not than I'm trying to hold out for more money, but I'm still going over the lease that was sent. I'm pretty sure they don't expect everyone to jump at the first offer, but what would be a reasonable time limit? I don't want to feel rushed but don't want to take too long. any advice would be very helpful.
Susan:
There is no time limit on negotiating a lease. These are your minerals and you need to be satisfied with your lease deal. You are correct in that taking the first offer is not a good idea. These landmen are sometimes working for a lease broker who is obtaining acreage for an oil operator. They have a ceiling price that they will pay but it is your job to find out what that figure is. You didn't state where your minerals are located but if you are in a "proven" area, where drilling has been or is occurring, your negotiating power is much greater. Research your area and find out the nearest wells along with some production figures. Read some various posts on this forum dealing with lease wording and educate yourself on what to look for in a good lease. Example, I advise not to sign a lease for longer than a 3 year term and no extensions. Research what the going bonus amounts are for your area and most important, get the highest % royalty as this is what you will be paid by over the long haul. You may want to insert a "pugh clause" in your lease and specify when you will be paid (wellhead, etc.). Transportation charges mount up and lessen your royalty check. Also, click on "Mineral Help" at the top of this forum and read this very carefully. Time is on your side and if you miss out on one deal, another deal will follow if your area is being developed. Good luck.
Susan,
Charles knows what he's talking about. He's been in the oil related business for many years. I, personally turned down a lease from a company(Cabot Oil and Gas) from Houston back in October 2011. June 16, 2012 I turned down another one(Anschutz Exploration-Denver, Colo.). My mineral rights are ready to be leased, but I'm not going to give them away. With a producing Horizontal well in the vicinity of my property, I'd be a fool to lease at the rate they were wanting. $150 per acre---3/16---3 years with a 2 year option. The numbers are not right. $300---20%---3years only. If they can't drill a well in 3 years then let someone else have a chance instead of tying up my acreage. Take your time. Someone will pay you more. When I get a decent offer then I will go to my attorney and go thru the fine print. Good luck........
Clint Liles
Thanks for the information. the minerals are located in the L Menchaca grant. In Karnes County. have been offered $1000 bonus and 20% royalty for 3 yrs w/ 3 yrs extension. don't know who owns the land,226 acres, and have no idea where it is located in the grant. the landman is working for EOG and told me they want to start drilling in December. at least that's what he told me over the phone. I inherited my minerals from my mom who inherited them from my step dad. it's his family that had the minerals on those acres. thanks for the info from y'all and will keep watching this web site for more.
susan
Susan:
The $1000 bonus is most likely on the low side being this is a first offer. I would bump it up to at least $1900 and go from there with the negotiations. You will at least learn the amount range they are willing to pay in regards to bonus. Again, if they stated that they want to start drilling in December (whcih they probably won't), then they don't have alot of time to get the leasing end finalized. Again, use time as your asset for negotiations. The 20% royalty sounds good along with the 3 years. No extension should be considered. Question: Why are they wanting an extension if this guy states they want to drill in December? Go figure!! Goood luck!!
Susan E Hallmark said:
Thanks for the information. the minerals are located in the L Menchaca grant. In Karnes County. have been offered $1000 bonus and 20% royalty for 3 yrs w/ 3 yrs extension. don't know who owns the land,226 acres, and have no idea where it is located in the grant. the landman is working for EOG and told me they want to start drilling in December. at least that's what he told me over the phone. I inherited my minerals from my mom who inherited them from my step dad. it's his family that had the minerals on those acres. thanks for the info from y'all and will keep watching this web site for more.
susan
If I were in your position, I would counter with at least $2000, 3 year no extension, and 25%. You should try to find out what others in the area are getting re the bonus $$. The bonus should be the only thing negotiable, the 3 years and 25% should be set in stone.
Susan E Hallmark said:
Thanks for the information. the minerals are located in the L Menchaca grant. In Karnes County. have been offered $1000 bonus and 20% royalty for 3 yrs w/ 3 yrs extension. don't know who owns the land,226 acres, and have no idea where it is located in the grant. the landman is working for EOG and told me they want to start drilling in December. at least that's what he told me over the phone. I inherited my minerals from my mom who inherited them from my step dad. it's his family that had the minerals on those acres. thanks for the info from y'all and will keep watching this web site for more.
susan
Call EOG now and start talking. Holding out will only brand you as difficult to work with and they may play head games with you. Be in communication with them and let them know that you want to lease, but you need a fair deal. They will understand that. I'm a landman, the nice people whom communicate with me always get the best deals.
Susan, you are very likely in the 'HOT' area of Karnes Co. - $4000-$5000/ac and 25% is very reasonable with the liquids that are coming out of the ground there, and that is what others (some of my relatives in the area) have received, so it's very reasonable. DO NOT TAKE less than 25% royalty - that'd be just silly for anywhere in Karnes- If landman starts pressuring you, tell him 'give me $10,000/ac and 33% now, otherwise I'm going to keep researching and see what other offers are out there. Marathon, Plains, Murphy, and other are ALL hot-to-trot all over karnes co.
There are EOG units in Karnes that are producing quarter-of-a-million barrels oil (in 12-18 mos) in Karnes co, so that 25% royalty is very important (versus the 20% they're offering). (multiply that 5% times 250,000 barrels times $80-$100 /bbl, and you will understand very quickly what I mean.)
