and geophysical tests and surveys, injecting gas, water and other fluids and air into subsurace strata, establishing and utilizing facilities for the DISPOSITION OF SALT WATER, laying pipelines, housing its employees and building roads, tanks, power stations, telephone lines and other structures theron to produce, save, take care of, treat, transport, and own said products, ......


Also , I am to bear 21% of costs of treating oil to render it marketable pipeline oil or, bear 21% of trucking charges. With gas, I pay 21% of cost of all compression, treating, dehydrating and transporting costs incurred in marketing the gas sold at the well.

Also has a phrase that lessee shall have free use of oil, gas and water from said land in all operations which lessee may conduct hereunder, including water injection and secondary recovery operations and the royality on oil and gas shall be computed after deducting any so used.

Also states lessee has the right and power to all or any part or formation or strata of land.

The landman states this the standard lease.

Is this standard?

Tags: lease, question, term

Views: 141

Replies to This Discussion

Simply answer to your question. Have oil & gas attorney review this lease before you sign. There are wording that could be a problem.
Thanks for the reply. I wish I had info on this website much earlier!
Joanne,
You need an attorney. Never sign a paid up lease. You need minimum $5000 per acre bonus; 25% royalty; you donot want to pay any expenses only taxes; delayed rental agreement[Gas company pays you something at the end of the anniversary of your lease [yearly] if they have not drilled and or in production [i.e 1/2 of original bonus];
shut-in royalty clause; depth clause etc. Also get all of your acreage into any well. This makes a big difference in your royalty check.
Cheerleader,

Those a pretty stout terms.

May I ask if you have received them in Shelby County recently?
sounds reasonable to me adam...lol
kj
My lawyer thought waiting wasn't a bad option as at this time gas prices are down and there seems to be a hugh amount in storage.

I heard a small acreage between Teneha and Timpson in Tennessee community was offered $500 / acre.
Waiting might not be a bad option with gas prices this low. But I will caution you, if you are waiting on the terms Cheerleader described, you might want to pick up a nice long book to help with the wait...I suggest War and Peace by Tolstoy.
If you are between Teneha and Timpson $500 acre is above market today. If you can get 22.5% royalty, vertical pugh clause, royalty free gas,3 years lease with no option and wording in lease ok with your lawyer sign and run to bank with money. Check NO Draft. waiting until market turns you are leaving money on table because the lease may expire before leases are with any higher bonus money. We had bubble last year that may never be seen in our grandchildrens lifetime. The terms of lease are the most important part of lease not bonus anymore those days are gone.
Having leased several properties in that area, I would have to agree with you for the most part. I do require an option (am willing to pay well for it), however.
adubu,if N/G got back to say 9-10 dollars an mcf over the next ten years do you believe bonus's would remain at the 300-500 dollar range? i do not. IMHO the bonus is the most important money one may get. i agree the terms of the lease are critical, but with such steep declines the bonus money may be the biggest payday one gets.
another point is when one signs a lease it "conveys" the minerals not reserved by the mineral owner to the O&G. so, how much would you be willing to sale 75% of your minerals for? would you be willing to take $300 per net acre to sell 75% of your intrest? how bout $500? doesnt sound very good when you break it down like that does it...
kj
joanne, those terms in the intro of this discussion are "boiler plate" terms. your lawyer should have some type of a contract of their own which they can fine tune to meet your specific needs. never, i repeat NEVER sign their contract. use one that your lawyer has prepared and customized to meet your needs. they will act like you are pulling their toe nails off with a pair plyers. that is how you know you are on the right tract. stick to your guns and get all you deserve.
my two cents worth.....
kj
Glad we can find humor in it.

Obviously they are excellent terms for the mineral owner. Just have to find the company that feels the same. Good luck on that.

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