Replies to This Discussion

Permalink Reply by John Tanner on August 30, 2023 at 6:06

Thanks for your reply Skip.  It's definitely interesting and I'm somewhat excited if this does turn out to be more than just hype, but I will definitely continue to educate myself before I sign anything and try and know all there is regarding what is actually in these forms being offered.  And yes, in the end the best possible royalty on a play where the hype turns out to be true will have the best pay off/long term return.  Is standard lithium's form any shorter or longer than the others?  15 years.  Are folks actually getting a good royalty from them?  Not as much concerned with the bonus.  Don't have a crazy amount of acreage or anything anyway.

Permalink Reply by Skip Peel - Mineral Consultant on August 30, 2023 at 6:12

You're welcome.  John, lessees want to use their lease form.  Let them but have an experienced legal professional review the lease, take note of your specific concerns and draft an Exhibit A to be part of the lease agreement.  The Exhibit A terms supersede the terms in the lease that cover the same issue.  An experienced Oil, Gas and Mineral attorney should be able to do this for a few hundred dollars.  Hourly rates will vary.  It is a good investment for a contractual agreement that could bind you and your heirs for decades.

Permalink Reply by Skip Peel - Mineral Consultant on September 5, 2023 at 15:04

I think by "form" you may be thinking of "term", the period of time that the agreement is in effect.  O&G leases have been traditionally for a three year period or term. As unconventional O&G plays became the norm, lessees wanted an option to extend the term and the 3/2 leases terms became popular.  A 3 year initial term with an option for the lessee to extend the term for 2 years by paying an additional bonus for that right.  Some lessees wanted a five year term at the one time bonus payment.  Those changes came about because unconventional reservoirs like the Haynesville Shale could cover large, continuous areas and it was a challenge for operators to drill fast enough to hold all those leases by production within the lease term.  The standard leasing terms basically challenged the industry's ability to drill them all up before they expired.

Mineral owners considering a brine lease should know that the Smackover lithium play is not an unconventional play like the Haynesville.  The Smackover is a much more known formation with plenty of well control.  Well control being historic wells drilled to the formation which provide data that can be used to make informed decisions on the prospective nature of a particular locale.  The Smackover lithium play will be like traditional conventional plays where a locale that is economic will be limited in scope and size.  Just as there were many "dry holes" in the days of conventional reservoir development including the Smackover, the areas that have the combination of lithium concentration and brine water volumes will be here and there and not continuous in area.  This makes for a lot of risk for lessees and lessors.  A bird in the hand would be the bonus offered early in the play against the two in the bush which would be a decent royalty for those whose mineral interest turns out to be in a sweet spot that is economic for lithium production.

Someone with a large acreage interest might be tempted to take a decent bonus offer per acre with a low royalty fraction but those with small to modest acreage would be best served to wait until more information is available.  The per acre bonus dollars offered currently are chump change.

Permalink Reply by John Tanner on September 6, 2023 at 4:28

Thanks Skip, that really makes it clear and easy to understand.  I appreciate it.  This forum has been a blessing.

Permalink Reply by Skip Peel - Mineral Consultant on September 6, 2023 at 4:42

You're welcome, John.  Pass the word. And suggest that your friends and family follow GoHaynesvilleShale.com

Permalink Reply by Rock Man on August 30, 2023 at 6:09

Building on your point about "proving up" acreage / leases, once water samples are captured and analyzed, many areas of Smackover will be condemned due to either low lithium concentrations or low water production volumes (or both(.

Sweet spots will be identified too - and those values will skyrocket.

Unlike O&G presence where open hole logs and rock work can be used to ID "pay", lithium concentrations need actual samples to determine that value.

I am not aware of any other way to determine lithium concentration.

Permalink Reply by Cass County Gal on February 23, 2022 at 2:49

Thanks for posting this.  I just got a call from a Jeremiah Nikel yesterday regarding leasing our minerals for brine.  I'll receive a packet of information in the mail soon and will hopefully know more about this.  

Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2022 at 3:56

Thanks for posting CCG.  Spread the word.  Cass mineral owners need to be informed.

Permalink Reply by Joe B. Lovelace on March 3, 2022 at 8:02

For the benefit of the group, I was unable to reach favorable terms with Cass County Brine, LLP and did not sign a lease.

Permalink Reply by Rock Man on March 3, 2022 at 8:04

Thanks for that update

Permalink Reply by Skip Peel - Mineral Consultant on March 3, 2022 at 8:09

Thanks, Joe.  Do you know of others who have been approached with a brine lease or may be in negotiations?

Permalink Reply by Joe B. Lovelace on March 3, 2022 at 8:41

Yes, several have contacted me that offers had been made.

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