Barnett Shale Fort Worth - Not sure where to start

My wife and I just purchased a home in the Ryanwood neighborhood in Fort Worth, Texas, last November. Recently, we received a packet from Dale Property Services offering a 5 year lease for our .223 acre at $2000 per acre/25% Royalty. Being from California, and obviously not adept at reading through all the fine print, I have no idea if this is a fair offer or not, and whether this is the going rate for the neighborhood. None of our neighbors seem to know anything. Any help would be appreciated.

Sincerely,
Tony Tesh

I just received my letter. I have a rental home on the west side of Fort Worth. I signed up with a company two years ago not knowing that I was getting shafted! They offered $2500 an acre. My neighbor across the street held out and had a meeting with a couple other neighbors and they ended up getting $25,000 per acre. That’s a big difference. That company sold the leases to Chesapeake Energy, who just sent me a renewal offer of the same $2500 per acre. I want to hold out, but don’t know how to go about it. Any info you could provide would be great.

Jeff, when was the 25,000 offer? That may have been back in '08 or earlier before gravity got the best of the payouts. Is the renewal offer a check to extend for 2 years or is it to outright lease. The last 3 leases I’ve been involved with in the last 6 month have been with CHK. These are in Johnson Co. which is the Co. just to the south of Tarrant Co. The offer for one in Cleburne was 2000/25%. We ended up with 2500/25%, no cost, & a few other clauses. In Burleson, the offer was for 2500/25%. The current offer in Joshua is the same but we’re working on the clauses, etc. All the lots are just .25 acre + or - city lots. Tony, I would think you could at minimum match these & probably do better. I would continue to ask around about it before you sign anything. I believe Dale is the land company working for CHK.

Hi Joel. Yes, the $25K was in 08. I realize I won’t probably won’t get that amount, but should do much better. I just don’t know how to go about “holding out.” It’s about a .25 acre lot. They are offering about $750. It’s a check and states “thank you for your consideration,” but there are not details regarding royalties or that it’s an extension. Do you have any tips on how I could maximize the offer? After I speak with neighbors and get them onboard, where do I go from there? Thanks!

Jeff, just looking at this, to me it looks like you leased in '08 & they are exercising their option to extend the lease. Most leases will have that option in them unless you negotiate them out. I would start by checking your lease before you expend your time & energy trying to hold out. If this is a check and your lease allows for an extension, it’s not an offer, it’s a done deal. Joel

Thanks Joel. Can you take a look at this and see if that is what it is? It appears that it was a 3 year lease with a 2 year option. If that’s the case, then holding out won’t do squat?

Sorry, had to take out the pdf file since it had my personal info on there. But it does state verbatim “three year primary term with a two-year option.”

Jeff Fortner said:

Thanks Joel. Can you take a look at this and see if that is what it is? It appears that it was a 3 year lease with a 2 year option. If that’s the case, then holding out won’t do squat?

Yea, your right. If after the 2 year extention no drilling activity has occurred, then you will have an opportunity to lease again. Sometimes before the end of your current lease expires, another O & G company will “top lease”, by paying 10% or so of there bonus offer up front & then the rest at the termination of your current lease, then their lease would go into effect. Hopefully there will be drilling activity soon. Best of luck, Joel

Jeff Fortner said:

Sorry, had to take out the pdf file since it had my personal info on there. But it does state verbatim "three year primary term with a two-year option."

Jeff Fortner said:
Thanks Joel. Can you take a look at this and see if that is what it is? It appears that it was a 3 year lease with a 2 year option. If that’s the case, then holding out won’t do squat?