Replies to This Discussion

Permalink Reply by jffree1 on August 13, 2010 at 4:08

So, did you get a new and improved royalty offer?

Permalink Reply by Ray on August 13, 2010 at 4:10

We sent back exactly what you said (well my attorney did, with all sorts of other stuff).

Still waiting to hear back.

Permalink Reply by jffree1 on August 13, 2010 at 4:34

I wouldn't be expecting a reply or a lease signing today.

Permalink Reply by Ray on August 13, 2010 at 4:55

The landman agreed to the $1500 per acre and 25%. She wants us to sign today.

Permalink Reply by Steve Henderson on August 13, 2010 at 5:06

Regan, if you got 25% royalties, congratulations! We only got 22.5%, but that is better than the 3/16 you were originally offered. Our landlady over and over said Encana was only giving $1500 per acre. All in all, I think you got the best deal available today in A-17. Now, if they actually drill in the eastern part (3/4 mile north of 103 like our landlady said) and hit a motherlode, prices would go up rapidly. I wonder how close you are to that location.

Permalink Reply by jffree1 on August 13, 2010 at 5:47

Regan, we don't know what all the attorney changed or added to the lease terms. If you have a good understanding of what you are signing and the lawyer has explained everything to your satisfaction then I echo Steve... Congratulations!

Land/mineral owners should just NEVER take the first offer made by an E&P unless it far exceeds everything offered in the area to date. And then they should not ever rush on getting the terms of the lease that they can live with.

landownerPermalink Reply by DJG on August 13, 2010 at 5:07

Glad to see they did work with you on those improvements.

That said, do make sure that you take the proper time to have whatever document you might be signing first reviewed by a qualified Oil & Gas attorney. You mentioned that you have your attorney looking things over, so perhaps that is already being covered but just want to make sure that the person looking things over for you does have experiance with Oil and Gas contracts.

The details about what protection clauses to look for and how to have them worded properly is oftentime quite specific so the recommendation is generally to make sure that, whoever you have working for you to protect your interests on that front, that they have experiance in what to look for and correct, delete, etc in the contract.

landownerPermalink Reply by DJG on August 13, 2010 at 4:16

What is your rush to have this signed today? I imagine that your interests might be better served if you slow down a bit and get yourself educated a bit further about what protections you might want to have included in your lease. Lease bonus amount and royalty amount, of course, are important - but it is the details that are in the wording of your contract agreement that you will be living with for 20-40 years or more once this gets signed.

The landman may be pushing hard to get you signed now, before you have time to learn what it is that you need to ask for, but that is because it is their own interest to do so and in YOUR interest.

The gas under your dirt has been there for millions of years, so it's not going anywhere. You likely have one time to get this right, so take whatever proper time is necessary to get it done correctly.


Checklist from TMLA on what items to have added to your lease:
http://www.tlma.org/oilgasleasechecklist.pdf

Helpful hints from TMLA on negotiation of the lease:
http://www.tlma.org/jfhintsonlease1997.pdf

Permalink Reply by Ray on August 13, 2010 at 4:19

Well why not now? It's a three year lease, so I don't know how that would affect us for 20-40 years. We are only 1/8th interest, so they are going in with our without us.

What is the benefit of holding out?

Permalink Reply by jffree1 on August 13, 2010 at 4:31

Regan, in the Haynesville Shale there are very few leases which ever expire due to non-production. If you have read the other discussion concerning the pad being built in C. Hereford... drilling is going to take place shortly. Once drilling has begun, your minerals are effectively Held By Production until production ceases which could be decades, if ever in your lifetime.

The old paradigm, where the mineral owner signs a lease, gets some bonus money, lease expires, minerals revert to mineral owner... that is over, gone, never to be seen again... in the Haynesville Shale.

They are going in with or without you but they would rather have you leased. The royalty offer they made you was a stinker, even for unproved acreage.

Permalink Reply by Ray on August 13, 2010 at 4:52

Just when I thought I couldn't be more confused! :)

So, you are saying don't sign the lease and wait for a new evolution in leasing? Yeah, I really don't understand.

Permalink Reply by GoshDarn on August 13, 2010 at 5:03

Regan:

Interesting word that "evolution."

Since my family has owned land for so darn long, going back to the 1800's in La. and TX and since my grandpa probably started signing leases during the first oil boom, around 1916 or so -- and since I've been negotiating, signing leases for over twenty years . . .

I can say, without a doubt, that there never is any rush.

But sure. A landman (person) might wanna rush to "close" a deal. But in life, I've found that when someone is trying to rush someone else, especially when it's something so darn important as to involve a signature on a binding contract, that this "bum's rush" is usually a bad sign.

Just say "no." Take your time. Such an offer ain't goin' nowhere.

They need you more than you need them.

Don't rush.

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