Advice on evaluation of lease offer Cherokee County Texas

Oil and Gas Leasing Help
1

I am wondering if anyone else has received lease offers in this area? My husband received a lease offer on this property that previously had a producing well when his grandmother owned it. It passed to his mother and then to him when his mother passed. We know nothing about lease language but I don’t know if this small portion of the pool would be worth paying a lawyer to review?

  • Texas
  • Cherokee County
  • Valence Operating
  • Lease Name WARD, RUSSELL
  • Field Percy Wheeler
  • Previous Expired Lease Number 123851
  • Well Number 1
  • District 6
  • 8.8 mineral acres owned in the pool
  • Pool 320 oil, 640 gas
  • Royalty offer 1/6
  • Bonus $100/acre

Thank you for your help. I have learned a lot from others in this forum.

Tracy

2

Tracy,

Welcome to Mineral Rights Forum.

We need to know the exact location of your husband’s minerals. Such as the Section and Block or Abstract number can make a big difference.

3

Looking through documents, this is what I find. Does this help at all? I also attached a copy of a plot map that was in the archives. The plot I highlighted is the property. My husband has a 50% interest in the 17.6 acres, yielding the 8.8 mineral acres.

Russell Ward Gas Unit 1, Cherokee County, Texas, being part of the Walter Pool Survey, A-718, the David Eakin Survey, A-262, The R.R. Jewell Survey, A-1, Cherokee County, Texas, and being more fully described in that certain Declaration of Unitization and designation of unit recorded in Volume 1024, Page 106 of the Land Records of Cherokee County, Texas.

Legal Description: Located 1677’ FEL and 1000’ FSL of the JT Jones Survey, Cherokee County, Texas.

8.8 Net Acres out of 17.6 Gross Acres, J. T. Jones Survey, A-473, located in Cherokee County, Texas.

17.6 acres of land, more or less, being part of the J. T. Jones Survey, A-473, Cherokee County, Texas; and being the same land described in a Deed dated May 27, 1968 and recorded in Volume 680, Page 745, of the deed records of Cherokee County, Texas.

288-Plot.JPG (65.5 KB)

4

Good Morning Tracy. I just checked the RR Commission GIS Mapping System and in the area of A(Abstract)-473 to the East and Northeast there are some fantastic wells being drilled by Valence, Jamex and Breitburn. These horizontal gas wells are being drilled into the Cotton Valley Sand Formation (10,500’-11,500’). The completion reports state that these gas wells’ initial production are from 5 to 10 million cubic feet per day. Your husband’s minerals are in a good area of Cherokee County. I just got off the phone with Mr. W. D. Wilkinson that has minerals about 2-3 miles Northeast of your husband’s minerals. He said that the minerals in that area are leasing for $250 per acre and the royalty rate is 22 1/2%.

You will need to try and get a ‘NO DEDUCTIONS CLAUSE’ IN YOUR LEASE… A CLAUSE THAT STATES THAT THE OIL COMPANY/PRODUCER WILL NOT TAKE FROM YOUR ROYALTY CHECK FOR THE COST OF PROCESSING, GATHERING, TRANSPORTING, TREATING, COMPRESSING, DEHYDRATING AND MARKETING OR OTHERWISE MAKING SUCH GAS OR OTHER SUBSTANCES READY FOR SALE.

GIS Map of Cherokee County A-473 and surrounding area:

CLICK ON MAP TO ENLARGE

Clint Liles

5

That’s great news! Thank you so much. I am reading the contract and for sure they have deductions so I will invest in an attorney to look it over.

Thank you again for your help. You are such a wealth of knowledge for those of us that are new to this.

Tracy

6

O&G attorney with experience in oil and gas leases, preferably.

Good luck.

7

Thanks Pat, I left messages for two that I found on this site with recommendations and just waiting for a call back. I know my local attorneys won’t know much about O&G.

T

8

Tracy, you might want to join the Cherokee County Group to keep up with new permits and completions, etc.

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Clint Liles

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9

Tracy, as always I think Clint has given you excellent information. We are very fortunate to have him. Valence is drilling the McElroy 3-H right now near the northeast corner of Cherokee County and about 3 miles south of that rig, Jamex is drilling the Johnson 1-H. I hope you are able to get the “free carry” clause. Most operators are now charging us over 30% in expenses on our royalty checks. The last offer we got was for $200 per acre and a 20% royalty and they would not accept our “free carry clause.” We countered with a 1/6th royalty with the “free carry” and they would not accept that. In East Texas when expenses are removed from a 20% royalty, we are really working with a 1/8th lease in some cases. Not all operators are charging this much, but the majority are. Good luck.

10

Tracy,

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