Cheyenne County Lease offer

Hi, all. I'm trying to find out what current lease offers are looking like in or around Cheyenne Co. I've received a Paid-Up Oil and Gas Lease that offers a signing bonus of $50 per acre, a five year lease, and 12.5% royalties. From what I've found so far, this is in the ballpark, but I'm a little concerned about the 5 year term and that the royalty might be on the low side.

Any thoughts or comments?

Thanks

Hi,

We recently received the same offer for our lease in Cheyenne Co. The landman assured me the $50 was the highest he could go and that it was competitive. Also said that unless we had 1000s of areas the 12.5 was standard too. I would also be interested in what others have gotten. Seems to be the start of some interest in the area.

Thanks

Thanks, Ann, any thoughts on the 5 year primary term of the lease? My offer came from Paschal Energy Services and I haven’t been able to figure out yet if they have an assignee they are working for or not.

Ann M. Torres said:

Hi,

We recently received the same offer for our lease in Cheyenne Co. The landman assured me the $50 was the highest he could go and that it was competitive. Also said that unless we had 1000s of areas the 12.5 was standard too. I would also be interested in what others have gotten. Seems to be the start of some interest in the area.

Thanks

Ours was for 5 years also. This is all new to me so I know nothing about the norm for a lease period. Our offer was with Paschal Energy also. What do you mean by an assignee?

It’s new to me also, but they may assign the lease to another company who would actually be interested in exploration. As far as I know, Paschal is strictly a go between. I found some things online regarding do’s and don’ts in leasing and one suggested that a shorter lease period would be beneficial. Supposedly, the shorter period provides more incentive to the lessee to actually do something with the property and if they don’t, you are free to lease with someone else sooner. Assuming, that is, if anyone else is interested. I guess that depends on how much interest there is in the area.

Ann M. Torres said:

Ours was for 5 years also. This is all new to me so I know nothing about the norm for a lease period. Our offer was with Paschal Energy also. What do you mean by an assignee?

Have you talked on the phone to the landman? When I visited with the one that sent us the letter he lead me to believe that they were in the process of leasing 20,000 acres for deep oil drilling in the area.

No, not yet. That will come in the next day or two. I wanted to be a little bit better informed prior to talking to him. I just found out that my sister has a contact with an oil attorney in Texas who is currently looking at the lease for us. I will post back after any further developments. Thanks.

Ann M. Torres said:

Have you talked on the phone to the landman? When I visited with the one that sent us the letter he lead me to believe that they were in the process of leasing 20,000 acres for deep oil drilling in the area.

Thank you. Appreciate the help.

I also got an offer from Paschal at fifty dollars and 15% for land south east of Kit Carson. Has any body accepted yet? I am being advised to play a little hard ball, but haven't started negotiating yet.

Hi, Don. I countered to Paschal at 18.75%, but have not received an answer yet. I didn’t try to change the $50 an acre because I’m talking such small acreage in my case it wasn’t really a big issue. I also did not counter on the five year term because I don’t think there is much going on in the area right now. I will post a comment when I hear my answer on my royalty counter offer.

Don Hogan said:

I also got an offer from Paschal at fifty dollars and 15% for land south east of Kit Carson. Has any body accepted yet? I am being advised to play a little hard ball, but haven't started negotiating yet.

My sources say that fifty is a fair offer but not hearing of any more than 15% royalty. They also recommend shooting for three years and no option.

Matthew Potter said:

Hi, Don. I countered to Paschal at 18.75%, but have not received an answer yet. I didn't try to change the $50 an acre because I'm talking such small acreage in my case it wasn't really a big issue. I also did not counter on the five year term because I don't think there is much going on in the area right now. I will post a comment when I hear my answer on my royalty counter offer.

Don Hogan said:

I also got an offer from Paschal at fifty dollars and 15% for land south east of Kit Carson. Has any body accepted yet? I am being advised to play a little hard ball, but haven't started negotiating yet.

