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Reaching out to the community for info about Norwood Land Services in Fort Worth, TX
Received an offer for a 2 year Extension of Lease for $12,000 per acre. That is for a lease not a sale. Because it is so high, I was wondering about the legitimacy of the offer.
Section 265, BLK 4 Torah Valley Grape & Alfalfa Co. Subdivision BLK 13 H&GN RR County Survey
Noble / Rosetta has wells to the west of Section 265. No permits on Section 265. More recent leases have been taken by Rosetta and Centennial. COG has leases there and your lease to COG does not expire until August 2018. It makes no sense that some other company is offering to extend the COG lease. COG would approach you directly and likely not this soon. Is this really a top-lease that does not come into effect unless and until the COG lease expires? If it is a top lease, you will only get a small part of the bonus at this time and then be due the rest next August. Your minerals are tied up and the top lease may be flipped, making it harder to find who has liability to pay you. This is a hot area and you have almost a year before getting competing bids. I am not familiar with Norwood and you can ask what company they are representing. Read any document presented carefully. Be sure about the exact terms of lease form - in particular that there is "25% royalty" and it does not say "25% of royalty" as the latter is a sale of 3/4 of your revenues.
Brenda, you might want to scan the lease or whatever form in and post it for us to read. Lots of sneaky stuff going on out West.
I will probably post this Lease Offer to extend the COG lease which doesn't expire until 2018. My oil and gas attorney took care of the paperwork. I signed the Extension of the Lease. The attorney told Norwood that he had the paperwork and would escrow the money. Norwood never sent the money.
I'm curious, how long as Norwood gone without sending the money? Also, I'm assuming they claimed to represent COG?
I recently met Blaine, a partner, and Jonathan from Norwood, and they seemed like genuine, straight-forward guys. Although, I have never done business with them.
I didn't have a problem with Norwood not sending the money. It could be that the other owners I share this tract with did not respond to the offer. I am puzzled as to why they offer a 2 year extension on a lease that doesn't expire until August 2018. They say they are acting on behalf of COG Operating LLC who holds the lease at this time. And, I must sign the Extension by 10/31/17 and return it to get the Bonus of $12K per acre. When I gave the signed paperwork to my attorney, he got no response.from Norwood. He was the go between to escrow the money.
That's a bit unprofessional of them to not answer; unexplained "radio silence" is one of my biggest pet peeves in business.
As far as the extension situation - it is likely that COG does not anticipate drilling a well before August 2018, so they want to extend the lease another 2 years. This could be due to a number of constraints, such as having their hands full with the current drilling schedule, they are waiting to see how other wells in the area produce before drilling, etc. It's anyone's guess.
COG/Norwood is probably being a bit "rushy" so you don't have the chance to sign a lease with another company. However, $12k/NMA is a pretty high extension bonus in my opinion, so I think you made a wise decision by accepting the offer. You are only tied up for an additional 2 years (as opposed to 3 with a new lease), and COG is a respected operator. To each their own, though.
The offer was so high that I was skeptical. However, I did sign and accept their offer
Norwood did not pay the Bonus or accept the paperwork from my attorney.
The bonus likely will not be paid until the extension goes into effect, the same time being when the 3 year primary term expires. However, for signing such an early extension, I would have asked for some money up-front as "earnest money". For instance, you could've requested 10% of the extension bonus to be paid now, with the remaining 90% to be paid when the extension goes into effect. I'm surprised your attorney did not recommend this at all. Your minerals are now locked up from other negotiations, for which you should have been compensated in my personal opinion.
Sounds like they may have pulled their offer. I generally don't ever agree to extend a prior lease. I find that it is in the mineral owner's best interest to allow the old lease to expire and negotiate a new lease or top lease. However, if your original lease was negotiated by an experienced oil and gas attorney and already contains all the provisions you want anyway, then an extension may be worthwhile if they're throwing a ton of money at you for it.
Keep in mind, however, that by agreeing to extend now, you take the chance that bonuses will be higher in August 2018 when you could have granted a new lease and you will miss out. The flip side of the same coin is that you might hold out until August 2018 and your area may be abandoned, in which case you would have missed out on the extension bonus they're offering today. Reeves County is a very hot area right now, so you should still be able to lease in August 2018, but there is no guarantee that you can still get $12k an acre for 2 years. As with anything in the oil business, a lot of decisions like this come down to timing and luck.
Food for thought.
Check the Extension you signed and any cover letter that came with it and see if the offer had or has a deadline for acceptance. Language to the effect that the offer is for only so many days.
If that is not clearly set out, then the offer was open ended. It stands until withdrawn.
Either way, you accepted their offer. They need to pay you.
Time to Lawyer Up. Either to get paid or have the Extension terminated and the signed original returned to you.
The Extension of the Lease had a deadline of October 31, 2017. I got it signed and notarized before that date. I have an Oil and Gas Attorney handling the paperwork and escrow for the transaction.
Latest update from attorney - the money will be sent this week to the attorney. Since the offer for lease is $12K per acre, I opted to let an attorney handle the transaction. I didn't want to sign a lease and not get paid. So, now we will see if the money comes.