DIMMIT COUNTY Oil & Natural Gas Opportunities

Oil and Gas Leasing Help
1

Over the last few months our family has received some offers for land we currently own in Dimmit County, TX just N of Catarina on Hwy 83. We have done some adequate research to find our actual location of land and came to the realization that the offers we had received were very low. We are interested in potentially selling or leasing the land and would like to know more about mineral rights and how you can keep them if land is sold and how the process of leasing works?

If anyone has any insight we would appreciate it and furthermore we would like to entertain some serious offers for leasing or selling.

Thank you very much,

Jeff Bullard Winchester, IN

2

How many acres do you have there?

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That is the difficulty in comparison to other posts I’ve seen on this forum… it isn’t much… 10 acres. But, from our land plot that we were sent it appears to be right off the highway.

4

Jeff: To clarify your situation are the offers you are receiving for the “real estate” or purchasing your mineral rights or leasing the “mineral rights” to an oil company? If you are in a potentially favorable area with production nearby then 10 net mineral acres can be meaningful for royalty income, that is assuming you own 100% of the minerals. As to the last part of your question, you can sell the surface estate and reserve 100% of the mineral rights. However, if I were buying 10 acres I would want all the minerals so I could control the surface protection issues.

5

Thanks for your input… I am understanding a little more now.

We have received another phone call and contract considerations this week from Gulf Coast Acquisitions that is interested in using a portion of our land (2-3 acres) to use for “Salt Water Injection.” Our understanding now is that there is an abandoned oil well currently on our property that they would use for this process and have offered us $1,500 a month for up to 10 years to lease our land to perform this. We believe this sounds good, but have our concerns about causing our land to not be available for future leasing or drilling options and we can’t be sure if $1,500 is a fair price?

This contract is not to lease the land or buy the land and it has nothing to do with mineral rights. We are going to allow our estate lawyer to review and give advice so we can be sure the language is well spelled out, however we are in Indiana and there may be limitations to what he knows?

We have determined whether we lease or sell, our desire is definitely to retain mineral rights or at least work to negotiate a percentage of royalties.

Thanks for everyone’s input so far, if you have any more insight it is appreciated…

Jeff

6

Jeff -

I’m a Landman in Fort Worth, Texas, with over 30 years of experience but have never negotiated a lease for a Saltwater Disposal Well.

But I’ve emailed a few friends in the industry, asking what typical terms might be.

Don’t sign just yet - I could be that you can negotiate for a “per barrel” price that would result in substantially more than $1500 a month.

And never, ever sell your mineral rights. Reserve them if you sell your surface rights and retain the rights of ingress and egress to develop them.

And if you are not satisfied with the lease offers you have received, send me your legal descriptions and I’ll see if I can find you what you want.

Charles Tooke Fort Worth, Texas fieldlandservices@gmail.com 713-408-2850

Jeff Bullard said:

Thanks for your input… I am understanding a little more now.

We have received another phone call and contract considerations this week from Gulf Coast Acquisitions that is interested in using a portion of our land (2-3 acres) to use for “Salt Water Injection”. Our understanding now is that there is an abandoned oil well currently on our property that they would use for this process and have offered us $1,500 a month for up to 10 years to lease our land to perform this. We believe this sounds good, but have our concerns about causing our land to not be available for future leasing or drilling options and we can’t be sure if $1500 is a fair price?

This contract is not to lease the land or buy the land and it has nothing to do with mineral rights. We are going to allow our estate lawyer to review and give advice so we can be sure the language is well spelled out, however we are in Indiana and there may be limitations to what he knows?

We have determined whether we lease or sell, our desire is definitely to retain mineral rights or at least work to negotiate a percentage of royalties.

Thanks for everyone’s input so far, if you have anymore insight it is appreciated…

Jeff

7

Charles,

I thank you for your information.

I have sent you a private email with some more questions as well as requesting any other information you may have about Salt Water Disposal…

Your post has been very encouraging and we hope to make a deal soon.

We have been advised by our Indiana estate lawyer to investigate retaining a lawyer in Texas that is well versed in negotiating these kinds of contracts. If you could email me (or respond to this post) whenever you have opportunity, we are trying to come to terms with the gentleman that has made us an offer. We want a fair shake for all involved and any insight you have would be helpful.

I realize it is holidays so not much will probably be accomplished in the next week or so, but anytime you get an opportunity, I would love to converse via email or even make a phone call.

Thanks for your time…

Jeff Bullard pjwinrevival@aol.com 765-584-9604 home

8

Hey, Jeff -

My apologies for not having gotten back in touch with you sooner - just busy with those pesky little details that make up life.

A couple of people suggested scouting out other Salt Water Disposal Wells (SWD’s) in the area and contacting those landowners to see what sort of contracts they negotiated. Pretty good advice, seeing as this sort of thing has been done before.

If you want to send me your legal description or at least what survey your land is in (whatever is on your tax statement should do), I’ll see what I can find out for you and who to call.

I have a couple of Attorneys I would feel comfortable suggesting to you - one a big firm type in Dallas, the other a small town Lawyer in the area. I don’t know how much experience either one has in negotiating specifically this type of contract, but seeking either one’s advice would be recommended.

My personal contact information is

Charles Emery Tooke III Certified Professional Landman 2601 Ridgmar Plaza, Suite 201 Fort Worth, Texas 76116 713-408-2850 Cell fieldlandservices@gmail.com

Merry Christmas!

Charles

Jeff Bullard said:

Charles,

I thank you for your information.

I have sent you a private email with some more questions as well as requesting any other information you may have about Salt Water Disposal…

Your post has been very encouraging and we hope to make a deal soon.

