Replies to This Discussion

Permalink Reply by ogmladvisor on February 14, 2009 at 19:53

Intrepid:

Good idea with the release...

And as for rates...who knows what they will do...I about as tied into this area as one can be, and I have no earthly idea. I am fairly certain the "land grab" of 2008 is long gone, and rates won't even come close to those paid just a few months ago. If you were offered big bucks for a lease in 2008, and decided to hold out for bigger bucks, I think you will look back and regret your decision.

As for the 163 acres, with spacing rules written how they are, if the tract was set up perfectly, I could get one nice fat horizontal well in there. But things are rarely set up perfectly.

Permalink Reply by edukador on February 14, 2009 at 7:38

$5000.00 per acre was paid as recently as December for property not too far from there. If this amount was paid a couple of months ago, shouldn't that be a fair amount for bonus money for her land? I mean, gas prices are about the same now as they were in December aren't they.

Permalink Reply by king john on February 14, 2009 at 8:53

adam.
would you be so kind to share with all of us what the going rate is? mabey you could follow up by telling us what fair market value is? i want to also point out that i wasnt giving advice but rather sharing my personal thoughts and ideas. the only advice i gave was that she might want to get a profesional to negoiate for her if she had enough acres to warrent the expense.in regard to those "unreasonable" people in the barnett shale that held out for a better deal, bonus over some time went to 27k-30k range. i suppose good things come to those who wait!

Permalink Reply by ogmladvisor on February 14, 2009 at 14:11

King John:

You might want to check what the going rate is in the Barnett Shale today:

http://www.istockanalyst.com/article/viewiStockNews/articleid/2879430

Your 27k-30k information is old news.

ogmladvisor

Permalink Reply by king john on February 15, 2009 at 1:08

what do you think about an eighty acre unit ogmladvisor?

Permalink Reply by ogmladvisor on February 15, 2009 at 3:12

King John, can you be more specific?

Permalink Reply by Adam on February 15, 2009 at 4:23

Going rates in Shelby: For my company, $250 to 500/ac.

I hardly believe in FMV for bonuses. My reason is that I feel bonuses should be a strict representation of competition and desire. Which company wants it more. If company A wants it more than company B, they will pay more. Royalty is where FMV comes in.

Your thoughts and ideas are a bit ambitious. But hey I am just a landman.

"i can honestly say i would not lease my open acres in shelby county for less than 15k and 25% royalty. thats anywhere in shelby county. the land person will tell you your crazy and that is when you tell them to have a nice day and dont call back until they have a serious offer. "

Notice the bold portion. You are telling her what she should do in regards to leasing for 15K. That is advice.

In regards to the Barnett. I am not going to argue what happens/happened there. I think ogmladvisor handled that one. Dig up your dirt and take it to Dallas.

Permalink Reply by Adam on February 15, 2009 at 4:28

Two points.

"Not too far from there" - Geology doesnt understand not too far from there. Geology understands faults, depths, thickness, etc. You can be 100 yards from a known producing unit and if I know you are faulted out, I will not pay you a dime.

As I mentioned ealier, fair amounts for bonuses are relevant only to competition and desire of the company leasing. If no one is paying high rates, then why should they.

Permalink Reply by intrepid on February 15, 2009 at 6:20

"Not too far from there" - Geology doesnt understand not too far from there. Geology understands faults, depths, thickness, etc. You can be 100 yards from a known producing unit and if I know you are faulted out, I will not pay you a dime.

That's a good way of putting it.

Permalink Reply by king john on February 15, 2009 at 12:39

when i posted my opinions earlier i had no idea it would be so controversial. i absoulty respect the opinions of the two professionals that have been commenting here. i think it would be safe to say we just are on oppisate sides of the fence. you two are industry professionals. i am a land and mineral owner. when i think of signing bonus i think of it as more like signing my life away. it is not like renting your minerals out . my leases have the term "convey" in them. this means to transfer or deliver to another. so what this really means to me is that i am selling my minerals for the cost of the signing bonus plus the royalty. i love the money but i regret letting the oil and gas company take over my farm. it will never be the same.
the reference to the barnett shale is a barometer of sorts for me. that play is 20 somthing years old where as this play hasnt even been public for a year. i am sure there are some commen links between the two and i cant help but make comparisons.
i asked about an 80 acre unit because that is what i would do if a unit was formed around me leaving me out. i would declare an independent unit .

Permalink Reply by edukador on February 15, 2009 at 13:43

Not putting you in this category Adam, so don't take this personal, but some landmen will use this type of language (faults, depths, thicknesses) to gain an advantage in negoitiating the terms of the lease. In other words, some landmen may not understand geology but they do understand greed, dishonesty, and dissemination of misinformation.

Permalink Reply by Craig Cooper on February 15, 2009 at 14:44

edukador, I understand your concern and I'm sure there are people who will try to take unfair advantage of others, but Adam is correct. It is very possible for faults to separate pay from non-pay and that transition can happen over a very short distance. Best to educate yourself as much as possible so that you're not taken unfair advantage of and you can make an informed decision about your property.

I also understand where KJ is coming from but at the end of the day fundamental supply/demand situation will dictate perceived value of anyone's property and what others are willing to pay for the privilege of tapping into potential oil & gas accumulations. The fundamentals have changed dramatically over the past year; both gas and oil prices have dropped significantly and are not expected to rise much for the next 12 - 18 months.....may in fact drop a bit more...... so I wouldn't expect anyone to offer the kind of terms that were typical during the past few years.

Everyone will have to decide whether they want to 'play' or not, wait for things to turn around or not, etc. As I said earlier, IMHO, the best thing to do is to educate yourself as much as possible and then make the / any decision you think is the right one for you at the time. Of course, one should preserve as much 'flexibility' as possible too so that you can quickly adapt to change.

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