I have 300 acres in the northern half of J.S. Johnson (sometimes spelled Johnston) Survey, A-410 and was recently contacted about leasing it. I no longer live in Texas, so I'm out of the loop for what the going rate is. I would appreciate any guidance on this. Thanks.
Jan, I just looked for recorded leases on A-410.
I show that Jim W. Crofford entered into a lease with Sonat Exploration on 300 acres that was recorded in late 1997.
Pulling up this Abstract on the RRC GIS Map Viewer, there are dry holes to the south, north, east and west.
Further east and further North East are some wells.
With that said, and recognizing that I know nothing about anything other than my activity in Henderson County is very light and the map shows many dry holes and the recorded leases are few and far between, I doubt you will get much in the form of bonus and I doubt the company will drill even if they take the lease.
I am very bearish as I had a company push back from the table yesterday in South Texas, Eagle Ford Shale play even though they have a tremendous number of the holders leased.
good luck.
Just looked at the location of your survey / acreage versus what has been happening in this part of the county as to O&G exploration activity. Bottom line is that things have been pretty slim in your area.
You are located west of the structural high ridge that runs parallel to the lake - basically low to possible O&G traps at the target intervals in this area.
There is no apparent deep structuring (e.g. salt domes) to create traps at depth in your area - so deeper targets (e.g. Cotton Valley, Smackover, etc.) are extreme long shots.
There has been one well drilled in the middle of this survey years ago - only to 5000' and a dry hole (probably targeting Woodbine Sands).
The only play of substance that is "active" (and I am stretching the word "active") is the Goodland lime unconventional play (tite oil charged carbonates). EOG has drilled a decent horizontal on the other side of the lake near Flint (horizontal) but has pulled back on any new drilling due to low oil prices and economics - they are even looking to dump a lot of their acreage in this play in many areas. Clayton Williams, Chesapeake, Apache, Carrizo and others have done some leasing north of you (for Goodland) between Opelika and Chandler and then up to near Lindale - but all this leasing is situated in a structural low that appears to be a key factor for the Goodland.
Your survey is not in one of these structural lows.
I am thinking that you are probably getting a low ball offer with less than a 25% royalty interest - but with no activity in your area and nothing much on the horizon, better terms are tough to support.
As per Drilling Info.com (a subscription site), there has been some mew leases filed over the past 24 months between Moore Station and Antioch - mostly by a group called Rampart (who may just be a brokerage / leasing group working for an operator). Looks like 3 year leases with some two year extensions. Royalties in the 20-25% range when noted. No info on bonuses.
That's all that I know and can find on your area
Not sure where Survey A-410 is located; close to what town? Do you mind sharing who the leasing company was, what the offer per lease acre was, and when this offer took place. I didn't think there was much, if any, leasing activity going on right now. I have rights near Chandler, Tx. THANKS!
If you drew a straight line between Antioch and Moore Station, the center of Abstract 410 is about 2.5 miles due west of the mid point of that line. Or the same distance from where CR 314 crosses the lake / creek in that area
Jan,
On the GIS Map I see production approximately 3 miles East of your A-410. Well API 213-30950/oil well/11,000' wildcat/drilled 2009/Pettet Formation. Link to approved drilling permit for well 30950:
http://webapps.rrc.state.tx.us/DP/drillDownQueryAction.do?fromPubli...
Also well API 213-31030/drilled 2011/oil well/Travis Peak Formation.
Link to Production Data for well 31030:
Your A-410 is approximately 6 miles South of Brownsboro, Texas.
GIS Map of Henderson County A-410 and surrounding area:
Clint Liles
Clint
Good display showing production versus acreage - all those wells are structurally high to the Abstract 410 area and tied to high side fault closures.
Of the four wells, three are still active but nothing super here.
31030 (Palmer Petroleum) making 14 BO & 75 MCF per day / total prod 41,000 BO & 63 MMCF
30950 (Randall) making 9 BO per day / total prod 35,000 BO
31012 (Buffco) making 6 BO per day / total prod 7100 BO
None of these wells will have pay out the drilling the completion costs as I see it.in m) c
Hello Rockman,
I agree with your assessment of these wells never paying for themselves at current oil prices. Maybe Jan will get some kind of lease. Considering the state of the oil business I would probably take whatever was offered in this area of Henderson County. Just my opinion.
