Information on Mineral Leases

Actually Shaun, according to the Texas Railroad Commission Oil & Gas Data Query, there is only one well drilled by any company that begins with Baker here in Brazos County and that is “Baker, Brent Oil & Gas” but not one actually drilled by Baker Exploration Company. As for Weber, I know they have sold their interest to Halcon which is great and I think Weber was very instrumental in the current play here in Brazos county but they have only drilled 12 wells since 2011 and the last permit was on 12/27/2012. I am sure that Baker’s has a good deal of interest in wells here in the Brazos Valley but I can’t even find one that they are the current operator for. As for Halcon, Since January 1 2013 they have 69 approved drilling permits and 3 that are awaiting approval and a total 212 wells state wide since May of 2012 which is impressive.

After a little research, I see that you are a landman in the business of leasing minerals which is great but like myself, I am a mineral right owner not only in Brazos County but many other counties in Texas and in New Mexico, Colorado, Wyoming, Kansas, Nebraska and Louisiana and my main concern is helping folks who own mineral rights but do not actually understand what the leases are saying or what is a fair deal. I do not ask anything in return and will not except anything more than a “Thank You”. I just want to protect the Land and Mineral Right Owners who cannot afford to take the lease full of jargon they do not understand to a lawyer. I do know that in my 30 years of leasing my minerals, I will not except a lease that is less than 25% gross at the wellhead with all petroleum products including the condensate and distillates, no Mother Hubbard Clause and I have been known to tear up leases that are filled with red flags which I have seen a good number of in this recent play.

I have yet to say that any company is bad but I do know who is working fairly with land & mineral right owners, who is doing the most exploration and is who has been reputable in negotiations. That is why I like Halcon. Personally, I leased to PetroMax and since then Halcon has purchase PetroMax’s leases which I am pleased with. And yes, I received 25% Gross at the wellhead and $825 per acre Bonus for 3 years on 50% minerals on 200 acres. As for the difference in 1/5th verses 1/4th, it can be a lot of money {1/5th - .20 and 1/4th = .25, .25-.20 = .05 Take 5 % of $100,000 is $5000 which is in my book most others a nice chunk of change}. Also, I want to be involved with a company that is currently exploring instead of being a negotiating chip in a particular well. In Brazos County from 01/01/2011, there have been 190 “New Drill” permitted/submitted and of those 72 are Halcon which is almost 38% of the wells with a total of 23 different companies actively drilling since 2011.

Just about every lease I recently read is based on “Net” and they wanted the mineral owner to pay for trucking, treating, condensation and all kinds of other services along with not offering to pay the mineral owner for condensate, distillate, or other liquid hydrocarbons produced and some lease have include all minerals not just Oil & Gas. As a mineral owner, I will be paid for all hydrocarbons and will not pay the expenses that for so many years were the unwritten responsibility of the exploration/production company. Why should the mineral owner pay the operating expenses of a company? That is like a chicken farmer having to pay for the grease used to fry the chicken at KFC.

If someone brings me a lease they have received, I always make suggestions of counter offers and if the oil company/landman is not receptive then I suggest Halcon first but never have I said that any company was bad and do not do business with a given company. I have said that as a mineral owner, you should get what is fair and is plainly stated in the counter offer and lease. As we all know, any first offer is normally in the best interest of the one making the offering. I want it FAIR FOR EVERYONE! I also have an 11th Commandment which I share with everyone “Thou Shall Not Sell Thy Mineral Rights”

I wish you the best in leasing minerals here in Brazos County. It is a great area in a great time and there is plenty to go around. If you would like to read my standard lease which I suggest as a counter offer because the lease I am reading is so full of red flags. My lease is used by several reputable oil companies and several extremely large mineral right owners in Texas. As the old saying goes, you get more with sugar than vinegar. Make a fair deal and people will flock to you and you will make a hell of a lot more money in the long run and folks will recommend you including me.

Wishing You A Blessed Year,

Bill



Przzz said:

Thanks for your comments on Baker's track record in the area. Unless I am mistaken, Baker's historical drilling as an operator has all been Austin Chalk or Buda - very different plays with respect to approach and needed capital than the present Eagle Ford play in this area. And neither of these are plays that require massive frac stimulation efforts to make the EF productive.

Land owners will make their own decisions, but personally I would look at the track record for drilling the Eagle Ford play to date - and Halcon (as well as others, e.g. Clayton Williams) have it.

It appears that Baker will have to bring in a third party to drill EF well - a big unknown for any landowner.

As always, just my opinion on this issue.

Shaun Penny said:

William, I respect your opinions as stated and believe too that Halcon is a good company with an excellent reputation. Yet they are not the only player in the EagleFord Shale. Your recommendation to lease to Halcon may not be in everybody’s best interest. As in life… not all situations are equal.