Like you, i think it might be low, but its better then what we were offerered…We have mineral interest in eads, Kiowa County. The land lady for Diamond Resources offered 25.00 per acre and 12.5% interest on a 5 year lease with a 5 year option to renew and that was a take it or leave it offer. Has anyone had a simular expierienced or any better offers???

John, after my counter at 18.75%, Paschal came back at 15% and the other terms unchanged at $50/acre for five years with an option to renew for five years at $100 per acre. I accepted it since everything I've heard says production is still a long way off in the Kit Carson area, (if it pans out at all).

Diamond Resources seems to be "new entity" in this discussion. Matthew, was your lease contract actually from Pascal Energy or was it Westpahl Energy, LLC.?



John Stuart said:

Like you, i think it might be low, but its better then what we were offerered....We have mineral interest in eads, Kiowa County. The land lady for Diamond Resources offered 25.00 per acre and 12.5% interest on a 5 year lease with a 5 year option to renew and that was a take it or leave it offer. Has anyone had a simular expierienced or any better offers????

Im not sure, but these leasee/landmen may be the go between fo someone.

Carolyn Rohde said:

Diamond Resources seems to be "new entity" in this discussion. Matthew, was your lease contract actually from Pascal Energy or was it Westpahl Energy, LLC.?



John Stuart said:

Like you, i think it might be low, but its better then what we were offerered....We have mineral interest in eads, Kiowa County. The land lady for Diamond Resources offered 25.00 per acre and 12.5% interest on a 5 year lease with a 5 year option to renew and that was a take it or leave it offer. Has anyone had a simular expierienced or any better offers????

John,

You are correct. I asked the representative for Pascal what oil company he was working with. He said the oil company wants to remain anonymous. He said is a big company that does not want to reveal their identity until later – competition and all that. That makes me think the landmen might speculating this for themselves! However, if Diamond Resources is indeed a different company, perhaps that gives us owners an advantage - competition for our leases!



John Stuart said:

Im not sure, but these leasee/landmen may be the go between fo someone.

Carolyn Rohde said:

Diamond Resources seems to be "new entity" in this discussion. Matthew, was your lease contract actually from Pascal Energy or was it Westpahl Energy, LLC.?



John Stuart said:

Like you, i think it might be low, but its better then what we were offerered....We have mineral interest in eads, Kiowa County. The land lady for Diamond Resources offered 25.00 per acre and 12.5% interest on a 5 year lease with a 5 year option to renew and that was a take it or leave it offer. Has anyone had a simular expierienced or any better offers????

My lease is directly from Paschal. He gave me the impression they were not working for another company. He also hinted that the lease would be assigned to Paschal Drilling.

Paschal is not a drilling company. Paschal no longer exists as Paschal.. it is now Westphal. Since they are not drillers they are either working for them or speculating. There are things in their contract that I'm being advised not to accept and things that I should add. If you want, I would be happy to pass along out side of this forum.

Also look for other offers. We now know that Diamond Resources of N. Dak is trying to lease in Cheyenne County. Be patient.

Matthew Potter said:

My lease is directly from Paschal. He gave me the impression they were not working for another company. He also hinted that the lease would be assigned to Paschal Drilling.


Diamond Resources is not an oil company either. Though they are legit. They are landmen who lease on behalf of the oil companies.
Carolyn Rohde said:

Diamond Resources seems to be "new entity" in this discussion. Matthew, was your lease contract actually from Pascal Energy or was it Westpahl Energy, LLC.?



John Stuart said:

Like you, i think it might be low, but its better then what we were offerered....We have mineral interest in eads, Kiowa County. The land lady for Diamond Resources offered 25.00 per acre and 12.5% interest on a 5 year lease with a 5 year option to renew and that was a take it or leave it offer. Has anyone had a simular expierienced or any better offers????

I am having a problem with Diamond Resources. After dealing with us for 8 months and actually getting my brother to execute a lease for which Diamond recorded a memorandum of lease, Diamond went to court and sought a mineral trust, claiming they could not find my brother or I. I am trying to hurry my lawyers to file the case against Diamond for fraud. If you shake hands with Diamond, be sure to count your fingers afterward.