Fresno County, CA oil & gas discussion group. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news. - Coalinga Front Prospect
$30 an acre ; is this reasonable offering for lease on section 4, township 13 area...unincorporated fresno county.
the rates in fresno county run between $25 to $50 depending on where your rights are located and how many acres you control. The next piece is how many years are paid in advance, and what the roayalty rate is if production is established. Typically they are 1/6.
Thank you - that is very helpful.
Does anyone know of information RE: Offers/rates for the Kettleman City Prospect leases currently being negotiated?
Kettleman City prospect appears to be a new boom area. There are a few majors there now taking leases. What rents and royalties you can negotiate depend upon how many acres you have and what your percentage of interest is in that acreage. The more acreage and the higher percent of interest in that acreage, the better negotiation power you have to command higher rents and royalties.
I agree with Mr. Simmons that $25 to $50 is acceptable, but I have started seeing rents rise in the Kettleman City prospect area. I recommend reading the article, "Leasing - What Not to Do" under Mineral Help above as this article gives some sage advice regarding leasing.
If your acreage is small and/or your interest in the acreage is small, you may be well advised to accept the offer but seek a prepaid 5 year lease.
Finally, for all of those persons out there that do not hold record title to your mineral interests (you're the heir of a decedent and that person holds record title), the oil companies will take a lease from you with an Affidavit of Heirship, but this will not give you title to the minerals. If your interest is small, the Affidavit is sufficient for leasing. If they start producing oil or gas, however, you will want to do somthing to get the minerals legally in your name so that you can pass the interests on to your heirs.
This information is very helpful. I just received an offer to lease my 1/6 interest in Coalinga area. They are exploring for Monterey Shale. Anyone else been offered a lease to explore for Monterey Shale?
Coalinga is a very hot area now. Rents can be upward of $75 per acre depending upon where they are located and the total acreage involved. I know that you said that you have a 1/6 interest. Thus, your negotiating ability is limited unless the acreage that you hold that 1/6 interest in is quite large.
The Monterey shale play is in Avenal and Coalinga (Kings and Fresno Counties) and extends North and South. Of course, where it is exactly is within the realm of the geologists. The majors intend to invest millions of dollars in obtaining leases and then conducting 3D seismic surveys to find out where it is and then will spend millions more in exploring for oil.
Hope this helps.
Jean M. Pledger
EHRLICH PLEDGER LAW, LLP
In the article 10 Common Mistakes During Mineral Lease Negotiation is says not to warrant mineral title. In the proposal I received there is an Affidavit of Heirship they want filled out and notarized. Is this the same as warrant mineral title? Is it standard procedue to issue only one check for lease rent even though there are several beneficaries? When do you advise he heirs to get an attorney. Anyones experience on this and any advise on negotiating a lease would be greatly appreciated.
An affidavit of heirship is not the same as warranting title, but you will want to ensure that the affidavit does not state that you are warranting title. The affidavit is a document that gives the oil company comfort that you are the rightful heir to the true, record title holder which is one of your ancestors. With regard to one lease, you can ask for a separate lease for each one of the family members, it is simply easier for the oil company to have one lease to deal with. It does make it a problem if they do get production, however, because you will only designate one person to receive the check and that person must split it up. Hope this helps.
Patricia: as to some of your questions, the large oil companies are reputable and will ensure that they operate within all of the laws. West Coast Land (and any other "land" company) is not an oil company. Therefore, you should ask who they are taking the lease for. With regard to pooling, the land owner has very little say in whether the land will be pooled or not. Pooling is done based upon the geology and location of the oil pool under the ground. If you hold a large percentage of interest in the section then you may have enough negotiating power to ask for a revised pooling provision whereby the oil company must seek your approval to pool or, at a minimum, must continue to develop the remainder of the land that is not pooled. You are correct that pooling does dilute your income but without pooling, the long horizontal wells that the companies intend to drill cannot be accomplished. I did not look up the exact area in which your property is located, but $35 is likely a low starting point for rent rates. Most of the Kings County properties are non-explored. What is going on in this area is based upon their knowledge of the Monterey Shale and the new technologies for obtaining oil from shale. Hope this helps.
Jean M. Pledger
EHRLICH ▪ PLEDGER LAW, LLP
My brother and I were offered a 5 yr lease in the Kettleman City Prospect. We were offered $75 per acre and 20% royalties for 8 acres. Is this a good offer and how long does it usually take before drilling starts if it starts? Thanks people.
Patricia: With regard to who can review a lease, if the properyt is in California you will want a California lawyer, as the law differs widely from state to state. Of course, the opposite is also true, if the property is outside of California contact a lawyer in the state in which the property is located.
Dan: The terms are good, especially for 8 acres. Please note that unless you have 100% interest in those 8 acres the amount you will receive for rents and royalties will be based upon the net acreage that you own. All drilling takes time. If this is currently non-producing land, the lessee may have to conduct a CEQA review before drilling. Many lessees are conducting large-scale seismic surveying before determining where they are going to drill. I would not expect to see them drill for several years. Likely, there is a clause that gives the lessee the option for an addtional amount of time. You may wish to limit the total time to 7 - 8 years maximum so that if they do not drill within this time the lease will expire and you will be free to lease to another oil company that may be more motivated to drill.
Good luck to you both!
$75 for each year of the lease or for the 5 years?
Each year for 5 yrs.
Hi all, I am very happy to find this group. I was wondering if there is any independent oil producers who are interested enhanced oil recovery (EOR)? our company are very good at chemical enhanced oil recovery technology. we want to lease some oilfield or collaborate with operators to do EOR. We offer both finance and technology investment.
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Rents typically are paid on a per net acre per year. For example, you may own a 1/2 interest in the 8 acres. As such, you own 4 net acres. The rent for the year would be calculated (4x $75) for a total annual rent of $300. Of course, I have not seen the lease so I cannot say for certain this is the offer. I am speaking generically about oil and gas leases and a typical scenario.
Thanks Jean that was what I was thinking. Man I didnt know it would take so long for drilling to start. I guessed that if someone was offering these rates they wanted to start asap. But thats why I joined this group, to find the realistic truth. Thanks!
Does anyone know if it is standard procedure to sign a lease stating that you have been paid prior to being paid. Also there is a "in consideration for one dollar" that starts the lease. Is this just how they use to start a lease years ago for legal reasons and is the one dollar actually paid? My grandfather leased his 1/7 interest back in the 80's and his lawyer added that he had this interest in the property. The landman told me that it isn't necessary as they have it in their records. Is it no longer necessary? I know that the lease is boiler plate, set up more for land owners who have the mineral rights and has been used for a long time. Is there anything I should look out for since I have mineral rights only? Thanks to anyone who can help me with these questions.
That is a good mineral rights question, the laws of intestate succession will apply in this case if no will was in place. This is something that happens quite a bit. When your father passed away the interest is split between you and the survivng spouse. Upon her death, just her share of the rights are divided among surviving children, of which you will get an equal share with her children, If she dies with no will. A good leasing company will be able to help sort it out when the time comes to lease.
New to the group and new to oil and gas. We have oil and gas rights under about 300 ac about 10 miles E of Coalinga. It’s in the Kreyenhagen Formation. Ca Dept Conservation advises the area landsmen are leasing “everything in sight”. We have been approached. Is it acceptable to talk about $ per mineral acre and the royalty offer with this group? And, they want to deduct expenses for transport and processing…where do most offers stand on expenses. Lease proposal is from a bonafide big oil company–not worried about that–just don’t want to leave too many chips on the table. Their first offer looks low to me. Thoughts?? Thanx.