The southwestern part of Franklin County rests atop the northern edge of the Tuscaloosa Marine Shale (TMS). The heart of the play in MS is currently south (Amite County) and west (Wilkinson County).
As the TMS continues to heat-up over the next couple of years propelled by encouraging results thus far and tax advantages, it is possible that more testing and drilling will occur in the southern-most parts of Franklin County although I am not aware of much activity here now. This discussion is for those willing to share information about Franklin County TMS leasing, when and if it happens. The more we share, the better positioned we are to negotiate for fair and reasonable lease terms.
The rest of this post shares some points I've learned from recent research and reading that could impact us in this community. I am not a lawyer or expert on these matters. I am simply a mineral rights owner trying to help other mineral rights owners in Franklin County. Do not use this as a substitute for seeking legal counsel.
1. In areas new to oil and gas exploration, it is common for independent land men and speculators to approach mineral rights owners with offers to lease their mineral rights. These land men may work for the oil and gas production companies BUT they may work for themselves as a sort of 'lease broker'---seeking to lease mineral rights with the intent on repackaging them for reassignment and a profit of course. Naturally, the offers from the lease brokers will tend to be less attractive than what you could get directly from an O&G production company. Their offer may come to you first because they are trying to lease ahead of the play on a speculation. This is not necessarily a bad thing---but you need to weigh the potential reward of leasing early to a 'broker' with the risks of leasing early to a 'broker'. Before you lease, research the company that approached you--their strategy, their track record.
2. Ask questions. Insist on time to research. Sign only when you are comfortable.
3. Negotiate. From what I've read, a reasonable standard for a wildcat/unproven area is $50-$100/net acre for 3 years and 3/16th royalty. If your offer is less than this, consider negotiating. For proven areas, the financial offers are much better (20-25% royalty if leasing directly with an O&G producer). Again, this is just a generality I noticed in my reading and not a hard rule. I can recommend articles.
4. There is no such thing as a standard lease. The producer's 88 has many different variations. Read your lease. Type it out so you understand every clause. Many experts recommend adding a pugh clause + separate compensation for surface damages---spell it out.
5. Many lease agreements are written to allow the lease to continue beyond the term as long as any number of a long list of 'operations' are in effect. Make the language clear so you know when the lease ends. Otherwise, it may be held in force longer than you anticipated.
6. In the state of MS, if an O&G producer/operator has 33% of the mineral rights leased for a given drilling unit, it is possible your unleased acreage (if planned for the drilling unit) can be force integrated. This is important to know because 1) your decision to lease can potentially impact your neighbor and 2) this law might be 'hand waved' as a tactic early in the leasing process to get reluctant mineral rights owners to sign a lease. Know when a force pool is an immediate reality versus a pressure tactic.
Please share. I am eager to learn more about leasing activity related to TMS testing/drilling in Franklin County.