Replies to This Discussion

Permalink Reply by GoshDarn on June 7, 2012 at 4:57

Got me, inthestix.

So maybe there's something I don't understand.  Maybe that "concept" location is so unproven that maybe a top O&G attorney didn't want to second-guess a "first offer" -- if that's what truly had happened.  Or maybe any lease these days is better than no lease these days.  (But, I mean, that's really quite debatable since I certainly would never think that way.)

Hey, I'm clueless; but what do I know?  I don't own any land too near there (as far as I know) -- although we do have extended family who owns some land around Benton. 

Yet, if someone is happy with what they got, then good for them.  And, I mean, at least it wasn't CHK.

 

 

 

Permalink Reply by inthestix on June 7, 2012 at 6:07

Haven't you heard GoshDarn? Chk hit an oil gusher somewhere in Texas!  Or is that another big lie to make their stock rebound? Lol

Permalink Reply by Liz on June 7, 2012 at 6:32

I am now understanding that my initial post may have been misleading regarding the input from the O&G firm, so I would like to elaborate: My husband contacted the O&G firm and received a return phone call from them in which it was stated that Merit was a good company to do business with and that the terms of the lease and addendum as related to them by my husband over the phone were consistent with what they would expect in this area around Plain Dealing. As my husband was satisfied with this info, he did not pursue it further and did not send in the lease for further examination. Hope this helps to clear up any misunderstanding.

Permalink Reply by GoshDarn on June 7, 2012 at 7:07

Well stated, Skip.

The phrase caveat emptor isn't a perfect fit in this particular situation; but it's sorta close, IMHO.

 

Permalink Reply by Liz on June 7, 2012 at 7:08

Sorry, I stated O&G firm when I meant O&G attorney in previous post. The more I explain, the worse it gets. Previous post should have read:

"I am now understanding that my initial post may have been misleading regarding the input from the O&G attorney, so I would like to elaborate: My husband contacted the O&G attorney and received a return phone call from them in which it was stated that Merit was a good company to do business with and that the terms of the lease and addendum as related to them by my husband over the phone were consistent with what they would expect in this area around Plain Dealing. As my husband was satisfied with this info, he did not pursue it further and did not send in the lease for further examination. Hope this helps to clear up any misunderstanding."

 

Permalink Reply by Skip Peel - Mineral Consultant on June 7, 2012 at 7:13

Liz, now your O&G attorney is suspect.  At the least they are not familiar with current offers in your area.  If they know the principles behind Merit and are providing an off the cuff approval of the firm you may need to be asking about conflicts of interest.  I would ask for some facts about Merit that you can confirm independently.  There are some red flags here.

Permalink Reply by inthestix on June 7, 2012 at 8:34

Thanks so much for your input Skip. My first question to their agent was are you a flipper!  He said no but i have been suspicious!  I hope they prove me wrong!

Permalink Reply by Skip Peel - Mineral Consultant on June 7, 2012 at 11:58

Merit Energy Services is registered with the LA Secretary of State.  I posted their state registration on an early page of this discussion.  I expect they will record the leases they have taken in the near future.  I'll post when they show up in the public records of Bossier Parish.  Sorry if my previous post caused any confusion.

inthestix, energy companies that "operate" regularly engage land companies to take leases for them.  Those land companies receive as part of their compensation an overriding royalty interest in each lease they take below the maximum royalty their client designates.  As an example the client may not accept a lease with royalty greater than 25%.  Therefore the land company can offer a 20% royalty and get a 5% ORRI or 22.5% and get a 2.5% ORRI.  This is standard operating procedure.  I do not consider land companies working for an operator client to be "flippers".  Those lessees without a working agreement with a client operator are what I define as flippers.  There is a risk that those flippers may not find a willing buyer for their leases. 

Leasing is business and a negotiation process.  Every lessee must decide what they are willing to accept as lease terms.  Not every mineral owner gets, or deserves, the best terms as there is great variance in size and location of mineral estates. 

Permalink Reply by inthestix on June 7, 2012 at 12:33

So you feel like these guys are legitimate and are working for a large company?  What is  your opinion of a 30 day pay option on bonus money? I have heard that some people don't like it. The last time i leased i got a check when i signed the lease.

Permalink Reply by Skip Peel - Mineral Consultant on June 7, 2012 at 12:44

What you are referring to is a "bank draft".  The use of bank drafts is not unusual.  It can have several purposes.  First it allows for a lessee to perform title due diligence to confirm mineral ownership and second it gives a cushion financially for cash requirements and transfers.  Obviously those are both benefits for the lessee/land company, not lessor/mineral owners.  The form of bonus payment is simply another part of lease negotiations.

Merit is almost certainly working for a client that plans to drill wells (operate).  How large the company/client may be is unknown at this point.

Permalink Reply by GoshDarn on June 7, 2012 at 7:11

Yeah, inthesix.

That Hogshooter Wash play in OK and TX  is a darn catchy term, to say the least.  Wish I had land on top of that oily formation.  Maybe some of my Cherokee friends got lucky.

I bet those fat hogs don't get slaughtered.

Permalink Reply by Just want mine on June 7, 2012 at 8:40

Hello, I'm completely new to the leasing business and have a question or 2.  I was recently contacted by JB Land Service w/an offer of leasing my part of an undivided property.  The other family member involved, which has controlling interest of the property, already signed a lease w/JB Land.  I've been told by a friend that I would probably be better off if I didn't sign a lease since my portion of land is small and undivided.  I believe their point was if I wasn't under a lease the land company would still have to pay me if any production was made.  My question is would I be better off signing or not signing the lease.  I've read over their terms and they seem to be what's on the table for everyone, $300. an acre for 3 years.  I've talked w/neighbors in the community and they have been signed as well w/JB.  Any help and/or advice would be greatly appreciated!!  

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