I know of Baker Exploration Company and believe a “smaller” company has many attributes to add to a merging development play such as Brazos County. First, Baker Exploration has been drilling and participating in wells in Brazos County since 1980 having participated and/or operated in over 100 wells in Brazos County alone. Baker Exploration has maintained an operating office here in Brazos County since 1985 which has recently been moved over to Burleson County. While operating over 40 wells in Brazos County alone in a period from 1990 to 1995, located mainly in the Steephollow and within the BCS city limits, Baker Exploration maintained an excellent reputation with landowners and city officials.

Would it surprise you to know that Baker Exploration took many of the first oil and gas leases in this EagleFord play in Brazos County in 2011 and caused three wells to be drilled by Weber Energy in partnership with Baker Exploration. The group then sold out to Halcon in early 2013. The Baker Lessor’s are extremely pleased with Baker and Halcon at this time while they are receiving Division Orders for their property.

Another way to look at the leasing situation, that I feel you should point out to this blog, is the fact…”would you rather lease to a company with a huge acreage position (Halcon has a reported 300,000 acres) or would you rather lease with a company like Baker Exploration who has the focus to handle a small acreage position and attempt to get oil and gas development on their lease position as soon as practical”. The focus of a smaller Lessor may help to expedite the development of these properties, and whether you lease for a ¼ of 1/5th lease, we all know and understand the time value of money, even if you lease at the smaller 1/5 royalty.

Actually Shaun, according to the Texas Railroad Commission Oil & Gas Data Query, there is only one well drilled by any company that begins with Baker here in Brazos County and that is “Baker, Brent Oil & Gas” but not one actually drilled by Baker Exploration Company. As for Weber, I know they have sold their interest to Halcon which is great and I think Weber was very instrumental in the current play here in Brazos county but they have only drilled 12 wells since 2011 and the last permit was on 12/27/2012. I am sure that Baker’s has a good deal of interest in wells here in the Brazos Valley but I can’t even find one that they are the current operator for. As for Halcon, Since January 1 2013 they have 69 approved drilling permits and 3 that are awaiting approval and a total 212 wells state wide since May of 2012 which is impressive.

After a little research, I see that you are a landman in the business of leasing minerals which is great but like myself, I am a mineral right owner not only in Brazos County but many other counties in Texas and in New Mexico, Colorado, Wyoming, Kansas, Nebraska and Louisiana and my main concern is helping folks who own mineral rights but do not actually understand what the leases are saying or what is a fair deal. I do not ask anything in return and will not except anything more than a “Thank You”. I just want to protect the Land and Mineral Right Owners who cannot afford to take the lease full of jargon they do not understand to a lawyer. I do know that in my 30 years of leasing my minerals, I will not except a lease that is less than 25% gross at the wellhead with all petroleum products including the condensate and distillates, no Mother Hubbard Clause and I have been known to tear up leases that are filled with red flags which I have seen a good number of in this recent play.

I have yet to say that any company is bad but I do know who is working fairly with land & mineral right owners, who is doing the most exploration and is who has been reputable in negotiations. That is why I like Halcon. Personally, I leased to PetroMax and since then Halcon has purchase PetroMax’s leases which I am pleased with. And yes, I received 25% Gross at the wellhead and $825 per acre Bonus for 3 years on 50% minerals on 200 acres. As for the difference in 1/5th verses 1/4th, it can be a lot of money {1/5th - .20 and 1/4th = .25, .25-.20 = .05 Take 5 % of $100,000 is $5000 which is in my book most others a nice chunk of change}. Also, I want to be involved with a company that is currently exploring instead of being a negotiating chip in a particular well. In Brazos County from 01/01/2011, there have been 190 “New Drill” permitted/submitted and of those 72 are Halcon which is almost 38% of the wells with a total of 23 different companies actively drilling since 2011.

Just about every lease I recently read is based on “Net” and they wanted the mineral owner to pay for trucking, treating, condensation and all kinds of other services along with not offering to pay the mineral owner for condensate, distillate, or other liquid hydrocarbons produced and some lease have include all minerals not just Oil & Gas. As a mineral owner, I will be paid for all hydrocarbons and will not pay the expenses that for so many years were the unwritten responsibility of the exploration/production company. Why should the mineral owner pay the operating expenses of a company? That is like a chicken farmer having to pay for the grease used to fry the chicken at KFC.

