Leasing is Like A Box of Chocolates

This Gas Leasing Stuff: For Every Move There is a Counter

As most of you know or have heard, Twin Cities has decided to only negotiate with individuals abandoning their previous policy of working with coalition groups. Beyond the additional issues of forsaking relationships which had been developed, and what seems to be a tendency to play loose with their commitments (a PR nightmare), as a private company, they are permitted to implement any policy they desire. But, surely they realize that for every move they make, there is a counter move by the party on the other side of the negotiating table – that being us, the landowner.

Twin Cities has decided to use market forces – a recession and depressed natural gas prices – to bring leverage in their negotiations with the landowner. We had the leverage when prices were soaring which allowed us to command a better leasing bonus and more favorable contractual terms. However suddenly, we find ourselves with an uphill climb – but does this mean we just give in and crown them as King? NO WAY!

My advice as a fellow landowner is to pick yourself off the ground and knock the mud off your knees and regain a second wind. Do the lease bonus prices suck – yes. Do natural gas prices suck – yes. Do 5 year leases with a 5 year option to renew suck – certainly. However, it’s time to put things into perspective and look at the big picture. This is indeed a marathon and not a sprint. If you have your eyes on that boat you want or even that retirement fund you want to fill then you lose. However, if you use long term vision and your goal is to enhance the livelihood of your children, or even your children’s children, then you will win. It’s that easy. Even Chesapeake Energy can’t compete with that.

"It's our new policy for 2009, and what we are doing is, we're giving the individual lessor the opportunity to negotiate on their own behalf for their own oil & gas mineral lease." THE STORY

Twin Cities
Director of Community Affairs
Clay Baskin

Don’t you love how he uses the word “opportunity”….? Last time I checked, they were seeking to lease our land. Surely the opportunity is on both sides.

Views: 21

Tags: cities, twin

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Comment by Lerret on March 8, 2009 at 9:30pm
Don't worry. There are places, boom and all where landowners were simply unable to make much headway. Kansas. There is a clique of producers from Wichita who have tacitly agreed among themselves to never pay over 1/8th royalty. Any "outsider" - say a person from Okla. City - offers a landowner 3/16th.... Those producers will stonewall the interloper, refuse to farm out or cooperate, threaten vendors and drillers who do business with them, etc. It is classic price fixing and the Feds should step in but it is so underground you cannot get them to break ranks. The Rockies, in many places, are about as bad. Be glad you CAN negotiate.

OTOH, as an "old head", please don't ask me to feel sympathy for folks who turned down $15,000 an acre and 20% royalties....Those are totally unprecedented and when you play that high stakes don't be surprised to "lose".

If you got 20% and $15,000 and price was $8 - 10 an MCF, you are going to make more on a good well than if you get 22% and $25,000 when prices have fell to $3-4 like they are now.
Just get what you can and demand NO POST-PRODUCTION EXPENSES - in the long run that makes you more money than you can imagine.
Comment by sesport on February 28, 2009 at 10:53pm
Dear Mr. Baskin,
Most appreciative for your kind response re. your 2009 policy. I will, on the other hand, maintain my policy that I will work with you through my coalition of choice. Just as your lessee has costs to consider, so do I. Just as your lessee has lease clauses favorable to it's E&P, my neighbors and I have lease clauses favorable to the quality of life in our community. I thank you for your time and consideration in keeping me posted to your current policies. Please feel free to contact us if there are further changes in your policy so that we can resume negotiations to the benefit of all involved.
Yours sincerely,
sesport
Comment by Sue on February 27, 2009 at 9:56am
Yeah, they are giving us such a great "OPPORTUNITY"! They act like they are not getting anything in return. I do not know who to trust anymore..........

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