Company wants to re-trade our lease

Our family signed lease agreements this summer for our interests in the above referenced property, only to have the original, signed leases returned to us with a cover letter offering a “significant reduction” in the lease offer amount resulting from “due diligence” having identified “a geologic fault traversing near or through this section.”

As far as I can see through online resources, there are geologic faults all over that area, a fact which has been known for decades (as evidenced by maps of the faults from the 1980’s and '90’s).

Has anyone else had this kind of thing come up? How did you handle it? Should we just suck it up and accept the new offer?

Thanks in advance for any help or advice you can give us.

If it for less money do not negotiate. Have you been paid for the original lease?

thomasgray - Thank you for responding.

No, we have not been paid for the original lease. The original lease document was returned to me.

What do you mean by “do not negotiate”?

Leslie, We are in Block 58 and were told our Block had faults also several years ago and couldn’t expect top dollars for a lease. Upon getting numerous inquiries`in a matter of months we turned it over to our attorney. He negotiated a lease $2500.00 per acre more than previous offers. Also in the past 2-4 months in Block 55 and 58 the RRC has permitted about 6 new wells. One was permitted in Section 29, Block 55 T5 just last week. Several have been drilled and are producing.

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Thank you, Kenneth… All good to know!

I think this a rather common ploy of oil and gas operators to try to drive down the price of the lease bonus and royalty. That’s one of the reasons they take so long responding. It is true that the faults have been known in this area for many years. I do not know who you are leasing from. That might make a difference.

It seems possible that a sweet spot might be developing between Balmorhea Lake and the Barrilla mountains. No one can know for sure but there has been very little drilling in that area. I know one vertical dry hole in the area has approximately 1400 feet of Barnett shale.

This is only my opinion.

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Hi My property is in that general area, South side of 10. Very little activity there… Yet (?) 9 wells directly across the street, put in a year ago. Where was the shale found? Any other possible indicators of a " sweet spot"?

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Thank you for the input. Based on these comments and my sketchy knowledge of how the State of Texas operates re: its school lands, I am going to wait for any other offers which may be forthcoming. I will not respond to the current offer.

Leslie, I’m on my iPad and I can’t see your land description anymore. Block 55 ??? We are not in a township, but across from Block 55 Township 5. Someone mentioned you being in the same area as them, south of I-10?? We are N of I-5 as is Township 5. I didn’t want to give you wrong information like I may have earlier.

BTW I see you are from Billings, we live in Huntley but worked in Billings. Marie Haag

Edit needed, North of I-10

Kenneth - Howdy, fellow Montanans! The legal description is Section 10, Block 55, Township 5.

Leslie, You are about 6-7 miles East of our sections. There used to be a private message tab several years ago on this forum if we wanted to share more info, but the powers that be have removed it. :slightly_frowning_face:

If you already accepted their offer, it may be too late for them to change the terms. You should ask an attorney about that.