Replies to This Discussion

Permalink Reply by Randy on October 22, 2009 at 5:53

You could ask that they not have (non-emergency) truck traffic from 10 PM to 6 AM or something of that nature.

I'd ask for ownership of the lake, that they accept liability for any issues caused by the construction of such lake (think drainage, etc), that they accept responsibility for maintaining water level in the lake (after any month it's used at the end of the month they have to re-fill it), and a monthly rent.

How much rent? I dunno. They will probably not like the rent idea. In lieu of that, maybe see if they will go for a fee for every tanker they fill, or by barrel. Probably couldn't get the 'going rate' for selling water, as they are also supplying it.

I imagine they are going to say, we'll offer you $5000. I'd get at least the value of the land * the acreage of the lake.

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Permalink Reply by David on October 22, 2009 at 6:08

king john,

Randy's advice is good; I would only add get an O&G attorney. He may know things to look for that would not occur to us as owners, but that may prove to be very important.

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Permalink Reply by ELLIS HUGH on October 22, 2009 at 6:16

I RECOMMEND hiring an attorney to handle the negotiations. You will be entering a legally binding agreement that will affect your property (presumably) forever. If you do not fully understand the implications of the agreement, you should seek professional counsel.

With that being said, I agree with your assumption that the operator will probably 'move on down the road' if they do not like the terms of your counter-proposal.

Someone else in the area may be in the position where they need/want to accept the terms put forth by the operator. If the landowner is protected, this is a good way to benefit from the glaring need for water supply/storage.

"how bad do they need it?"

In my opinion, the more important question is, "how bad do they need it from you?"

Good Luck!

--EH

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Permalink Reply by Randy on October 22, 2009 at 6:34

Good advice by all, I did leave out the obligatory "get a qualified attorney to handle it". Ellis has a very good point, "how bad do you they need it from you." At the point you didn't accept my first offer, I wouldn't just stop talking to you, but I would start looking at other options getting my other ducks in a row.

Be prepared, although, their first offer probably isn't worth the headache anyway. For what will be a relatively small amount of money split over the life of the agreement.

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Permalink Reply by Grillin' - MmmMmm on October 22, 2009 at 6:52

Another item to think about: make sure the contract clearly states that the lake will be used for water sourcing, not treating/recycling...unless you don't mind having that type of facility. One of the big issues could become what to do with the water that flows back following a frac. Many people are recycling the water. Now I support this approach as it reduces the need for water, cleans up the water and avoids pumping the waste away. But it will be a different operation and so you should understand what that might entail. Depending on the process, your lake might not be something you want later on.

Having said that, I haven't heard good/bad about the treating process so you'll need to research that. A 6 acre lake would be nice if everything else can be handled. Maybe get them to stock it for you!!

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Permalink Reply by The_Baron on October 22, 2009 at 7:19

A couple of things come to mind.

They will probally want to fill and even drain with pipelines, trucks are expensive.

Drive down to elm grove and see all the temp. lines above ground. be sure to find out if they are going to use trucks or pipelines and be sure you are happy with their response, and make sure it is spelled out in your agreement. Make sure the agreement is not open ended. It should be for a specific time. You may want any lines buried, Make sure you are happy with the location of these lines

Make sure they have a detailed plan or plat.

Require them to carry insurance, AND name you as additional insured for any problems, not just in construction but in all their operations.

I would also want my lake stocked with fish and have assurances it wil never be drawn down below a set level. If you are going to have a lake, what good is it if its empty or has no fish?? just my humble opinion.

I also agree you should have lawyer at least reveiw the final agreement.

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Permalink Reply by Mac Davis on October 22, 2009 at 8:27

Definitely have a limited time on the length of time they have rights to the lake. Even if it's a LONG time, such as 10 years or more. Be sure that ALL their rights to anything expire after a certain time, even if they're still using the lake. If you can't get 10 years, make it 20 or more. Nothing worse than finding some old, obsolete legal agreement encumbering the property when you want to sell it or do something with it later.

Another possibility is to negotiate some monthly rent, perhaps after a certain number of years, terminating their rights after a certain number of additional years. They'd then have an incentive to release their rights as soon as they stop actually using the lake, instead of just continuing to hold on to their claim on the land forever.

The more I think about it, the more I think that it's important to be sure there's a time limit on the usage. Otherwise, they can just hold on to their agreement forever, and you've essentially sold them the land.

None of this says you have to be "greedy." Just be sure you're not writing them a blank check.

Be sure you specify what roads they can build, what part of your property they can access, cleanup after they are through, etc. Do you need them to build fences? Remember, the gomers coming out there to work on things WILL leave the gates open.


Be sure the money you get is worth the potential hassle.

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Permalink Reply by Randy on October 22, 2009 at 9:01

I also agree on limiting the length of the agreement, even if it's a long time.

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Permalink Reply by insomniacnla on October 22, 2009 at 11:04

What about including language that addressess any conflicts or violations of the Agreement? Like if the Agreement states that there will be no truck traffic at certain hours, and the company does it anyway. Enforcement of all provisions will be easier if the Agreement is clear as to any penalty for any violation. If the company does X, then Y will happen. Will it be a monetary penalty/fine or will it result in voiding the agreement entirely.

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Permalink Reply by king john on October 22, 2009 at 11:22

lots of good ideas here guys and i appreciate all of them. i have some additional information as to their plans. they would like to have a place to stockpile water. they will over supply in order to withstand a drought. they will also pipeline the water in and out rather than trucking. these lines will run on top of the ground up to 5 miles away. i will have a meeting with them the first of next week and will have more of the details at that time. thanks again to all, lots of good ideas being shared.
kj

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Permalink Reply by Rosebud on October 22, 2009 at 12:30

There was a big article in The Shreveport Times recently about a man, I want to say in DeSoto parish, who was creating big ponds to supply water to drilling sites and they were using the 5-mile surface lines. I remember him saying that he is creating these ponds for others but I can't recall any specifics.

Unless I dreamed it, I also remember hearing a brief report somewhere that these private pond owners were running into conflict with DeSoto parish owned ponds.

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Permalink Reply by king john on October 23, 2009 at 0:34

rosebud, do you happen to recall what the conflict was? did anyone else see this article? i wonder what the capacity of the ponds are... and also the source of the water?
kj

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