The 'three year extension' is quite bogus - there is -Z E R O - benefit to you, because it is an OPTION for the oil co only, and they only have to 'pay' you if they decide to keep it (ie, if the oil lease values increase). For example, my minerals were just 'option extended' at $200/acre - a price set three years ago when my dad signed original lease - even though everyone is paying $1500 - $4000 these days for lease. If values would have dropped, they simply just choose to not-renew, and you get nothing!Tell oil-co they can forget the 'extension' , and just re-lease at the then current 'fair' value of lease acreage -thats fair, right?
If you truly have 100% of the net minerals for 226 acres in Karnes Co, you really need to consider having a pro like Buddy Coton look things over for you - the difference in 'little bitty things' could end up costing you $100,000's of $$ that you could have received.
oldoak,
You sound like a wise man. I like your thinking.
Clint Liles
I agree with Jack P regarding the royalty %---that should be set in stone. Many experienced mineral owners that I know in Texas state from the outset that they want 25%, 2 or 3 year primary term with no extensions or they walk away. This is NOT unreasonable whatsoever. Those are your minerals. You are granting them the right to explore and produce them.
Jack P. said:
If I were in your position, I would counter with at least $2000, 3 year no extension, and 25%. You should try to find out what others in the area are getting re the bonus $$. The bonus should be the only thing negotiable, the 3 years and 25% should be set in stone.
Susan E Hallmark said:Thanks for the information. the minerals are located in the L Menchaca grant. In Karnes County. have been offered $1000 bonus and 20% royalty for 3 yrs w/ 3 yrs extension. don't know who owns the land,226 acres, and have no idea where it is located in the grant. the landman is working for EOG and told me they want to start drilling in December. at least that's what he told me over the phone. I inherited my minerals from my mom who inherited them from my step dad. it's his family that had the minerals on those acres. thanks for the info from y'all and will keep watching this web site for more.
susan
I think that is right also. I don't have a large piece of the pie, but want as much as possible. was hoping I could stir up another mineral owner in the abstract. maybe I should put in the family name that it has been inherited from? just a thought. thanks for the input
susan
Ron Hicks said:
I agree with Jack P regarding the royalty %---that should be set in stone. Many experienced mineral owners that I know in Texas state from the outset that they want 25%, 2 or 3 year primary term with no extensions or they walk away. This is NOT unreasonable whatsoever. Those are your minerals. You are granting them the right to explore and produce them.
Jack P. said:If I were in your position, I would counter with at least $2000, 3 year no extension, and 25%. You should try to find out what others in the area are getting re the bonus $$. The bonus should be the only thing negotiable, the 3 years and 25% should be set in stone.
Susan E Hallmark said:Thanks for the information. the minerals are located in the L Menchaca grant. In Karnes County. have been offered $1000 bonus and 20% royalty for 3 yrs w/ 3 yrs extension. don't know who owns the land,226 acres, and have no idea where it is located in the grant. the landman is working for EOG and told me they want to start drilling in December. at least that's what he told me over the phone. I inherited my minerals from my mom who inherited them from my step dad. it's his family that had the minerals on those acres. thanks for the info from y'all and will keep watching this web site for more.
susan
Susan, here are some links (below) to nearby (L.Menchaca survey) PRODUCING WELLS: ( 1st link only works after 11am - look at the second link - 120,000 bbls!! Wow!). That is right in the middle of a VERY hot area. How many mineral-acres do you actually have? If just a few and I were you, I'd put in writing, back to landman ' I'm all in, and I'll share the risk - I'll take one-dollar per acre bonus with 35% royalty. ' You see, with just a few acres, the bonus will be peanuts, but the real money will be in the royalty. Landman will balk and refuse at first (at the percent), but stand firm, because this is totally a reasonable offer because you're not asking for ANY money up front, so you're sharing the risk - after all, that is 'their' position, that 'they're' putting up all the up-front money, so they're 'entitled' to the lions share of royalty (80% is what they 'would love' to have . . ) - offering them to keep 65% for just your few acres is very reasonable. Lets put it this way - there's like a huge treasure-chest of gold down there - they know it's there, and they know how to get it - and have all the tools and equipment to do it. It belongs 100% to you , until you 'sign' the papers that 'entitle' them to take the 'percent they get', but they never talk about that, just the percent 'you get'. Sure, they should be 'paid well' for all their hard work, but isn't 80% a little greedy? You're willing to share the risk ($1/ac bonus), so they can have 65% . . .
P.S. - there is a 'chance' that wells might have already been drilled and producing (since you're not living on land, and have probably been difficult for them to find). Ask the landman straight-up ; it's a crime for him to lie if you ask directly. If so, you're in the catbird-seat, and should negotiate a good royalty percent (for YOU!) quickly. My family is from the area (poth/fall city/hobson) going 6 generations back, so I have an interest in the area and try to keep an eye on things. Email/message me if you'd like me to help track down the specific area for you.
http://webapps.rrc.state.tx.us/DP/drillDownQueryAction.do?fromPubli...
http://webapps2.rrc.state.tx.us/EWA/specificLeaseQueryAction.do?tab...
Susan:
I am not completely familiar with this Eagle Ford Shale area but if these posts are correct in regards to the location of your minerals, I would think seriously about participating in the well or wells and forget the leasing procedure.
Ditto, what Oldoak says about wells already having been drilled. You need to find out. It's time to get help. Buddy Cotten would be my first choice but get someones help. Good luck!
Here is an excellent Eagle Ford Shale blog. You can subscribe and get updates.
thanks Ron. I subscribed to and it a great place to check on EOG .
Ron Hicks said:
Here is an excellent Eagle Ford Shale blog. You can subscribe and get updates.