Replies to This Discussion

Permalink Reply by d laurenson on November 18, 2017 at 15:19

Thanks, Penterra is actually the people I have been in contact with in re to the lease.  The assignment does not mean that they have sold the leases...is that correct?

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Permalink Reply by Skip Peel - Mineral Consultant on November 18, 2017 at 15:43

Yes, an assignment is a sale of sorts. 

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Permalink Reply by d laurenson on November 19, 2017 at 16:14

So is it impossible to determine which one it is?

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Permalink Reply by Skip Peel - Mineral Consultant on November 19, 2017 at 16:49

Not impossible but beyond the ability of most land owners.  Those with enough acreage to make a drilling unit uneconomical if not leased can often get answers to questions others can not especially if they have a lot of experience or have good legal representation (not just any attorney, an O&G attorney).  Those of us that do land work can often find clues or definitive proof in the public records.  If land company X has recorded assignments to operator Y in a particular area, that's pretty iron clad evidence.  That generally has not yet happened in the early months of a lease program.

Re: assignments.  If client A hires land company B to take leases for them and pays all the expenses associated with the effort and a per acre fee, is it considered a "sale" when land company B assigns the leases to client A? 

If you want to make it simple just say no to any royalty less than a quarter.  Investors, flippers, corner shooters, block busters; whatever you care to call them will not agree.  It's often the only way they can make a meaningful profit.  Of course the land/mineral owner has to be willing to see the offer withdrawn and then wait to see if a better offer comes along.  Sometimes it does, sometimes it does not.  I would very much like for everyone to have the financial security to take that course but unfortunately not everyone can, or will.

The decline of the small, independent O&G companies has been helped along by just this situation.  Major and mid-major E&P companies that drill unconventional basins can live with a Net Royalty Interest of 75% or there abouts.  The small independent, drilling vertical wells in conventional reservoirs, more often than not can't make the economics work.  They need to offer something less.  The damage done to the small independents when the Haynesville Shale land rush pushed royalties to a quarter was/is significant.  I encourage land/mineral owners to consider leasing to them for a lesser royalty with one requirement.  Do not give them an "all depths" lease.  Use an experienced attorney.  Get a well written depth clause and a tight vertical Pugh clause.  You then retain your "deep rights" which is where the unconventional reservoirs are located and you are free to lease them if another company comes along and offers you a quarter royalty.

Permalink Reply by d laurenson on November 20, 2017 at 5:12

Thank you so much Skip, great info.  I have had atty advice but maybe need more..thanks again!

Permalink Reply by Skip Peel - Mineral Consultant on November 27, 2017 at 3:20

Billy Random, currently there are 7 assignments of leases from 1334 Haynesville Minerals to Brix recorded in the public records of DeSoto Parish and 2 in Caddo Parish.  This is not rumor, it is a fact.

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Permalink Reply by Billy Random on November 27, 2017 at 4:26

This is not a rumor, it is a fact...1334 is not told by Brix/Vine where to go buy leases.  Period.  Any assumption otherwise is misinformed.

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Permalink Reply by Skip Peel - Mineral Consultant on November 27, 2017 at 4:32

Billy, do you work for 1334 Haynesville?  I don't discount the possibility that you are correct if you are indeed associated in some way with 1334 Haynesville. If there is no direct working relationship between 1334 and Brix/Vine then 1334 Haynesville is speculating in leases.  Would that be an accurate statement?

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Permalink Reply by Skip Peel - Mineral Consultant on November 27, 2017 at 6:43

I will take that as a yes and thank you for confirming that 1334 Haynesville Minerals is indeed a "flipper".

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Permalink Reply by Billy Random on November 27, 2017 at 8:56

Yes, you can consider that confirmed by someone with direct knowledge.  Sorry, I don't check my personal emails often and just saw the replies.  Billy is not my real name.  I just prefer that my real name is not out there so I can inform on this site without it coming back on me at my job. 

The only reason I posted here today was to clarify for the landowner with the original post to make a better informed decision.  They are not an operator and thus the decision to lease to them is not as simple as it is to lease to an operator. 

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Permalink Reply by Skip Peel - Mineral Consultant on November 27, 2017 at 9:24

Agreed. And understood.  Thanks, Bill.

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Permalink Reply by d laurenson on November 27, 2017 at 14:30

Thanks to everyone here for the insight and information. Have a good nite!

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