We have been advised by our Indiana estate lawyer to investigate retaining a lawyer in TX that is well versed in negotiating these kinds of contracts. If you could email me (or respond to this post) whenever you have opportunity, we are trying to come to terms with the gentleman that has made us an offer. We want a fair shake for all involved and any insight you have would be helpful.

I realize it is holidays so not much will probably be accomplished in the next week or so, but anytime you get an opportunity, I would love to converse via email or even make a phone call.

Thanks for your time…

Jeff Bullard pjwinrevival@aol.com 765-584-9604 home

9

Charles,

I own surface acreage in Texas, without minerals, that has a plugged and abandoned well on it. The mineral interest is currently held by production by a major oil and gas company. Another company has approached us to sign a lease to use the surface area around the P&A well for reentry and conversion to a saltwater disposal well. The major oil company’s representative tells us that, being the surface owner, we don’t have those rights. The company desiring to convert the P&A well to a disposal well tells us that under Texas law, we do have those rights. I checked on the lease agreement between the mineral owner and the major company and it is a lease for oil and gas only, not including any other minerals. Do you know if there is a Texas statute defining this issue? If not, do you know of any Texas court case that settled with the surface owner having the rights to saltwater disposal? Thanks for your help. Robert Anthony

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Mr. Anthony: It is my understanding that the surface owner in Texas would be entitled to negotiate with an oil company on a saltwater disposal (SWD) type well. This situation came about with us being mineral owners only on a well that was determined to be a dry hole. The operator was then wanting to use the well for disposal purposes. Our attorney advised that we would no longer be involved since no oil or gas production could be commercially produced. Also, I don’t think a well that has been plugged and abandoned can be held by production. I would advise consulting an oil and gas attorney to clarify your rights.

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Mr. Anthony, it is my understanding that the surface owner is paid “damages” for a SWD. It is not a matter concerning the mineral owner who has a right to payments from the production of their minerals because nothing is being produced and taken away. I recommend that you get help from a mineral manager with the deal, to not sell yourself short. There are many considerations that will determine how much you can charge, such as how much it will cost the oil company to take the oil somewhere else, and precisely who and how many companies will be using the SWD. One company could lease from you and charge other companies to dispose of their water and actually make a profit off your SWD. I would want a per barrel price, not just a monthly payment. I have even heard of people getting paid part of the skim oil that is reclaimed before they pump the water underground. I wish you luck; this could be better than having an oil well.

Bob G. Anthony said:

Charles,

I own surface acreage in Texas, without minerals, that has a plugged and abandoned well on it. The mineral interest is currently held by production by a major oil and gas company. Another company has approached us to sign a lease to use the surface area around the P&A well for reentry and conversion to a saltwater disposal well. The major oil company’s representative tells us that, being the surface owner, we don’t have those rights. The company desiring to convert the P&A well to a disposal well tells us that under Texas law, we do have those rights. I checked on the lease agreement between the mineral owner and the major company and it is a lease for oil and gas only, not including any other minerals. Do you know if there is a Texas statute defining this issue? If not, do you know of any Texas court case that settled with the surface owner having the rights to saltwater disposal? Thanks for your help. Robert Anthony

12

The question of damages on a SWD well depends on if lease salt water is being disposed (lease well) or if water is being hauled in off lease (Commercial SWD well). On a commercial SWD well, the surface owner has the complete right to negotiate or refuse to lease for commercial purposes. Most mineral leases and I think case law (don’t ask me to look it up) provides that the mineral lessee has the absolute right to dispose of lease produced salt water.

13

Thanks so very much for your expeditious reply to my questions. Your information is very helpful. I was advised by another source to go online to the Texas Railroad Commission’s GIS map site. I did so and I found my acreage and under the DISPLAY section, slid the mouse to Highlight Comm Disp, left clicked mouse on Commercial Disposal and the map showed the Commercial Disposal wells highlighted in orange. Then I clicked the mouse under MAP TOOLS to Identify Wells. When I moved the mouse over the disposal well and clicked, it brought up information on the well. I now have the legal description of the surface on which the disposal well is located. I will now find the name of the surface owner and check with that person to see if they will tell me what they are being paid. Thanks again for your help. Hopefully, the GIS map information will be useful to others seeking advice on well, leases, etc.

Best Regards and Happy Thanksgiving.

Robert Anthony

14

I’m curious as to what progress you have made since your last post. I currently work as a regulatory permitting consultant for SWD wells. There could be some additional roadblocks to be aware of once you get past the surface use rights/mineral rights argument.

Kudos to you, though, for really researching this before signing anything. I see too many landowners locked into surface use leases for pennies compared to what is fair.

15

Christi,

I have learned, by virtue of research on the web, that the Texas Railroad Commission hearing examiners have on at least one occasion ruled that the surface owner has rights to a plugged and abandoned well to be converted to a SWD well. However, I have not yet been able to determine if there are any Texas court cases addressing the issue between oil and gas lessor and surface owner concerning reentry of plugged and abandoned oil wells for conversion to SWD wells. The oil company that has the oil and gas rights to our land states that by Texas law, it and only it has the rights to plugged and abandoned wells. I don’t want to spend hundreds of dollars per hour for legal fees and I don’t want to be forced to go to court. If I had evidence of Texas court cases that have found in favor of the surface owner concerning reentry of a P&A well for conversion to a SWD well, that would probably suffice.

Thanks for your interest.

16

Hi Christi,

As the landowner, how do I determine the fair rate for a 10 acre surface lease for a SWD well in McMullen County Texas? The land is adjacent to the major highway.

Thanks

Marilynn

mfforrester@cox.net