A Funny Thing Happened On The Way To Sign The Letter Of Intent
A funny thing happened on the way to sign the letter of intent..NOT!
I have been working since May for my area. I went door to door and talked to folks in my section about mineral rights and the need to collectively bargain. I had meetings in my living room then moved them to my yard when there were too many to fit into the house. Soon people from outside my section were joining our group and we had representatives from 8 sections.
I have been negotiating with the O&G Company for 2 months. We reached an agreement regarding money and royalty percentage relatively easily. The terms of the lease related to environmental protections, land owner protections and such took more time and meetings, meetings, meetings, emails, emails and more emails.
Finally last Tuesday we reached an agreement that, while a couple of us would have liked some stronger wording here and there, most of my group was thrilled with. People were excited and questions regarding when we sign a letter of intent became the topic of all emails and calls from the group.
Then came Wednesday evening when the land man called and said we need to talk. He came by and told me that most of 2 of the sections in our group (including the one I live in) may be held by production from a well in a completely different section due to a lease in 1955. Now, I must say, while the land man I have been dealing with is a tough negotiator, he was compassionate when discussing this and went so far as to bring me a copy of the lease the next day. It seems while researching section 28 they stumbled across a 1955 lease that encompassed land in section 30, 19 and section 25 of another township and range but that runs contiguous with section 30 in my neighborhood.
Thursday one of our group members spent the day at the court house trying to research and Friday I joined her and another member to trace the land from the point of the 1955 lease to the present. We are still researching as we must trace every land transaction in our two sections as well as trace the lease/well ownership from its inception in 1955 to the present.
So, Saturday morning I had to tell the people in the affected areas of section 25 and 30 that they may not be able to lease. Telling 50 families that their dreams, and mine had just effectively gone up in smoke due to a 1955 well was heart breaking to say the least. Some could not understand because they had leased before 2 or 3 years ago. What they did not know is many companies, lease flippers and land men only did a 20 or 30 year title search. This would not have picked up on a 1955 lease! Of course we were all sad to see the opportunity for such monitory gain slip through our fingers but the part that really saddened us is the probable loss of the land, environmental and land owner protections we had in the lease agreement I negotiated (they did not have that kind of stuff in 1955 leases).
Immediately after letting down so many people I began a series of meetings in my home that had been scheduled to sign letters of intent for the other members of the group not impacted by this unfortunate event. My friends and I (all of whom live in the area that may be HBP from the 1955 lease/well) worked from 12:30 PM until 10:00 PM Saturday explaining the lease, addendum and letter of intent to 63 families and organizing their signed letters of intent with their legal land descriptions.
At first it was hard to get through this due to our own feelings of grief and frustration. Many people asked us why we were continuing to do all of this work for those who were going to get to lease when we may not. The answer was simple, I started this to bring the community together, educate people and ensure people were protected more than they would be on their own. That has not changed. The ladies who were helping me volunteered early on to help and agreed the right thing to do was to see this through for all.
As the day wore on we found ourselves discussing how blessed we were even if this thing does not get worked out. Our community used to be a bunch of people who happen to live close to each other but did not really know each other. That is no longer the case. We now know each other. Many of us have developed friendships that will now last a lifetime. Some of us are pursuing business opportunities together. We have learned, grown and our community is now truly a community in every old fashioned sense of the word. By 10pm when we were able to turn our attention back to our problem and start categorizing the research done so far and planning for the next trip to the courthouse we were laughing (of course the strawberry lemonade Vodka drink one of the ladies made helped with that!). A funny thing happened on my way to sign my letter of intent. I did not get to sign it but I felt more blessed than the day before anyway.
I have been working since May for my area. I went door to door and talked to folks in my section about mineral rights and the need to collectively bargain. I had meetings in my living room then moved them to my yard when there were too many to fit into the house. Soon people from outside my section were joining our group and we had representatives from 8 sections.
I have been negotiating with the O&G Company for 2 months. We reached an agreement regarding money and royalty percentage relatively easily. The terms of the lease related to environmental protections, land owner protections and such took more time and meetings, meetings, meetings, emails, emails and more emails.
Finally last Tuesday we reached an agreement that, while a couple of us would have liked some stronger wording here and there, most of my group was thrilled with. People were excited and questions regarding when we sign a letter of intent became the topic of all emails and calls from the group.
Then came Wednesday evening when the land man called and said we need to talk. He came by and told me that most of 2 of the sections in our group (including the one I live in) may be held by production from a well in a completely different section due to a lease in 1955. Now, I must say, while the land man I have been dealing with is a tough negotiator, he was compassionate when discussing this and went so far as to bring me a copy of the lease the next day. It seems while researching section 28 they stumbled across a 1955 lease that encompassed land in section 30, 19 and section 25 of another township and range but that runs contiguous with section 30 in my neighborhood.
Thursday one of our group members spent the day at the court house trying to research and Friday I joined her and another member to trace the land from the point of the 1955 lease to the present. We are still researching as we must trace every land transaction in our two sections as well as trace the lease/well ownership from its inception in 1955 to the present.
So, Saturday morning I had to tell the people in the affected areas of section 25 and 30 that they may not be able to lease. Telling 50 families that their dreams, and mine had just effectively gone up in smoke due to a 1955 well was heart breaking to say the least. Some could not understand because they had leased before 2 or 3 years ago. What they did not know is many companies, lease flippers and land men only did a 20 or 30 year title search. This would not have picked up on a 1955 lease! Of course we were all sad to see the opportunity for such monitory gain slip through our fingers but the part that really saddened us is the probable loss of the land, environmental and land owner protections we had in the lease agreement I negotiated (they did not have that kind of stuff in 1955 leases).