If someone brings me a lease they have received, I always make suggestions of counter offers and if the oil company/landman is not receptive then I suggest Halcon first but never have I said that any company was bad and do not do business with a given company. I have said that as a mineral owner, you should get what is fair and is plainly stated in the counter offer and lease. As we all know, any first offer is normally in the best interest of the one making the offering. I want it FAIR FOR EVERYONE! I also have an 11th Commandment which I share with everyone “Thou Shall Not Sell Thy Mineral Rights”

I wish you the best in leasing minerals here in Brazos County. It is a great area in a great time and there is plenty to go around. If you would like to read my standard lease which I suggest as a counter offer because the lease I am reading is so full of red flags. My lease is used by several reputable oil companies and several extremely large mineral right owners in Texas. As the old saying goes, you get more with sugar than vinegar. Make a fair deal and people will flock to you and you will make a hell of a lot more money in the long run and folks will recommend you including me.

Wishing You A Blessed Year,

Bill


Shaun Penny said:

William, I respect your opinions as stated and believe too that Halcon is a good company with an excellent reputation. Yet they are not the only player in the EagleFord Shale. Your recommendation to lease to Halcon may not be in everybody’s best interest. As in life… not all situations are equal.

I know of Baker Exploration Company and believe a “smaller” company has many attributes to add to a merging development play such as Brazos County. First, Baker Exploration has been drilling and participating in wells in Brazos County since 1980 having participated and/or operated in over 100 wells in Brazos County alone. Baker Exploration has maintained an operating office here in Brazos County since 1985 which has recently been moved over to Burleson County. While operating over 40 wells in Brazos County alone in a period from 1990 to 1995, located mainly in the Steephollow and within the BCS city limits, Baker Exploration maintained an excellent reputation with landowners and city officials.

Would it surprise you to know that Baker Exploration took many of the first oil and gas leases in this EagleFord play in Brazos County in 2011 and caused three wells to be drilled by Weber Energy in partnership with Baker Exploration. The group then sold out to Halcon in early 2013. The Baker Lessor’s are extremely pleased with Baker and Halcon at this time while they are receiving Division Orders for their property.

Another way to look at the leasing situation, that I feel you should point out to this blog, is the fact…”would you rather lease to a company with a huge acreage position (Halcon has a reported 300,000 acres) or would you rather lease with a company like Baker Exploration who has the focus to handle a small acreage position and attempt to get oil and gas development on their lease position as soon as practical”. The focus of a smaller Lessor may help to expedite the development of these properties, and whether you lease for a ¼ of 1/5th lease, we all know and understand the time value of money, even if you lease at the smaller 1/5 royalty.

Bubba, I sent you a friend request so that I can send you more information on Halcon.

Thanks,

William {Bill}

979-402-9363



William Osborn II said:

If you would like, when you think you have a decent offer and lease, I would be more than happy and read it just to make sure there are no red flags! just let me know. I will send you a friend invite so that we can share contact information. I just want to make sure land & mineral right owners get a fair shake.

Good Luck,

Bill

Bubba B Brown said:

Thanks for your timely and detailed response. Sounds like good advice.

William Osborn II said:

I agree Przzz! Actually, year to date, Halcon has applied for 79 wells to be drilled and have drilled over 60 producing wells drilled this year just in Brazos County. And they are very concerned about the land owner and those who live in the vicinity of the wells. When they were fracing a well close to our home, the noise was pretty bad so they put us up in a hotel for 4 nights even though we did not have any interest in the well. They were only concerned about our peace and well being. AWESOME FOLKS TO DEAL WITH!

I highly recommend Halcon.

I originally leased to PetroMax Energy. Since I signed, PetroMax sold the lease to Halcon which I feel is to my best interest since Halcon has drilled more wells than any other company in Brazos County this year. I feel they ere the most reputable company operating and drilling in the Brazos Valley.
I also suggest that you do not settle for less than 25% royalties GROSS AT THE WELLHEAD. Also, the mineral royalties paid should be without deduction for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and otherwise making the oil, gas and other products produced hereunder ready for sale, or use. Also, make damn sure that your lease states that you get paid for not only oil and gas but also all condensate, distillate, or other liquid hydrocarbons.
Bonus money has been running between $800 and $1200 an acre.
Thanks
William Osborn {Bill}



Przzz said:

Don't know about Baker - 90% sure they are a brokerage firm.

Halcon has been chasing the Eagle Ford play very hard in Brazos Co and into Burleson. Have permitted over 40 wells in the Bryan /CS area and have drilled over 2 dozen. Very successful - appears to be the core for their operations right now. Look at their website for more info.

Halcon are the old Petrohawk guys that first "discovered" the Eagle Ford in S Tx in 2008-2009.

Pretty obvious who I would chose - even if Halcon offered less money for lease.

Bubba B Brown said:

I have been approached by two leasing agents, one representing Baker Exploration and the other representing Halcon.

I want to go with the winner, the one who plans to drill the well. The small acreage is located near FM2818 and Villa Maria intersection. Can someone give me some advice on who to lease with?