Land man called tonight with offer. $150/acre for 10acres. 3yrs with 2 yr. renewal. Told him to send paper work and would have lawyer look at it.

Any thoughts??


Will update here as this progresses.

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Before you negotiate you should ask what energy company the land company is representing and what formation(s) that company intends to explore.  Request a copy of the lease agreement form and make sure you consult an experienced O&G attorney.  Not just any lawyer will do.  The best case scenario for a mineral owner is competition from multiple lessees where possible.  An attorney who deals with a lot of mineral clients should know what companies are leasing where. 

Thanks Skip. I have followed this forum for quite awhile and have absorbed as much information as I could. All of what you say is exactly what I intend to do. Since the call this evening I have searched everywhere I could think of to maybe find out who else may be leasing in this area. Do you have any ideas as to where such information could be found.

In case anyone else is looking at this, my 10 acres is located on hwy 961 about 8 miles NE of Clinton, la.

You can go to the parish clerk of court's office and examine the Day Book or use the clerk's computerized records to see if leases have been filed recently.  However unless your lease offer is an isolated case, and I doubt that it is, an attorney that specializes in mineral law will probably have other clients that are also receiving offers to lease.  I suggest you also post your discussion on the appropriate group page(s).

The headline on another thread from last week noted that Comstock is coming into the TMS at $1,000.00 per acre.  The article also suggested that Comstock would be leasing in East Feliciana Parish.  Mr. Jacob is being offered $150.00 per acre in East Feliciana.  Why is there such a difference in the reality of the offer and amount suggested in the thread regarding Comstock? As an unleased owner in West Feliciana Parish your thoughts would be appreciated.

At this time we don't know if Steve's offer comes from Comstock.  Knowing the company behind the offer is important on how to proceed.  The $1,000 paid by Comstock has little meaning or use for mineral owners in lease negotiations.  I suspect there are existing leases connected to earlier interest in the TMS.  In fact since Steve has only 10 acres it is possible he is in an area where all or most of the large tracts are already leased.  This offer could be coming from a speculator that expects that development is imminent and wants to flip leases for a profit to the actual operator.  In the business we call them "block busters" or "corner shooters".  Then again it could be an opening offer from a land company representing a bona fide operating company.  No matter the case the bonus is the least important lease term and a 10 acre tract will not bring a significant amount of money after taxes even at $1000.  The 3 year primary term with a 2 year extension option is fine.  It is the royalty and other beneficial and protective terms which should be the focus..

Jay (ShaleGeo) posted a discussion announcing Comstock's purchase and pointing out how little they paid for the leases.  The bonus paid per acre for a lease is a small portion of the total cost to research, contact, negotiate and record.  At $1000 per acre someone may have just recouped their investment,  There certainly was little profit if any at $1K.

Much of Comstock acreage was in Wilkinson County just north of the Goodrich's Crosby well and I think that acreage currently is more valuable that East Feliciana acreage so while the average was $1,000 it could be that Wilkinson was valued at $1,500 and East Feliciana value at $150.  Headline averages can be very misleading when the acreage is spread across a very large portion of a resource play. 

Good point, tc.  Hopefully recent developments in the TMS Play will afford some GHS members an opportunity to lease their minerals.  I hope they've done their homework.

Areas around slaughter were paid around 300 an acre and you are a lot closer to the action than we are.

Thomas,
Do you know what co. Was doing the leasing?

Steve,

It was my understanding that Midstates was doing some leasing Southwest of Slaughter for an Austin Chalk test. Nothing has happened on those leases to date. They have 3 years plus a 2 year option on them. That was a year or so ago that they took them. Also, we hear rumors that someone is checking the area in general to see what is leased. To my knowledge no leasing has taken place since Midstates leased the acreage they were interested in.

Thanks Joe. While discussing this offer with neighbors it's becoming more apparent this offer is from speculators. Have not received promised paper work, via e-mail, from landman that contacted me. I' m in no hurry to make deal.
Will update as needed.

Still talking with landman. He says he is not speculating but buying up leases for an independent that intends to drill in this area. He says that co. is looking for both oil and gas and the lease would be for all zones and depths.

Will meet landman soon to discuss details and look for a lot better terms.

Steve

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