Clint
Clint
I would have to agree with you as long as the lease is a good one and doesn't contain any ugly clauses that penalize the mineral owner.
One of my concerns here considering the low prospectivity is the broker "making a deal" and then waiting forever to get paid bonus money
Thank you Bill. I appreciate your honesty and your time and expertise in looking into this. That's interesting about the Eagle Ford Shale as I was contacted last month about 3 acres I have in Live Oak County. I was offered $300/acre, 20% royalty for 3 year lease with possible 2 year extension. I've got the lease agreement at a lawyer's as there are a couple of paragraphs that sounded a little scary to me. Obviously, I'm not going to be able to retire to the French Riviera, but I don't want to get stuck with bills from lease.
Thank you Rock Man for sharing your knowledge and expertise. I was offered $150/acre - is that what is referred to as the bonus? 20% royalty for 3 years. The company is Doughtie (not sure of the spelling), but I haven't received paperwork yet. Just got the offer Tuesday via phone. I'm a novice with all this as these are mineral rights I inherited and haven't any real experience with having to handle it myself.
Jan, make sure the lease is a cost free royalty and contains a "Pugh Clause." I would be very careful with the addendum as it often will say "Notwithstanding anythnig to the contrary..." and everything in the addendum is contrary to what is in their "form" lease that "everyone signs."
I have also read recently of people signing leases and having a tough time collecting their bonus while it appear to me that the landman is marketing the lease for a quick flip. I always include a cover letter telling them that it is to be held in escrow pending payment of the bonus and if that is not paid within five days they are to return the original to me and it is null and void.
Thank you for all this info, Clint. The offer is $I50/acre with a 20% royalty. I'm assuming you can see my replies to the others, so I won't burden you with the repetition. One last question: is the $150/acre what is called the bonus and why is it called a bonus?
The "ugly clauses" part is what scares me. I've got the Live Oak County lease at my lawyer's, but I haven't heard back from him and it's almost been a month. (My lawyer is a relative so I'm not high priority, but he is a dear to sort through the legalese.) Are there some "ugly" parts I should watch out for?
Thank you. This is my concern, especially with the Live Oak lease as it is a Louisiana firm - oh my. Here's just part of a lengthy and confusing paragraph that bothered me: "Lessor's interest shall bear the stated part of all taxes, and costs of treating the oil to make it marketable..." Similar language for gas sold the Lessor's "proportionate part of ad valorem taxes and production, severance, or other excise taxes and the costs incurred by Lessee in delivering, treating, processing, etc." Sounds like I would be paying all the expenses out of my supposed royalties. Am I understanding this correctly? If costs are higher than my royalties, can I be billed?
Jan,
Yes, the $150 per acre is the bonus money. From what I understand it is also called a 'Consideration Payment'. The 20% royalty sounds good but you need a 'No Deductions Clause' in your lease for sure. Go to the Mineral Rights Forum main page and where it says SEARCH enter 'No Deduction Clause' I think you will find some interesting information.
Clint Liles
Doug - I called you Will earlier, my apologies. I got your number; thank you for sending that. It may be next week before I get in touch as I have a busy day tomorrow, and then we are preparing for Hurricane Joaquin this weekend. We live in Williamsburg VA, right off the coast. We have already gotten and are continuing to get lots of rain from a cold front, so we are saturated - not a good position to be in with a hurricane coming. Pray it turns east out to sea.
I go by either doug or Will or deviation thereof.
I think you are hearing a lot of good ideas but it can be overwhelming and I have some leases that I sure wish I could do over.
The leasing guys are very charismatic and well they no how to work their audience.
Dont be afraid to ask questions and get it all in writing.
One of my favorite saying is "the way you know they are lieing is that their lips are moving." Not all but enough that it is very dangerous and I dont think they should double or tripple their investment due to our ignorance. Fair pay for fair work fine, but they dont own the minerals so be careful.
Thanks for this information. I'll look today on "No Deduction Clause."
Also, I love the "Have a Nice Day" sign. I'm trying but we've been battening down the hatches for Hurricane Joaquin and parts of our area is already suffering from fresh water flooding. I bet that makes Californians jealous.