We have 160 acres in Beckham CO, spanning two sections in T9N R22W. We signed a lowball lease in OCT 2014 for 80 acres, a hole was drilled in March 2015 and we were told it looked like a viable hole and they were moving forward to complete. A month and a half ago when checking in with the land man we were told that the exploration company had tried two attempts to complete and said both were to tight. During that discussion we told that they would make a third attempt with in the next two weeks. Also during the discussion the land man mentioned that they were interested in leasing the remaining 80 acres at the same very low ball lease. We've not received and lease offers yet and upon speaking with the land man last week he said that the exploration company has asked him to not divulge any more information with the mineral holders, leaving us to feel left in the dark. I'm just guessing but my thoughts are that they don't want a competitor to swoop in on their find and get the other adjasent 80 acres. Has anyone experienced this? Any knowledge or experiences would be appreciated.
mike
Yes, that does happen. However, if you are to lease again on the other 80 acres, you might want to make sure you have an even better lease than the first time. No post production charges, limited shut-in time frame, depth clause, Pugh clause, etc. Try for more royalty, etc. If you want some help, friend me. Depending upon the section you are in, there is potential for multiple pay zones, horizontal wells, etc. and you want a really good lease the second time around.
Thanks Mark, I would appreciate any help at all. I'm thinking it's time to look for a different land man for the remaining 80 acres.
mike
M Barnes said:
Yes, that does happen. However, if you are to lease again on the other 80 acres, you might want to make sure you have an even better lease than the first time. No post production charges, limited shut-in time frame, depth clause, Pugh clause, etc. Try for more royalty, etc. If you want some help, friend me. Depending upon the section you are in, there is potential for multiple pay zones, horizontal wells, etc. and you want a really good lease the second time around.
If you are going to lease the other 80 adjacent then I agree with Barnes, push for better terms on that lease. Granted, there is not much going on in this area currently but if you can't get a better lease you might just want to wait for them to "force-pool" you, which they will only do in the event they actually plan to drill a well there. The options available on a pooling are often more favorable (bonus-wise at least) than you are going to get on a "first offer" from a landman. By not leasing at all of course, you risk that they may never drill a well in the adjacent section, and thus will never apply to force-pool it and thus no pooling bonus. I'd shoot for a better lease first if you are interested in leasing, but if they won't improve the terms over your current lease I'd back away and wait for a potential forced-pooling order. Even if you are eventually force-pooled, you can often negotiate a lease with the applicant or another company before you actually become subject to the pooling (they often give you 15 days to make an election on the pooling, or to lease to someone before the 15 days is up). This assumes you are promptly (by mail) notified of the fact that you are being force-pooled...which is a problem sometimes.
Frederick M. "Mick" Scott CMM RPL