2012 - Fayette County

March 20, 2012

I've been offered $1200 per acre to lease in Fayette Co. plus 20% royalty and a 3yr option to renew for two more years. The same bonus, royalty and option was offered to me a few

months back to lease in another county and I was able to negotiate a much

higher bonus, etc. Has anyone had any recent dealings in Fayette Co.? I would

appreciate your thoughts and insights.

Thanks,

Cindy M.

About four moths ago, we (South Fayette) were offered:

We have two offers. $1000.00, 1/4, 3yrs with a 2yr option for $1000.00 or $1200.00, 1/5, 3yrs with a 2yr option for $1200.00.

and another offer, very recently: for $1200/ 20%/5years. Neither group seems willing to budge on terms and both groups claim to be the only company willing and able to drill on our land.

We are currently concentrating on terms for seismic lease.

I am in Central Fayette 22.5% $300.00 3-2. May I ask the location of your properties?

Thanks for the update. All of these are decent to good offers. What I'm about to say is strictly my personal opinion at the moment and situations change as you well know. It is going to be a long time beofre I agree to another 5 year offer; however, it's labeled. Three years is my target. I already have one 5 year lease on another place and I "ain't" getting any younger. On this end of the play, we are EF infants. These guys are just beginning to come our way again. At least in my area, South West Fayette, we are beginning to get a few nibbles. Nothing substantial yet; but, there is a flipper trying to put together a hugh number of acres (>50,000) in North Gonzales and Southwestern Fayette. She is talking a good game and getting a large number of people to sign an offer document that is good until May 15th. She has a lease (only a starting point for most of us) that few people have ever seen and the real lease negotiations will take place whenever her attorney contacts the mineral owner. The oil company or companies she is dealing with are kept under the covers which is a little scary in itself. The initial offer that people are agreeing to is good; but, there is a few words in the offer that prevent me from signing or ever recommending to anyone. The offer is: $1500, 3years & 23%. Signing the offer does nothing for the mineral owner except give her time to herd up contiguous acres to flip to an oil company, even if there is one. The good part is that other than holding mineral acres until May 15th, there is no binding requirement to sign a lease, either theirs or the one our attorney comes up with.

I personally believe Southern Bay , ZaZA (Hess), Geo Southern and possibly Cypress have full plates for at least three years. They have to drill on a lot of acres or loose or renegotiate the lease, so I don't believe we will be leasing many acres to these guys right now. At some point I believe we are going to be getting some of the newer players (who they are, I don't have a clue) headed our way and they don't usually come one at a time. They are pretty much like fish, they either bite or don't bite. Using the fish analogy again, my thought is that when one or two gets interested, there will be a whole school of them hit the courthouse at once.

One additional point is that large blocks of contiguous acres are a very positive note. If possible, it is very beneifcial to get a 800 to 1000 acres contiguous acre block together. It's very hard to hold people in the group together when dollars are involved; but, it sure is a positive step in the right direction.

Good luck!

AMF said:

About four moths ago, we (South Fayette) were offered:

We have two offers. $1000.00, 1/4, 3yrs with a 2yr option for $1000.00 or $1200.00, 1/5, 3yrs with a 2yr option for $1200.00.

and another offer, very recently: for $1200/ 20%/5years. Neither group seems willing to budge on terms and both groups claim to be the only company willing and able to drill on our land.

We are currently concentrating on terms for seismic lease.

Thanks for your input. One of the companies that contacted me was Cypress, which you mentioned, Bigfoot.

As far as where the land is located in Fayette Co., I honestly don't know. I have the legal descriptions of the properties which cites two different "Leagues". When I find out where they are, I'll let you know.

Thanks, again!

I realize that you probably don't want to wade through all the discussions on the other Fayette County forum from the middle of 2010....but, there is a huge amount of information on exactly the thing you are dealing with now.

The names have changed but the situations are the same. Many 'flippers' in the play back then. Much discussions among property owners and lots and lots of questions.

One interesting note, the $$ amounts are the same now as then, or at least very close, plus % so I guess things are holding steady in those areas.

And the advice to contact an O & G attorney is paramount.