Replies to This Discussion

Permalink Reply by tc on February 27, 2013 at 4:55

The question you need to ask yourself is much do you want oil that pays 30 to 1 vs. NG.  Devon was very hot for the TMS and now they are leaving, so don't assume that if you play hardball that the oil company will give in, more oil plays are being "discovered" everyday in the US and companies have more options for their drilling $$$.  I am assuming you are happy with the majority of the terms on your current lease.

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Permalink Reply by 33r27ki34d1em on February 27, 2013 at 5:35

Forget the signing bonus!! You want the well to be drilled!

 

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Permalink Reply by Bigfoot on March 5, 2013 at 12:42

Damon is correct, in my opinion, you want the oil; therefore, you want a new well.  I believe the days of not having a lateral are more than likely over, so, at some point you might as well go-for-it.  One point that was made above is extremely important to me.  These guys may want to drill to a deeper strata and that's what I believe you really want; however, since that lease has been in effect for 5 years, I would bet that you or at least you and your neighbors together have gotten a little smarter.  Sooo--, if there is anything you want or need to change in your lease, this is the time to work on that.  If your deep rights get returned to you at the closing date of the lease and these guys want to drill, I would suspect there are others that are waiting for the opportunity.    Lots of opportunity for decisions here.

Good Luck!

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Permalink Reply by Greedy Landowner on February 27, 2013 at 6:45

How many acres of mineral interests do you own in the section they are proposing to drill?

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Permalink Reply by True Texan on February 28, 2013 at 6:53

350

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Permalink Reply by Henry on February 27, 2013 at 13:23

A thought....  If there are any terms in your lease contract that you would like changed, maybe this is the opportunity.  In exchange for any cash up front, maybe you can get unfavorable lease terms made favorable.

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Permalink Reply by Skip Peel - Mineral Consultant on February 28, 2013 at 3:53

Thia appears to involve a "cross unit lateral".  You need an experienced O&G attorney.

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Permalink Reply by Chris on February 28, 2013 at 5:31

Companies typically do not pay a bonus in this situations. The bonus is for tying up your minerals for a number of years with no promise of a well. In this case the land is already under lease and producing and an additional well is planned to be drilled on which you will receive royalties. If you refuse you are only hurting yourself by losing out on the potential royalty payments. What I suggest is that you hire an oil & gas attorney to review everything, one who is experience with the particulars of a cross unit lateral and that you require, in writing, that the company pay your attorney's costs.

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Permalink Reply by True Texan on February 28, 2013 at 6:34

Robertson County   

 

Encana

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Permalink Reply by William C. Morrison on February 28, 2013 at 9:28

It may have to do with your present lease.  Sometimes the original lease only specifies a limited depth.  We had one that was limited to 16,000 feet.  We know under us is the Tucaloosa Trend.  A year later they came back with an new lease and specified depths and royalties for same, that is different rates for different depths.  So review your old lease and see what it says. 

 

 

 

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Permalink Reply by Nancy Mosley on March 5, 2013 at 13:47

It is becoming common practice in the Marcellus shale area to ask for bonus money, or even to be offered the money and maybe an increase in royalty %, when asked to increase the unit size. Of course you want the oil royalty, but so does the company. I agree that it is also a good time to see if there is anything in your lease you want amended. You can always ask, and they can refuse. If they want your oil they'll give you something in return for the amended lease. If you know of a good attorney in your area, now is the time to have this amendment reviewed. At least that is what I would do.

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Permalink Reply by Krkyoldhag on March 6, 2013 at 3:51

The oil company I am leased to called this a production share agreement (PSA)  It changed the unit from 640 acres to 1500 acres..Everybody signed the agreements over two years ago and no drilling so far.

I am content with that...don't really want the NG produced at less then $3  ...

One of these days there will be NG vehicles running the roads and I will be driving one.

Does anyone know where on the Gulf Coast Vicon is building the LNG refinery?  And will Itochu be shipping/selling product from the leases they own stake in?

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