Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on May 20, 2010 at 3:15

Not without location and acres.

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Permalink Reply by Shaleeee on May 20, 2010 at 3:19

Skip - T7 R11W

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Permalink Reply by Shaleeee on May 20, 2010 at 3:21

Would not accept my edit - but it is 80 acres

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Permalink Reply by The_Baron on May 20, 2010 at 3:27

With 80 acres, be sure you have a good pugh clause. Also may want some surface protections..

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Permalink Reply by Skip Peel - Mineral Consultant on May 20, 2010 at 3:35

Shaleeee. 7N - 11W is just too far off the HS map at present to have a handle on. It appears to be outside the Haynesville and Bossier Play boundaries on many of the blob maps (doesn't necessarily mean that it is/there may be too few data points). All tracts should have a no cost royalty and vertical Pugh if possible (you never know until you ask/demand). Tracts which are in excess of 5 acres or cross section or township lines should have a horizontal Pugh. I prefer to include no surface use clauses for tracts 40 acres or more or that have significant potential surface conflicts. In general, the more you load up a lease request with clauses that inhibit the lessee, the less they are inclined to give you top dollar on bonus and royalty. The number of lease clauses that will most likely be rejected out of hand are too many to list. Though 80acres is a sizable tract, lessees will not consider restrictive lease language as they might for 200 acres and up. And location is so important to value.

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Permalink Reply by Shaleeee on May 20, 2010 at 3:45

Thanks to you both - Makes sense that 80 acres in an un-proven location would not carry a lot of bargaining power.

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Permalink Reply by Skip Peel - Mineral Consultant on May 20, 2010 at 3:50

At this point, I would suggest checking the Day Book at the Clerk of Court's Record Room on a periodic basis. It is helpful to know what companies are leasing and where. Then it will not be a surprise when they show up on your door step. If you have your lease language worked out you can give the landman a copy and tell him/her to base their offer on those terms. Just showing that you are knowledgeable and expecting to negotiate is a good first step.

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Permalink Reply by Mac Davis on May 20, 2010 at 13:37

Do you live on the property, or is it ag or timber land? Consider this in terms of wanting to restrict surface access. Consider what the economic value of "undisturbed" land is. Will oil wells or roads have economic impact in the future?

Are you near the North or South border of the section? This is where they'll tend to want to locate the well, if it's a Haynesville shale well. They'll probably care less about surface access at the edges than out in the middle of the section. This might matter in terms of 1) Do they care about surface access? 2) Will they pay extra for surface access? 3) Are they likely to want to put a well on the property and how do you feel about that?

Don't forget that you don't have to lease. You can go UMO. 80 acres is probably big enough to make fighting over UMO payments worthwhile. Or wait for better prices and offers in the future.

I'd rather have surface access be a separate item. i.e. you have access to this specific area for this specific use at this specific price, instead of "do anything you want anywhere at no cost." I don't know if anyone's likely to sign such a lease.

Of course, you'd want as short a lease as possible, with no automatic renewal.

I see they formed new units in 12/2009 one township North, so there may be some interest in the area.

Looking at my Dad's lease, probably 9 out of 10 of the terms in the lease are what I consider "BS" terms they threw in as "let's see if he's a rube we can screw over" terms. I don't know how hard they'll fight for the terms. You might want to specify a higher than normal distance away from the house for any surface activity.

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Permalink Reply by Shaleeee on May 20, 2010 at 15:23

Thanks Mac, property is in the southwest corner of the section - my concern is for the cattle and hay field - not a large herd but none the less need care. Would a separate surface lease be an addendum as mentioned in another thread or a different lease? Would not having an automatic renewal be a deal breaker?

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Permalink Reply by Mac Davis on May 20, 2010 at 21:45

GD probably knows a lot more about this than I do. His negotiating ideas sound good.

I'm not familiar with what terms are and aren't being accepted now.

In 2008 just before the "gold rush" began and bonus payments were only a few hundred per acre around Shreveport, they basically never flinched over "no auto renewal, no surface rights, 3 year" leases on 5 acre or smaller plots. Lease terms got even easier after the gold rush started and payments boomed. I'm not in the business, but I never heard of anyone "small" having any trouble getting those particular terms. I haven't had much if any direct contact with anyone being leased outside the central area of the play after the top blew off of the gold rush.

Personally, I'd be more concerned about lease terms than the size of the bonus payments. Bonus payments are immediate, lease terms are forever.

With an 80 acre "corner" lot, you may find that it's harder to get a "no surface" lease. I can't tell you whether they'd be willing to sign a lease with surface use limited to a defined area.

Be very careful, they will try to scam you with the terms on any lease. It's part of the "code of ethics" to try and cheat you. The "standard" contracts are filled with "shaft the elderly country rube" terms and conditions.

Don't let them pressure you. Don't let them think you're eager. If you don't lease now, your gas doesn't disappear. If it's a good location that's going to pay good royalties, someone will be back later.

GD, my mom was a nurse trained at a charity hospital, too.

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Permalink Reply by Jack Blake on May 21, 2010 at 2:45

You can get "no surface use" and you want it so you can then get plenty more money for pipeling ROW agreements. Jack put in his initial mineral lease that they could put a single P/l, but it could only be used as a gathering line for wells IN MY SECTION (knowing almost certainly that if they put a gathering line on my land it would transport more than just gas from a well in my section). Jack was cypherin' things out ahead of time. I wish I knew all then that I know now!!!!!!!!!!!!!!!!!
Jack should be a lease negotiator as he has learned alot and a lawyer is not really 100% interested in getting you the best deal no matter what you pay him. He has other things to think about, like who to charge his drinks and lunch to and who he can get a percentage from for negotiating a lease and really all he is doing is getting you to sign so he can get money that should have all gone to the land owner. (Jack Blake could be wrong, but ask yourself what you think of any Lawyer you have ever dealt with or talked to).
It is good to be in the corner of a section as far as getting paid for pipeline gathering lines on your land (because your land borders three other sections) so you have a better chance of getting pipelines. Jack Blake was paid for a ROW down two sides of his land (he has only 20 acres) for gathering lines.
The landowner has to ASK-ASK-ASK THE EXPERTS and have sense enough to weed out who knows their stuff and who is blowing smoke. LEARN-LEARN LEARN and you can manage your HS blessing wisely!
Jack Blake has spoken-(DISCLAIMER) he could be wrong, but this is how Jack sees things.
GHS cried Jack Blake!

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Permalink Reply by Shaleeee on May 21, 2010 at 2:46

GD & Mac - I really appreciate your responses and very good info and advice - I am one of those get your ducks in a row type people and need time to digest what I hear - there are some rumblings about leasing in the area (nothing definite) But one thing you are both right about is that is seems I can make no decisions until there is a decision to be made. Nurses rear good sons! Thanks

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