I currently have an unsigned lease in my hand, and I really don't like the wording, or the terms. It seems to go against all the advice on these forums (warrant the title, no check attached, etc.), but it is the only offer in town. Is there some way I can get other, better, offers, to compete against this one, for my oil?
Where are your minerals? Have you spoken to the company and asked for the Warranty of Title to be removed and for a check to be issued?
A Warranty of Title is standard in most oil and gas lease forms, you have to ask for it to be removed. I don't send a check to a mineral owner until I have spoken to them and they have agreed to a bonus amount. (Keeps the company from having to cancel checks if the owner doesn't take my offer.)
I would say wait. A bad lease is worse than no lease at all. Also refusing the lease offer is a legitimate bargaining tactic. If you do not refuse, why would they consider it in their best interest to compromise with you? If you don't refuse they will sit there and wait for you to give in, because how did you put it ? They are the only offer in town. Have you verified that they are the only potential lessee/operator in the area ? I think you should share where your minerals are and maybe someone can tell you if other operators are in the area. You could even list your minerals for lease on the home page of this site at the bottom of the page. A little effort could pay large returns.
Sean,
I agree with RW. Be patient. If you want to make a counter proposal, make certain of the strengths of your position. Check out some of the Groups on MRF that apply to your county or geologic provence.
Sean, I agree with the above. If there is any activity in the area the Landmen (persons Myranda?) will find you. In Oklahoma you can monitor the Oklahoma Corporation Commission website and follow the application process to see if an operator is actually planning to drill, I'm sure your other states have a similar process. Don't let a Landman rush you into something by saying they are waiting on you to start drilling. If they don't have some applications in process you have plenty of time. If you don't lease and they want to drill you will be force pooled and get a fair bonus anyway. Many times the force pool bonus is better than what the Landman offers you. One caution with this strategy; if you don't sign and they don't drill you lose out on some free money.
Sean, To clarify my position, I don't think you should sign a lease that you aren't comfortable with. I was just saying that the first offer that they sent is probably not what they expect you to sign (they hope you will sign it just like the car dealer hopes that you will buy a car with and extended warranty at sticker price.) In your post in sounded like you hadn't voiced your concerns with the company yet.
Michael, The term is Landman no matter what the gender of the person is. It has always been my understanding that "Landman" is a shortened form of Land Management/Manager. It makes some people feel more comfortable to use the term Land Management Professional, but that sounds like a mouthful to me.
Just joking around Myranda. I couldn't use that term with a straight face. How 'bout "Land Girl" !
Land M'am
I like "Land Girl" it sounds like I need a cape with a cool logo on it.
It will "make my day" to add ... "Land Woman"
Cheers!
I like them both but when Myranda becomes Legendary I'll take credit for "Land Girl"
Pat I see you live in Houston, I grew up there but moved to Alvin about 25 years ago, the real estate's a lot cheaper here.
I have two non contiguous parcels of land in Cheyenne County, Colorado. One is in T14S/R45W and the other is in T13S/R49W. I asked the land company to split these into separate leases, change the lease years from 5+5 to 4+5, the royalty from 12.5% to 15%, and to strike the Warranty clause. Signing bonus was on a 60 day "Order of Payment", and not an actual check.
The response I received was that they would agree to %15 but everything else would remain the same, and that if I wanted to make changes, that I should call them directly, and not to mark up the lease, as I had done before.
I feel that I had made it pretty clear what I wanted, and if they wanted to negotiate, they could have called me, about it. About this time, after what I had read on these forums, I started having a bad feeling about this, and asked my question about how to get other companies to make me an offer.
There is currently a lot of activity in Cheyenne County, and I just want to make sure I get a fair deal.
I would see if I could get someone else interested in my minerals. My advice that a bad lease is worse than no lease still stands. I don't think you are asking for the moon and stars. I would say talk to any other operator or landman but the one you are dealing with for the next month or two. Just be too busy to talk to him whenever he calls. I think he will get the message in a month or 6 weeks. I also think the 15% was yours for the asking at any time, but there was no reason to offer it until you asked. I would not consider it a concession on their part.
Sean Clay said:
I have two non contiguous parcels of land in Cheyenne County, Colorado. One is in T14S/R45W and the other is in T13S/R49W. I asked the land company to split these into separate leases, change the lease years from 5+5 to 4+5, the royalty from 12.5% to 15%, and to strike the Warranty clause. Signing bonus was on a 60 day "Order of Payment", and not an actual check.
The response I received was that they would agree to %15 but everything else would remain the same, and that if I wanted to make changes, that I should call them directly, and not to mark up the lease, as I had done before.
I feel that I had made it pretty clear what I wanted, and if they wanted to negotiate, they could have called me, about it. About this time, after what I had read on these forums, I started having a bad feeling about this, and asked my question about how to get other companies to make me an offer.
