Replies to This Discussion

Permalink Reply by HBP on January 24, 2009 at 6:00

If they are offering a two month lease - then they aren't looking for it to expire (IMHO). So your back to the question many on here ask themselves: Why should I lease at all?

If they are doing a 2 month term, then they probably have a spud date scheduled. drilling sometimes = production = royalties.

If you do lease, I'd focus on getting the 1/4 royalty. IMHO, just the bonus per acre in this specific scenario where they are about to produce is far down the list of reasons to go as a working interest (WI). I also assume that if they are 2 months out from possible spud, that your unleased mineral acreage is probably not half the section. Therefore, you hold out for 10-20k/bonus - they will move forward and leave that WI out there.

This is all just opinion from watching past situations. There may be those out there that can explain why its better not to lease in this scenario.

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Permalink Reply by M. Mcwilliams on January 24, 2009 at 6:56

They are less than 2 months to spud, by my estimation. One, they permitted the well on 9/25/08, so that permit would expire on 3/25/09. Two, and more important, leases start expiring in February. I ran the record - not thoroughly, but enough to get an idea of what was going on - and I see from my notes that a 30 acre tract was leased on 3/1/06 for 3 years; another 10 acres was leased on 3/14/06 for 3 years; 26 acres on 3/13/06 for 3 years. So, yes, I can pretty well be assured that they are going to spud very soon. And they have said so. And they have told us that they intend for it to be a producing well, and that they intend to drill a shale well. My unleased interest, with the other unleased interest, makes up a small, very small, percentage of the section.

I'm not sure what bonus amount it would take to induce me to sign at this point, but I know for certain I will not sign for less than 25% royalty. That's why I was being somewhat sarcastic in asking whether I am missing anything here. HBP, your comments are on target with my thoughts. I know this isn't a good deal.

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Permalink Reply by HBP on January 24, 2009 at 7:13

Maybe not a good deal now, but....

I'd put the fact of the bonus aside with them - then ask for the 25% and a no surface w/o consent. If I could get that in that situation, I would sign (even for 2k/acre), hand them my address and bank wire info, and then "go on vacation" (Shale Geo's philosophy). Going WI is not worth the headache in some situations.

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Permalink Reply by BirdDawg, plain ole' idiot on January 24, 2009 at 8:23

One thing you said I agree with. "And remember, you read it here first".
As per post by Gosh Darn.

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Permalink Reply by M. Mcwilliams on January 24, 2009 at 8:53

I'm replying to both you and to HPB above.

I've already told the landman that I don't need $2,000, thus, don't really care whether I lose out on the bonus money. I can't really say at what price point that mindset would change, but so far $1,000/ac. is the only bonus offer.

They have already said that Exco will NOT go to 25%. I have already told them that this fact alone is a deal breaker.

In addition, while the landman says that this will be a Haynesville Shale well, my research has shown that Exco is drilling Cotton Valley and Hosston wells. We have also been told that the company will not agree to a depth restriction clause, so if they did drill only a CV or Hosston well, I'd be held by production by that well, without further opportunity to re-lease if things pick up or change in the future.

All in all, I don't see having anything to lose by holding out. If going unleased proves to be a supreme hassle, well, I still haven't lost much. I guess I'm blessed to be able to walk away from $2000 - there have been times in my life that that amount of money would have made a huge difference. Now is not one of them. I only have 2 acres, so I'm not expecting much. I just can't see signing a lease like the one that has been offered to me, without any concessions to the fact of where my land is located, the nature of the activity all around me and just the reality of what we have all learned about the Haynesville Shale.

At this point, I've decided that I'll put aside a few hundred dollars in case I have to retain an attorney to write some demand letters, and I'll sit tight and see what happens.

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Permalink Reply by M. Mcwilliams on January 24, 2009 at 9:39

And I would agree that the bonus is not the primary consideration. There's been discussion here already about the differences between how different companies are pursuing their drilling programs, for example - some being good neighbors and utilizing best practices to maximize the return while minimizing the environmental issues, for example. It is hard, however, to know that I'm sitting in a nice spot for Haynesville Shale production and to know what was being paid during the summer and to agree to only $1000 per acre. If I knew that I was being paid $1000 per acre for only a shallow well, I might agree, for I can understand the idea of encouraging some of the smaller operators to continue to drill the shallower, cheaper wells. But for me, for the deal being offered, at this time, and with the situation as presented, it just doesn't make sense.

Thanks for your thoughts, HBP and GD and others, it helps to hash this out with others.

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Permalink Reply by Bobi Carr ("parker") on January 25, 2009 at 9:02

M. McWilliams,

It doesn't sound like they are giving you any opportunity to work with the.

I agree that at present it is uncertain as to determine just what a reasonable bonus offer amount should be.

But if you put that aside and focus on the more important issues and they won't deal on those, they aren't giving you a "reason" to lease with them.

I would want the 25%, no surface and to lease them ONLY the HS. I might would consider the HOSS and CV if they were planning on commingling them at this time.

If they aren't willing to work with you on these issues, I feel like they are not giving you the respect that they should. And of course, you should NEVER give respect to someone who will not show you equal respect.

Permalink Reply by tandg on January 23, 2009 at 14:34

I received an offer of $3000 an acre with 25% Royalty for 1.132 acres. My land is in Red River Parish north of Coushatta in Section 22, T13N-R10W. This for a three year lease with an option for an additional two years at $1500 an acre. The company is Oden & Associates located in Shreveport. Has anyone heard of any leasing going on in Red River Parish and amounts? I am wondering if this is a good amount under the current conditions.

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Permalink Reply by RAY on January 23, 2009 at 15:24

Just received a letter from AMerican Royalties,LP:
they are offering to buy 1/8th royalty interest per mineral acre for $3000

is this worth considering??

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Permalink Reply by Muddigger on January 23, 2009 at 15:52

I would tell please don't send me anymore offers of this type because laughing gives me gas.

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Permalink Reply by Ms.Dragonslaya on January 23, 2009 at 16:17

YOU TELL 'EM MUDDIGGER

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Permalink Reply by Ms.Dragonslaya on January 23, 2009 at 16:16

NO

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