How do I go about accepting a lease? (Texas Haynesville play)
I'm posting this for my grandparents that is not computer literate. They have a few hundred acres in Shelby County and were given an offer of >$4000/ acre @24%. Now a landman (who is also a long time aquaintence of the family) stepped up and said that he could shop the land for us to get a higher price. In order to do so, we need to lease the land to him (an "open" lease where the lease price isn't on the books) and he would find a better deal. Actually, the lease wouldn't be in his name, but a third parties name, because the landman didn't want to make and enemies by using his own name since we works will all the companies in East Texas.
From my description you can probably see that I'm not experienced in the oil lease business. I have read on these boards that many leases are going for the $4-5K rate, but don't know if theres more to be made, and if this landman is being honest with us. When we began to question him, and he did not give the family a hard sell. But he did say that if we want to do it, it needs to be done fast. From experience I've learned to not trust people who try to force me into quick decisions . . .
So, is what this person wanting to do a common and valid practice? Or is this something that will give him money but not help us? Isn't $4300 + 24% a pretty attractive offer already? Any advice is appreciated
From my description you can probably see that I'm not experienced in the oil lease business. I have read on these boards that many leases are going for the $4-5K rate, but don't know if theres more to be made, and if this landman is being honest with us. When we began to question him, and he did not give the family a hard sell. But he did say that if we want to do it, it needs to be done fast. From experience I've learned to not trust people who try to force me into quick decisions . . .
So, is what this person wanting to do a common and valid practice? Or is this something that will give him money but not help us? Isn't $4300 + 24% a pretty attractive offer already? Any advice is appreciated
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Replies to This Discussion
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Permalink Reply by Randy on -
I'd like to chime in that not all real estate attorneys are schooled in O&G leases. Don't just assume any attorney can negotiate or understand an O&G lease. I have had some lawyers send me some stupid stupid clauses that didn't even make since, half of them were obviously pulled out of old leases that didn't even apply anymore.
Ask any lawyer what his specific experience in dealing with O&G law is, and expect a detailed answer. Don't take any BS like "Oh well it's all pretty standard and easy to maneuver once you understand the wording"
Randy
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Permalink Reply by Alamo on
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Amc,
I have been leasing oil and gas property for a long time and watched my Dad do the same before my time. He was a petroleum engineer and former Director of the Oil and Gas Division of the Texas Railroad Commission, the regulatory agency for oil and gas production in Texas.
I have never heard of such an "arrangement". That doesn't mean it has never occurred, but not to me or anyone I know. If he is willing to double deal within his chosen profession he might be willing to do the same with you all.
Your description of the pending offer(s) indicates that several hundred thousand dollars is likely involved. Your family's minerals are very valuable and need to be managed carefully. This kind of "deal" has an odor, a strong odor about it and should be avoided. No one I know wants to leave money on the table nor do I know anyone that wants to be fleeced either. Continue negotiating with the oil and gas reps;. No "deal", just the Fair Market Value. Keep informed and remember your family owns something the rep needs to acquire and he can only do so with your permission. Good luck.
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Permalink Reply by DT on
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Does anyone know how much leases are going for in Rusk County, Texas. My family has several hundred acres and are leased to Goodrich, but do not have the Haynesville Shale formation under lease?
Goodrich is offering 20% with $500 bonus per acre. Is this good?
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Permalink Reply by CheetahBait on
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Sounds pretty good, according to the latest US Lease Price Report I reviewed. You may be able to get the royalty rate up to 25% - the offered bonus is good if you want to lease right now. The latest US Lease Price Report (May - June, 2008) shows Rusk County leases going for between $50 and $100 per acre with the most common bonus being $50.00 per acre and a royalty range of 12.50% to 25.00% with the lease term being between 1 and 5 years. I have not heard that the Haynesville Shale play extends over to Rusk County, but you never know... This is a young play and we really don't know what it will do or how far it reaches yet.
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Permalink Reply by easttexas12 on
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Hmm, actually the Haynesville Shale does extend to Rusk county, simply google minden field/haynesville shale (165' thick), Im suprised you don't know that? You do work for an O&G company, right?
There is a form of disinformation going on here when it pertains to mineral right owners and their need for full disclosure on these test wells (on the Tx side at least) to make an informed decision BEFORE signing with O&G. You would agree with that statement, no?
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Cat got your tongue "Landman"?
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Goodrich drilled a well 1/2 mile from our ranch with 170 feet of Haynesville shale. They are in the process of logging the well now. They first offered $200 bonus, but when we turned it down, they came back within 24 hours with an offer of $500.
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Permalink Reply by durango mom 01 on
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WHAT DOES THE LEASE PRICE REPORT SAY FOR SHELBY COUNTY NORTHEAST PART
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Permalink Reply by Shelley on -
hello amc, where about does your grandparents have land in San Augustine... I am also from San Augustine had we have been offer 5000.00 per acre...... and you right on people trying to force you to do it fast..... you have time!! again please let me know and i will help as much as i can!!! Take care and good luck! Shelley
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I'll give everyone an update.
I wasn't able to relay the excellent info ya'll provided to my grandmother before she signed the land over to a broker for pretty much $0 with the promise that the broker is going to shop the land for her and get her a better deal. After talking to her she expressed regrets to the deal, and the land man said that he would rip up the contract. Well, he didn't.
He haven't outright accused the landman of shady dealings yet because we're afraid that if he thinks he cannot fleece my grandmother of anymore money in the future (from other property), he will do the best he can to take every penny he can right now. This isn't what I feel is the best approach to the situation- but this is what my father (who has been relaying my info to my grandmother and also trying to give her advice) wants to do.
I have been recommending to my father that he go to a lawyer and see what the rights my grandmother still has and if she can get out of the contract. I don't know what the law says, but my grandmother is very lucid and healthy, so it would be hard to argue that she didn't know what she was signing, even though she didn't. Any recommendations guys?
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