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Permalink Reply by olddog573 on July 3, 2008 at 2:11

i am now in the process of signing leases for two different properties in three parishes. the leases are with NO option to renew. i've already signed one a year or so ago and it's up for renewal this year at $75/acre. needless to say, i won't make that mistake again.

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Permalink Reply by Snake Stewart on July 3, 2008 at 2:25

Hello Ray, Generally speaking the 2 year option is built in to give O & G an out or in, depending on situation.If after three years no activity has taken place on your property , O & G has the option of not paying you for additional term. If they feel your place no longer has the potential it once had, they may not decide to pay for extra 2 years.If they do,they have saved themselves the price increase that would have taken place over the 3 year initial term( at least on these newer Shale plays).

Some tougher leases either have no option or give company first rights on whether they are willing to keep lease in effect after primery term at the new higher negotiated rate.

Most of the time the Primary is set at a price and the 2 year is around the same amount. In other words if you sign a lease the terms could be $10,000 3 year primary with 2 year option.This means that they would pay you $10,000 for first 3 years and $10,000 for years 4 and 5 (combined) if they picked up the option. I hope that helps a little.

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Permalink Reply by Snake Stewart on July 3, 2008 at 3:53

It is hard for me to even fathom what the drilling situation is going to turn out like in the urban areas,especially downtown.Whom ever has that responsibility ,of figuring out where and how, certainly has a full plate. Trying to allow extraction and keeping everybody happy is not going to happen. Heads are going to role come drill time.

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Permalink Reply by Randy on July 3, 2008 at 13:59

Much of shreveport and bossier has a lot of existing pipeline from the 80's and a lot of existing that railyards have used. The infastructure part of course is detailed and technical to hash out, but we have a head-start on that, much better than barnett.

Randy

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