Mineral, Oil and Gas Lease in Lincoln Parish, LA

I was presenting a offer on behalf of Loutex-Sovereign, L.L.C, regarding a lease for 40 acre tract in Section 32-17N-3W, for $400 and 20% for the half that I own. Is that a good offer for that piece of land? I live in California and don't know what is going in there.

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Permalink Reply by Sandra Simmons on September 15, 2015 at 3:44

Jay thank you for the reply. I would like to have more detailed info. I could not inbox you directly without a friend invite. I did submit a request to you.

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2015 at 3:47

Sandra, in addition to any help Jay may offer, I suggest that you join the Lincoln Parish Group and read through the discussions there.

http://www.gohaynesvilleshale.com/group/lincolnparish

Permalink Reply by Sandra Simmons on September 15, 2015 at 5:43

Thanks Skip, I will join the Lincoln Parish Group. I did read some of the questions asked and the replies. I know you stated the most important is the percentage of royalty. The only company that has contacted us is Loutex-Sovereign, L.L.C. They are trying to put a rush on the lease and I'm hesitate to sign because of the urgent request. After reading some of the comments I believe the best price is 25% instead of 20% and what Jay said about a no deduction lease. Have you heard of this company? Need a little more explanation on what that means.

Sandra

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2015 at 8:01

Sandra, although I tend to agree with Jay that it is better to sign with the company that drills the wells, I don't have a problem leasing to a land company that represents that company.  Loutex-Sovereign, L.L.C has filed about 180 leases for Lincoln Parish in the public record.  The only recorded instrument that indicates that they assigned some portion of those leases was to a non-operating company.  Non-operating means they don't drill wells.  Don't let any company or landman rush you into signing a lease.  Take you time and do your homework.  I suggest that you read the portion of my Mineral Fundamentals post that deals with leasing. Use this link:

http://www.gohaynesvilleshale.com/profiles/blogs/fundamentals-of-mi...

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2015 at 8:51

Loutex-Soveriegn isn't leasing for an operator.  Looks to me like they are speculating.  I know which land companies lease for which operators from following the play for some years.  However mineral owners don't need to know what I know to get a good lease.  A good lease in this play is a quarter royalty.  With the other beneficial and protective standard lease clauses they could lease to any company because the lease terms are in force no matter which company ends up with them.

Permalink Reply by Sandra Simmons on September 15, 2015 at 10:04

Thanks Skip, I will read. I received the lease today by Fed-Ex but I left a message stating that I need time to read and need to negotiate the royalty percentage.

Sandra

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2015 at 12:46

Loutex-Soveriegn has an assignment of leases recorded in the public records of Lincoln Parish to Rockcliff - QLS Joint Venture.  Here is their LA corporate registration, note the registration date.

ROCKCLIFF - QLS JOINT VENTURE LLC Limited Liability Company (Non-Louisiana) DOVER Active

Previous Names
Business: ROCKCLIFF - QLS JOINT VENTURE LLC
Charter Number: 41864370Q
Registration Date: 4/22/2015
Domicile Address
  1675 SOUTH STATE STREET
  SUITE B
  DOVER, DE 19901
Mailing Address
  1301 MCKINNEY ST
  STE 1300
  HOUSTON, TX 77010
Principal Business Office
  1301 MCKINNEY ST
  STE 1300
  HOUSTON, TX 77010
Registered Office in Louisiana
  8550 UNITED PLAZA BUILDING II, STE. 305
  BATON ROUGE, LA 70809
Principal Business Establishment in Louisiana
  8550 UNITED PLAZA BUILDING II, STE. 305
  BATON ROUGE, LA 70809
Status
Status: Active
Annual Report Status: In Good Standing
Qualified: 4/22/2015
Last Report Filed: N/A
Type: Limited Liability Company (Non-Louisiana)
Registered Agent(s)
Agent: CAPITOL CORPORATE SERVICES, INC.
Address 1: 8550 UNITED PLAZA BUILDING II, STE. 305
City, State, Zip: BATON ROUGE, LA 70809
Appointment Date: 4/22/2015

Permalink Reply by Sandra Simmons on September 15, 2015 at 14:30

Jay, thanks again. I noticed the date. Their agent, Wesley Day, replied back to me and is not willing to negotiate. He stated if the contract was not back by Tuesday consider it void. The land I mention is 40 acre which my family own 20 with another family member that owns the other 20. She signed her lease in May.

Sandra

Permalink Reply by Skip Peel - Mineral Consultant on September 15, 2015 at 15:15

Sandra, insistence on you to rush your decision is not professional.  And a refusal to negotiate is a red flag.    Each owner in the tract may make their own decision to lease, or not. 

Permalink Reply by lee on September 16, 2015 at 1:46

It is my understanding that leasing in Lincoln Parish has come to a screeching halt.  Most leasing agents are not returning calls nor are the mineral and royalty buyers.  $6000 per acre for minerals and $1500 per acre for leasing is now a thing of the past.  Someone finally realized that the price of gas could not warrant those prices.  If you reject their offer you probably won't hear from anyone  else.

Permalink Reply by Skip Peel - Mineral Consultant on September 16, 2015 at 2:13

There are nine land companies leasing in Lincoln Parish.  At least one that I am aware of has placed a hold on offering new leases.  Others continue to make offers.  I don't see a screeching halt at this time.  The bonus offers for a lease and offers to acquire mineral rights or royalty have been elevated but that always occurs where there is a good bit of competition.  Although it's possible that opinions about future commodity prices are slowing mineral acquisitions I think it is more likely lack of well control and the uncertainty over the distance leasing has moved away from the areas being drilled.  Whatever the reason it is not advisable to be rushed into a lease.  And it's unwise to grab a relatively insignificant bonus, in this case $8,000, by accepting a low royalty.

Permalink Reply by lee on September 16, 2015 at 3:45

Almost as good advice Jay as "I would not be in any rush to sign anything.  Any I would not sign with a leasing agent."

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