Replies to This Discussion

Permalink Reply by adubu on September 4, 2009 at 8:44

Simply answer to your question. Have oil & gas attorney review this lease before you sign. There are wording that could be a problem.

Permalink Reply by Lorissa Gail on September 4, 2009 at 9:50

Thanks for the reply. I wish I had info on this website much earlier!

Permalink Reply by Cheerleader on September 4, 2009 at 17:05

Joanne,
You need an attorney. Never sign a paid up lease. You need minimum $5000 per acre bonus; 25% royalty; you donot want to pay any expenses only taxes; delayed rental agreement[Gas company pays you something at the end of the anniversary of your lease [yearly] if they have not drilled and or in production [i.e 1/2 of original bonus];
shut-in royalty clause; depth clause etc. Also get all of your acreage into any well. This makes a big difference in your royalty check.

Permalink Reply by Adam on September 8, 2009 at 2:52

Cheerleader,

Those a pretty stout terms.

May I ask if you have received them in Shelby County recently?

Permalink Reply by king john on September 8, 2009 at 3:23

sounds reasonable to me adam...lol
kj

Permalink Reply by Lorissa Gail on September 8, 2009 at 4:31

My lawyer thought waiting wasn't a bad option as at this time gas prices are down and there seems to be a hugh amount in storage.

I heard a small acreage between Teneha and Timpson in Tennessee community was offered $500 / acre.

Permalink Reply by ogmladvisor on September 8, 2009 at 4:43

Waiting might not be a bad option with gas prices this low. But I will caution you, if you are waiting on the terms Cheerleader described, you might want to pick up a nice long book to help with the wait...I suggest War and Peace by Tolstoy.

Permalink Reply by adubu on September 8, 2009 at 4:45

If you are between Teneha and Timpson $500 acre is above market today. If you can get 22.5% royalty, vertical pugh clause, royalty free gas,3 years lease with no option and wording in lease ok with your lawyer sign and run to bank with money. Check NO Draft. waiting until market turns you are leaving money on table because the lease may expire before leases are with any higher bonus money. We had bubble last year that may never be seen in our grandchildrens lifetime. The terms of lease are the most important part of lease not bonus anymore those days are gone.

Permalink Reply by Adam on September 8, 2009 at 6:36

Having leased several properties in that area, I would have to agree with you for the most part. I do require an option (am willing to pay well for it), however.

Permalink Reply by king john on September 8, 2009 at 6:49

adubu,if N/G got back to say 9-10 dollars an mcf over the next ten years do you believe bonus's would remain at the 300-500 dollar range? i do not. IMHO the bonus is the most important money one may get. i agree the terms of the lease are critical, but with such steep declines the bonus money may be the biggest payday one gets.
another point is when one signs a lease it "conveys" the minerals not reserved by the mineral owner to the O&G. so, how much would you be willing to sale 75% of your minerals for? would you be willing to take $300 per net acre to sell 75% of your intrest? how bout $500? doesnt sound very good when you break it down like that does it...
kj

Permalink Reply by king john on September 8, 2009 at 4:50

joanne, those terms in the intro of this discussion are "boiler plate" terms. your lawyer should have some type of a contract of their own which they can fine tune to meet your specific needs. never, i repeat NEVER sign their contract. use one that your lawyer has prepared and customized to meet your needs. they will act like you are pulling their toe nails off with a pair plyers. that is how you know you are on the right tract. stick to your guns and get all you deserve.
my two cents worth.....
kj

Permalink Reply by Adam on September 8, 2009 at 6:33

Glad we can find humor in it.

Obviously they are excellent terms for the mineral owner. Just have to find the company that feels the same. Good luck on that.

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