How do you know if they are just trying to flip your lease or actually with a oil company and if they actually plan on producing on your mineral rights.
If the operating companies name is already on the lease form, that's a good sign. A landman will usually tell you anything he thinks you need to hear to get that executed lease out of your hands. It's the landmans job to get those leases. I would consider that if they paid by check in exchange for your executed lease and not ask you to send in the lease in exchange for a 90 banking day draft that they could be and probably are the real deal, but there is no way to know for sure, other than the operators name is already on the lease.
r w kennedy said:
If the operating companies name is already on the lease form, that's a good sign. A landman will usually tell you anything he thinks you need to hear to get that executed lease out of your hands. It's the landmans job to get those leases. I would consider that if they paid by check in exchange for your executed lease and not ask you to send in the lease in exchange for a 90 banking day draft that they could be and probably are the real deal, but there is no way to know for sure, other than the operators name is already on the lease.
No it was a 90 day draft that he gave me and not sure about company name being on lease will have to look.
David:
Sometimes it is impossible to predict what an oil company will do with a lease once it has leased the mineral acreage. rw is right in his response but sometimes it boils down to some swapping between operators if a majority leasehold is in the picture. I've been involved with this leasing since 2004 and still won't predict what will happen until the well is drilled.
ok thanks charles and rw guess its hurry up and wait time .
I hope you are paid with no issues. Although it may not sound like it, I think most lease deals go off without a hitch. If you hang around the forum you will hear about a larger percentage that did not, because many people come here after they have a problem. I agree with Charles that even if you are leased to the operator, there is still horse trades between operators. Not only small companies assign leases. Chesapeake made alot of money leasing and then assigning leases to another company for a profit.
One company assigning a lease to another does not bother me.....as long as they paid for the lease first. To basically trick a mineral owner into executing a lease that you have no intention of paying for if you can't flip it to someone else for a profit is disingenuous [ nice word for lie ] because you are actually wanting not a lease but a free option, and the mineral owner thinks he's just executed a lease agreement. It gets worse when the flipper records the lease so the mineral owner can't lease to a legitimate and paying lessee without obtaining a release, which probably means they need a lawyer.
Another way. No lease without a check or short term draft. Require consent to assign. Many times a company will ask the broker to buy the lease in his name. Very common.
If they want to pay by draft or an option for a small percent, it is more likely to be a lease flipper. Buddy is correct many companies use brokers to keep the buzz down. If they insist on the lease being in the brokers name, try to find out who they represent and confirm.
yes the draft was actually 3o day I came right out and ask if he was going to flip the lease.
Don't keep me in suspense, what did he say?
David Little said:
yes the draft was actually 3o day I came right out and ask if he was going to flip the lease.
In Texas, one can go to the Railroad Commission Web site and query all the wells that a particular producer has drilled, with a time frame (for example, "in the last three years"). When I was leasing in one part of Texas, I was getting resistance from one community, who kept regaling me about the high bonus offers that a competitor was offering. I had never heard of that company before, so I went to the Railroad Commission Web site. Sure enough, that other company had NEVER drilled a well in the play, and had only been in existence for about a year and a half. Armed with this information, I was able to persuade many Lessors to sign with me because my base client, a large, established producer, had an extensive track record of drilling successful wells in that play and a reputation for almost NEVER assigning a Lease.
So check with the regulatory agency in your state responsible for the oil-and-gas industry, they probably will have data available to you to decide whether the company to which you leased your minerals is a real operator or a "lease flipper."