We have had mineral rights in Nueces and Jim Wells Counties for decades in the family. We have an out-of-state group that that is interested in exploring for minerals, oil, and gas, with a lease contract to be negotiated after they take a look at the property to decide whether to proceed. They want to do a seismic as well. Years ago we had a lease agreement with Walker and Cummings who actually took out a license to drill in one section of the property, but Mr. Walker died suddenly and that's as far as the deal went. The property 's lease ran out with no further action and C&W was acquired by another company. This new group is asking for a Power of attorney for an unspecified period of time (to be negotiated), to do the seismic and other pre-leasing tasks to determine if they want to sink their money into actually drilling some wells. There has been a lot of activity in previous years in the Casa Blanca land grant area, and several locals told us there is a very good prospect of making a find. The total acreage is about 2500 acres. We now live in North Carolina and do not know much about the property. Does anyone have a sample pre-leasing type POA we can look at or suggestions in how to proceed from here?
All input is most welcome, including an attorney we will need for doing the mineral lease.
Thanks,
Ed: From your description it appears that this Firm wants to conduct a seismic shoot on your property prior to offering a mineral lease. Generally speaking, most mineral managers I have visited with caution against this approach as it potentially could deny you and opportunity for bonus monies that would otherwise be negotiated with a formal mineral lease agreement. This can be a judgement call if your area is speculative and high risk, that is there is little production occurring in your area and a seismic shoot can determine potential productive zones to explore. I am also curious about an investment group wanting to be granted a Power of Attorney prior to entering a mineral lease. This sounds like an extraordinarily unusual request and one I would be very careful about. I looked at drilling permit activity in Nueces and Jim Wells and it seemed more oriented toward natural gas plays than oil. The one prominent company I saw was EOG Resources. I personally prefer to deal with proven Operators who will be directly involved in the exploration and production of my mineral interests. You might visit the Texas Railroad Commission web site to view the drilling activity around your property.
We had a lot of activity when prices were higher, but with the price lower, and it dropped again today, activity is not what we have experienced. The gentleman who made the introduction for us has been involved in another deal with me. I believe his group is a "money group" willing to invest with a drilling group.
Ed
Hi, Ed -
I very much agree with Mike that their asking for a POA is highly unusual. I've been in the industry for more than 37 years and I've never even heard of anyone requesting something like that.
Something in the back of my mind makes me think that they may want to negotiate a deal with a third party that is more to their favor than to yours. I advise you stay away from that idea and retain personal control of your properties.
If they want to perform a Seismic Shoot or a 3D Seismic Shoot, have them prepare a Seismic Permit and pay you a Bonus Payment for it, just like everybody else in the business does.
If you need an Attorney's advice, which I highly recommend, Wade Caldwell, Esq., out of San Antonio is a frequent contributor to The Forum. If he does not see your posting and respond to it, then you might want to reach out to him.
If you would me to suggest an additional Attorney or two, then accept my offer to become A Friend on The Forum and I'll send something over to you privately (the ones I have in mind are not members of The Forum).
Also, if you will send me your legal description(s) I will be happy to see what I can dig up on activities near your interests.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Dumb is as dumb does! When I first read your post, I though it was a joke.
Do you know how much power you sign away with a POA? It's good for you that you posted on the Forum. Hopefully, you will be attentive to what these people say.
Good luck! I believe you may need it!
Pat
Dear Mr. Mattson,
I do agree with the comments of Mr. Igau and Mr. Tooke. This is a most unusual request. A better business strategy could be framed around a seismic option with a penalty for not shooting and evaluating the seismic.
Further, you would want to include a minimum REQUIRED selection of lands post shoot. You would also want a strong lease form already negotiated and in place.
When I hear of things this far out in left field, I am often asking ":Why?" and until I understand Why, I do not make a firm decision. The why's that I am coming up with in your situation generally are not good.
Best of fortune in all things,
Buddy Cotten
If they have a deep pocket, but don't want to lease it sight unseen, given current commodity prices, you might want to counter with a Seismic Permit with a Lease Option instead of the POA. It doesn't sound like you have had any activity for a long time. The above suggestion may accomplish what they are wanting to do. It sounds like countering for a straight lease will be a waste of time based on what they told you.
Thanks for all the great comments and advice. Surely worth it to minimize the many traps that could unfold!