Gas lease tarrant county tx, 9 acres @ I20 & hwy 287

Good day all My sister, brother and I own the mineral rights to this acreage, the State of Texas owns the land. We are currently being offered $2500 ac and 22% royalty. Does anyone know if this is the going rate for the area or if we have some leverage? I’m shooting for 25% royalty Any help is appreciated as we are to meet with the gas lease people on Thursday 10/10 thanks in advance jana

I’d recommend accepting the $2500/acre, asking for 25% RI and limit it to a 3 year term with no option. Gary Swindell

thanks Gary for the reply. Is the reason for ‘no option’ helpful in renegotiation at the end of the 3 yr lease term? Also, does anyone know if there is ANY bartering room on the $2,500 per ac sign on? thanks again jana

Gary Swindell said:

I’d recommend accepting the $2500/acre, asking for 25% RI and limit it to a 3 year term with no option.
Gary Swindell

I do not have any active leasing knowledge that would shed light on the $2500/acre, but companies always leave room in their programs to go higher - so ask for more. The bonus seems like a lot of money, but I’d focus on getting wells drilled, where the real income potential is. A 3 year term without an option will force an operator to get wells drilled.

Another question… It appears a transportation pipeline is earmarked through some of this land…since we don’t own the land, but do own the mineral rights, is there any monetary compensation for laying this pipeline? (I’m really not greedy, just trying to make the most of what my grandparents left us.) thanks, jana

Leverage?

One of the biggest factors in determining your leverage is the amount of mineral acres you own. I would not sign for less than 25% royalty. I agree a 3 year primary term is plenty, no option. I am not familiar with current bonus rates in Tarrant County, but if their first offer was 2500/22%, I would counter with at least 3000/25%.

The surface owner will paid for the pipeline row.

Jules, thank you so much for the info! I think we’re going to shoot for $4,000 and hope for $3,500. It’s 10 acres. thank you again jana

Jules Clement said:

Leverage?

One of the biggest factors in determining your leverage is the amount of mineral acres you own. I would not sign for less than 25% royalty. I agree a 3 year primary term is plenty, no option. I am not familiar with current bonus rates in Tarrant County, but if their first offer was 2500/22%, I would counter with at least 3000/25%.

The surface owner will paid for the pipeline row.

Dear Jana,

The offer is modest. There are other factors in weighing an offer past the bonus and royalty rate. A good writing of the form could increase the effective royalty rate by over 1% net and there are other items that could increase the effective royalty rate as well.

Many mistakes are made by focusing on the bonus and royalty rate.

Buddy thanks for the input, would you be able to elaborate for this layperson that I am? thanks jana

Buddy Cotten said:

Dear Jana,

The offer is modest. There are other factors in weighing an offer past the bonus and royalty rate. A good writing of the form could increase the effective royalty rate by over 1% net and there are other items that could increase the effective royalty rate as well.

Many mistakes are made by focusing on the bonus and royalty rate.

Buddy Cotten
www.cottenoilproperties.com

Joel King said:

Joel King said:
Jana, I’m not a professional but I’ll give you a little imput. I have a freind in Burleson, TX. who ask me to help him on an offer from CHK. He signed a couple of weeks ago for 2500/25%. The bonus amount & percentage seemed reasonable from what I can tell in this current market. I focused more on several other things, such as a depth clause, idemnification, gross roaylties,no warrenty of title, etc. Be real carfull even if they agree to any or all of these. Striker was the company handling the leases for CHK and he would agree to all of these items and the next day would return with the changes. On the depth clause, it stated all depth 100’ below the barnett shale would be released back to the mineral owner 1 year after the primary term (which is 2 years in this case) or after operations, which ever came LAST. Well, if it stated First that would be fine but operations could last many years so in essence, there would have been no depth clause. On the no warrenty of title, they removed the original wording of lessor warrenting the title but then went on to state that lessee could use funds from the royalties to defend title. We got what we wanted in the end but just be aware. I would recommend to not sign a lease until you are ready, not when they are ready. If you’re not familiar with leases & such, have a O&G attorney or someone familar with them look it over. If you do it yourself, I know it’s boring but be sure and take the time to read every word. If you don’t understand any part of it, ask or research on line. On the bonus amount I say go for it. It just depends on the situation if you’ll get it or not. Hope this helps.

Hi Joel And thank you for the insight…‘the company’ is faxing over their ‘standard contract’ and we’ll take a look. We got a VERY negative response on the $4,000…and they won’t budge on the 22% royalty. I must say, am more confused now than when we started. It’s still in the works! thank you again so mych jana

Joel King said:

Joel King said:
Joel King said:
Jana, I’m not a professional but I’ll give you a little imput. I have a freind in Burleson, TX. who ask me to help him on an offer from CHK. He signed a couple of weeks ago for 2500/25%. The bonus amount & percentage seemed reasonable from what I can tell in this current market. I focused more on several other things, such as a depth clause, idemnification, gross roaylties,no warrenty of title, etc. Be real carfull even if they agree to any or all of these. Striker was the company handling the leases for CHK and he would agree to all of these items and the next day would return with the changes. On the depth clause, it stated all depth 100’ below the barnett shale would be released back to the mineral owner 1 year after the primary term (which is 2 years in this case) or after operations, which ever came LAST. Well, if it stated First that would be fine but operations could last many years so in essence, there would have been no depth clause. On the no warrenty of title, they removed the original wording of lessor warrenting the title but then went on to state that lessee could use funds from the royalties to defend title. We got what we wanted in the end but just be aware. I would recommend to not sign a lease until you are ready, not when they are ready. If you’re not familiar with leases & such, have a O&G attorney or someone familar with them look it over. If you do it yourself, I know it’s boring but be sure and take the time to read every word. If you don’t understand any part of it, ask or research on line. On the bonus amount I say go for it. It just depends on the situation if you’ll get it or not. Hope this helps.

If your confused I definintely would run this by an attny. You may or maynot be in a good position for barganing, depending on the location & other factors. If your not in a position to play hardball with them but try to, you may hurt yourself in the long run. Joel

Joel So true as they have backed off to let us stew…I feel we will end up with original offer, but why not after all? It is what it is and may not come along later, eh? No harm done in trying and it’s human nature to barter and bargain, even at a garage sale!

Joel King said:

If your confused I definintely would run this by an attny. You may or maynot be in a good position for barganing, depending on the location & other factors. If your not in a position to play hardball with them but try to, you may hurt yourself in the long run.
Joel

what was the outcome of your lease negotiations?

Jim my husband n I have 38 acres off of 16 and west 476 in Poteet Tx we want to know how to sell or lease for drilling. Any advice is much appreciated