Immediately after letting down so many people I began a series of meetings in my home that had been scheduled to sign letters of intent for the other members of the group not impacted by this unfortunate event. My friends and I (all of whom live in the area that may be HBP from the 1955 lease/well) worked from 12:30 PM until 10:00 PM Saturday explaining the lease, addendum and letter of intent to 63 families and organizing their signed letters of intent with their legal land descriptions.
At first it was hard to get through this due to our own feelings of grief and frustration. Many people asked us why we were continuing to do all of this work for those who were going to get to lease when we may not. The answer was simple, I started this to bring the community together, educate people and ensure people were protected more than they would be on their own. That has not changed. The ladies who were helping me volunteered early on to help and agreed the right thing to do was to see this through for all.
As the day wore on we found ourselves discussing how blessed we were even if this thing does not get worked out. Our community used to be a bunch of people who happen to live close to each other but did not really know each other. That is no longer the case. We now know each other. Many of us have developed friendships that will now last a lifetime. Some of us are pursuing business opportunities together. We have learned, grown and our community is now truly a community in every old fashioned sense of the word. By 10pm when we were able to turn our attention back to our problem and start categorizing the research done so far and planning for the next trip to the courthouse we were laughing (of course the strawberry lemonade Vodka drink one of the ladies made helped with that!). A funny thing happened on my way to sign my letter of intent. I did not get to sign it but I felt more blessed than the day before anyway.
Views: 88
Add a Comment
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Comment by LP on August 26, 2008 at 1:38 -
Kassi,
When the news of the Haynesville Boom really came out, you were the one who stepped up and said, be aware and informed. You provided essential information early on with TV interviews and brought some sobering caution to mind. Many of us have you to thank for so much, not the least of which is benefit of strength in numbers and the power of knowledge.
On this web site, more than anyone else, when you post…people go to read what you have said. Like the EF Hutton commercial: When Kassi speaks, people listen.
Your gathering of facts and willingness to share them has gained you this high regard and respect that you most certainly deserve.
For you to be among the ones who may not benefit from this earthly blessing is tragic. But you were able to continue on with your dedication to helping your neighbors with a smile and expression of optimism. I was there, Saturday and I witnessed this.
Your strength of character is an inspiration.
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Comment by MSE on August 25, 2008 at 12:39
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I read this somewhere else. does this apply? I did not write this but copied it from another blog on tigerdroppings.com where people are discussing the Haynesville Shale.
The '10 year rule' is nothing but a rule that a mineral servitude prescribes after 10 years of non-use. So if they have been using it the whole time, there is no period of non-use. If the well stopped producing tommorow they would still own the mineral servitude for 10 years from today.
Down here in South Louisiana there are certain companies and families that still hold tens of thousands of acres through production because they severed the mineral servitude in one whole piece and hold it even though the land was sold off in a variety of parcels.
The one way this is not the case: if a state highway or navigable waterway cuts across. Lets say you reserved 20,000 acre servitude, 10,000 on one side of the Red River and 10,000 on the other. Since the state owns the bed of highways and rivers then this is not a contiguous 20,000 parcel, but instead two 10,000 parcels. They would need some production on each, because production on the west side would not count on the east side of the river.
Apart from this, as long as the tract is contiguous then any well anywhere on it will hold production.
Note I said state highway, because parish roads are often just rights of way or servitudes and don't change ownership of the underlying land.
hope this helps
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Comment by shawn on August 25, 2008 at 12:34
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I'm so sorry Kassi where do you live
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Sorry to read about your troubles. It might be worth sending a demand letter for development or release to the company holding the 1955 lease. Also, you might want to determine if the ownership of the lease is the same in every section. It is possible if different companies own 100% of the lease in the different sections, there could be a division of the lease and each area would stand on its own and not be HBP. You would need to do some very detailed title work to determine this, but it could be worth it.
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Comment by Kassi on August 25, 2008 at 10:29
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Ray-Cd3: yes, they can go back further after the lease is paid. This is why it is important to negotiate a clause in your lease ensuring the O&G Company warrants the title not you. Funny, I negotiated that into our lease but they went all the way back in time first..lol
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Comment by r k on August 25, 2008 at 6:14
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Kudo's and we wish you the best. My mom may be in a similiar situation. Hard to believe some of the things that happened in the past. Many a rich man created by taking advantage of others and it is still going on today.
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Comment by RAY on August 25, 2008 at 5:05
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once a HS lease has been signed and paid off,
can they go back and dig up data pass the Thirty-year title research?
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Comment by Dorcheated A1 on August 25, 2008 at 4:21
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Kassi, I believe in Karma and you have good Karma. Something good is going to happen to you.
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Comment by milton A1 on August 25, 2008 at 3:59
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God bless you.
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Comment by Dion Warr, CPL on August 25, 2008 at 3:18 -
Kassi:
Sorry to hear about your trials and tribulations in the land business. These things do happen in a play that is proceeding at 100 miles per hour.
Generally, when you have time, one should compile a mineral history prior to researching title in any area in Louisiana. It takes some time and expertise to do it right, but it will save you situations like these.
Unfortunately, the speed at which this play has unfolded has resulted in just the situations you describe: 'Tax roll title', "Ten-year title", "Thirty-year title" are all the results of the ugly compromises being made for the sake of time. Many landmen and abstractors from TX and other states (or abstractors and landmen that are just new to the business) simply don't know or understand what has to be done here to prove up mineral title, or understand the value of doing a mineral history prior to starting title.
Good luck to you.
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