Lease for first production - how to evaluate if it's fair?

General Mineral Rights Discussion
1

Our family has many leases but they are all renewals and were all ORRIs originating in the 40s and 50s. Those leases never change and their terms all the same. This one is for an undeveloped parcel. I have no idea how to read this darn thing. It is for Loving county - Who can I talk to?

2

Hi, TC -

You should have every lease you are offered reviewed by an experienced Oil and Gas Attorney.

There are a few that answer questions here on The Forum, as well as other Consulting Professionals. They may be able to help.

If you do not have an Attorney to consult, you are welcome to accept my invitation to become A Friend on The Forum. The Forum frowns upon solicitation, but I can privately suggest a few that way.

Hope this helps -

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

3

Charles,

My siblings and I are currently, and have been, wondering if employing a landman would be prudent, especially as we learn more about the variables unknowingly within our control. I would appreciate your contact. We recently received an offer from Plains for $2,000/ma for Block 28, Sections 9,12,15,16,27. What's unusual (to me) is that there are producing wells currently there (Anadarko, shell). Their lease terms are sorely lessor un-friendly, too. Also, they want a decision within a month of their offer - unusual?

Hope to hear from you,

Henry

4

Read discussion under Buyer Beware. A company with Plains in name is trying to acquire a portion of your royalties, not offering an oil and gas mineral lease with full royalties to you. There is a lot of activity in Loving County with permits and leasing. Hang on to your royalties. And never let anyone pressure you. These time limits are often with the hope that you will learn about activity after you sign.

5

Henry, here is a link to the thread TennisDaze was referencing:

http://www.mineralrightsforum.com/forum/topics/buyer-beware-offer-for-royalty-lease-as-opposed-to-mineral-lease

Is the "Lessee" on the lease form described as being "Plains Natural Resources", or are they using a different name?

6

Hi, Henry -

I just sent you an Invitation to become A Friend on The Forum. Accept it and I'll send you my contact information.

TennisDaze and Wolfcamp Shale may be correct - that they are trying to swindle you out of your royalties. You need to be careful, especially because it might include the royalties you are receiving now.

Charles

7

Hey, TC -

I haven't heard back from you. Have you had someone look over your lease or offer?

And by the way: You sure shine up good.

Charles

8

Yes, it is from Plains Natural Resources and they "are interested in leasing your interest located in Loving Co......". Is this legit or is this about getting a piece of my royalties as TennisDaze cautions?

9

We have had the lease looked at by a qualified person. Awaiting an evaluation...

10

Given what you've described so far, it sounds highly suspicious. If the granting clause says something to the effect of "Lessor hereby grants, leases and lets exclusively to Lesssee..all of Lessor's royalty interest in and to all of the oil, gas...." or something to that effect, then I would be concerned. One of the mineral consultants listed in the marketplace of this forum can probably give you an answer pretty quickly on this matter. Here is a link to those vendors: http://marketplace.mineralrightsforum.com/ad-category/minerals-mana...

11

I asked a few industry professionals and Attorneys about this type of "Lease". It is generally considered a rip off. I advise you to tell them to stick it.

If anyone has already signed one of these things and wants out, I have the names of two different law firms, one in Dallas and one in Houston, that have been successful in getting them reversed.

Charles