There is currently a lot of activity in Cheyenne County, and I just want to make sure I get a fair deal.
Be cautious, take your time and be thorough. I suggest:
1. use a lawyer that is very experienced in g/o leasing.
2. talk with friends and neighbors and be open about the offer details. gas leasing is not landowner vs landowner it is landownerS vs gasco. Form a landowner group in your area - there is power in numbers.
3. they don't change the contracts, but they will create an addendum with all agreed changes.
4. do not accept any form of payment accept for an effective immediately standard company check or even better a cashiers check. Do not provide your lease until said check clears and you have "cash in hand".
5. investigate the landman and the company he works for. When doing so, be positive you have the exact name correct; in particular the llc, inc. co, part. Google the landman name, phone number, company phone number, company name etc to learn all you can. Also, check with the state to see if the company is licensed to do business there.
6. Try to determine who the landman is representing (who is their client). often they won't release this, but you need to know if it is a producer or a speculator. lease only to a producer.
7. post here every detail about the offer so others will know and others can share what they have seen. There is probably a Cheyenne County section on this board, join and post there.
A lot of people have been hosed so you have to be careful. Don't believe everything you have been told and do your communication with landmen in writing and be sure that all agreements are in writing and reflected in the lease/addendum. They will make it appear that they are the only game in town, or they are leaving, or offer is expiring, or they won't budge - they use many excuses to get you to sign without taking your time. As RW has said, a bad lease can haunt you for a long time. Sign bonus is nice, but the lease details are KEY.
Good luck.
Wilson
Wilson,
An awesome guideline that demonstrates the application of experience, intelligence, and patience. I would only add gaining a grasp of technical information such as geology and producer economics to determine an internal value.
Wilsontownship said:
Be cautious, take your time and be thorough. I suggest:
1. use a lawyer that is very experienced in g/o leasing.
2. talk with friends and neighbors and be open about the offer details. gas leasing is not landowner vs landowner it is landownerS vs gasco. Form a landowner group in your area - there is power in numbers.
3. they don't change the contracts, but they will create an addendum with all agreed changes.
4. do not accept any form of payment accept for an effective immediately standard company check or even better a cashiers check. Do not provide your lease until said check clears and you have "cash in hand".
5. investigate the landman and the company he works for. When doing so, be positive you have the exact name correct; in particular the llc, inc. co, part. Google the landman name, phone number, company phone number, company name etc to learn all you can. Also, check with the state to see if the company is licensed to do business there.
6. Try to determine who the landman is representing (who is their client). often they won't release this, but you need to know if it is a producer or a speculator. lease only to a producer.
7. post here every detail about the offer so others will know and others can share what they have seen. There is probably a Cheyenne County section on this board, join and post there.
A lot of people have been hosed so you have to be careful. Don't believe everything you have been told and do your communication with landmen in writing and be sure that all agreements are in writing and reflected in the lease/addendum. They will make it appear that they are the only game in town, or they are leaving, or offer is expiring, or they won't budge - they use many excuses to get you to sign without taking your time. As RW has said, a bad lease can haunt you for a long time. Sign bonus is nice, but the lease details are KEY.
Good luck.
Wilson
Wilson,
Excellent advice!
Another problem, I guess, is that my family has moved A LOT over the years, and I am sure that the oil companies have lost track of us. Is there any county office that I should go to, and make sure that the address associated with my mineral rights is current? I assume that each state is different, and I have minerals in many different states. Currently working on getting things in order for Colorado, since I have a lease offer there, and also working on my Oklahoma properties. Suggestions on which agency to start with?
Sean,
You would work with the Cheyenne County Recorder. The contact information is in the link below. Call them to find out exactly what information you need to have on file to clearly show your ownership. Many states have a period of time (20 years) that if there has been no activity with the minerals then the mineral rights will revert to the surface owner (if seperated). If you own the surface too, then it isn't necessary to record your minerals per se, but it is advisable that you would have up to date contact information on record. This information is always kept by the county recorder (in the county where the land/minerals are located) and the recorder office is generally in the court house in the county seat.
http://www.co.cheyenne.co.us/countydepartments/clerkandrecorder.htm
Wilson
PS - thanks Michael and Gary for your kind words - hope it helps people. Those ideas are just some of many and doesn't even touch the requirements of the lease terms.
I know that the Cheyenne County recorder knows where I am, because I just received the latest tax bill for the minerals, in Colorado. I have never received a tax bill for my property in Texas, so I am sure that it has 'gone south' on me, by now. Florida is one of those states that have the minerals revert back to the land owner, if no activity has taken place in a while. I have a big, thick folder on Florida properties, but like the Texas properties, I think most of those might be long gone, too. Spent most of today working on my Oklahoma minerals, and the ones in Mississippi, trying to get a list of what I have, and current status. I don't think that I have anything leased out, at this time.
Sean, If you haven't already, try this link for Okla. The counties not listed usually have their own websites.