Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 18, 2020 at 8:22

Ensight is a small Haynesville operator as far as development goes.  By that I mean they operate a number of non-Haynesville wells that they acquired from others in order to gain the underlying lease rights.  The company has drilled a few Cotton Valley wells but mostly Haynesville wells.  I wouldn't shy away from negotiating a lease with them as the lease terms are what protects you and limits Ensight's ability to do things you do not like.  The same can be said for any lease with any company.  If you interested in a lease you should:  ask for an executable lease form with a cover letter cover whatever is not covered in the lease language such as bonus per acre, send both to an experienced O&G attorney for review and do a little research to see if you might have other companies active or interested in your area that would make you a lease offer.  Competition for leases tends to benefit the mineral owner.  You can post your section-township-range here and get replies as to what is publicly available data.  You can also get a referral or two for a local O&G attorney.  Hopefully ones without any conflicts of interest with Ensight.

Here are the wells that Ensight IV has drilled.  The status code 10 wells are producing.  The status code 01 wells are permitted.

250732	HA RA SU73;CTF LLC 33 H	001	10				E4161	1464	22-JAN-18	033-14N-15W
250888	HA RA SU142;DEVONDONNER30-31HC	001-ALT	10				E4161	2360	22-MAR-18	030-15N-13W
250889	HA RA SU142;DEVONDONNER30-31HC	002-ALT	10				E4161	2360	22-MAR-18	030-15N-13W
250902	LCV RA SUO;USA (PARCEL 3)	084-ALT	10				E4161	8358	29-MAR-18	002-17N-12W
250904	HA RA SU142;DEVON DONNER 30H	001	10				E4161	2360	29-MAR-18	030-15N-13W
251188	HA RA SU113;ATKINS ETAL 6-7 HC	001	10				E4161	4313	31-JUL-18	006-16N-16W
251277	HA RA SU61;M&K MIN 33-4 HC	001	10				E4161	4313	10-SEP-18	033-17N-16W
251635	HA RA SU143;HODGES FAMILY 19 H	001	10				E4161	3608	26-MAR-19	019-16N-10W
251640	HA RA SU143;HODGES FAMILY 19 H	002-ALT	10				E4161	3608	29-MAR-19	019-16N-10W
251880	HA RA SU144;SNYDER LM LLC 31H	001	10				E4161	3608	02-AUG-19	006-15N-11W
251881	HA RA SU144;SNYDER LM LLC 31H	002-ALT	10				E4161	3608	02-AUG-19	006-15N-11W
252031	HA RA SU71;CHANDLER 6-7 H	001	01				E4161	8358	11-OCT-19	032-18N-11W
252254	HA RA SU76; CHANDLER 31-30 H	001	01				E4161	8358	04-MAR-20	032-18N-11W
252376	HA RA SU73;CTF LLC 33 H	002-ALT	01				E4161	1464	01-JUL-20	033-14N-15W

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Permalink Reply by Patricia Gayle Nesom on August 19, 2020 at 10:11

Thanks, Skip.

I haven't dealt with a lease in years, and I'm sure a lot has changed. I'll start with the attorney I used previously. The property is this:

11N 15W Section 16. 

Has anyone else signed with them lately? I have not idea about bonuses and royalties.

Thanks,

Gayle

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Permalink Reply by Skip Peel - Mineral Consultant on August 19, 2020 at 10:23

Interesting.  Birx had two permits for wells including your Section 16 but both expired in late July.  I wouldn't have a problem entertaining a lease offer from Ensight IV but since your area is also one where Indigo has a presence, I'd see if they wanted to extend a offer to lease also. I would much prefer to lease with Indigo.  Indigo operates Section 21 to your immediate south.  They might be interested in Section 16.

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Permalink Reply by Skip Peel - Mineral Consultant on August 20, 2020 at 5:30

Patricia, I would be hesitant to lease to Ensight IV at this time.  It appears they are promoting a sale of their Haynesville assets.  Of course the most important consideration would be the lease terms you can get especially the royalty fraction and any language regarding post production deductions.  A good lease is binding upon any company that may acquire it.  So I would not rule out signing with Ensight, I just wouldn't get in too much of a hurry and I would get legal assistance preferably from an experienced O&G attorney.

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Permalink Reply by Patricia Gayle Nesom on September 3, 2020 at 14:13

Thanks, everyone. Sorry for my late reply. I'll look at all these comments. I have sent the least to the lawyer that reviewed a Chesapeake lease several years ago, and I'll forward the comments to him as well.

By the way, the property is 80 acres, half mine, half my brother's.

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Permalink Reply by Bud on August 28, 2020 at 8:36

I have royalty interest in two of their wells. We had some issues getting timely royalty payments and some errors in the calculations. But they seem to be managing production of the wells professionly. I would go for a higher royalty % rather than push for a higher bonus for a long term benefit.

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Permalink Reply by Rock Man on August 29, 2020 at 6:18

Agree on the concept of giving up some bonus $$$ for higher royalty - that will pay more for a long time assuming any well success. Plus higher royalty will get higher offers to purchase minerals down the road if you opt to go that direction.

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Permalink Reply by Skip Peel - Mineral Consultant on August 29, 2020 at 6:26

That trade off has gotten harder to negotiate without having a large acreage interest.  Bonus offers are modest, initial offers for many are for a three sixteenth royalty with one fifth being the most that operators will agree to. Operators tend to avoid drilling where they can not make their numbers work based on a perception that prices will be range bound for years.

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Permalink Reply by Rock Man on August 29, 2020 at 6:35

Good point - the dance in the oilfield between mineral owners and operators has gotten more difficult over the years.

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Permalink Reply by Skip Peel - Mineral Consultant on August 29, 2020 at 11:46

Operators overpaid and cut a lot of corners in the Haynesville land rush.  The reality of over supply has served as a sobering lesson and now they live with the ramifications of all that early over exuberance.  The fallout will continue for a while.   

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Permalink Reply by phoenix on September 2, 2020 at 2:10

What is Dixon Services offer?  amount of Bonus money, lease term and royalty? 

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Permalink Reply by Brandon J. on September 3, 2020 at 8:50

$1000 per acre, 1/5th royalty, for 3yrs with a 2yr option at $666 per acre. 

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