Lease from Jagged Peak Energy

Hi, I own a 5 acres lot in Ward County for about 12 years:

Lot 1, N/2 of Section 3, Block 33, H&TC Survey, Ward County.

Jagged Peak Energy tried to lease the lot from me through their agent, Optima Land Group, for 10 years lease.

In the contract, under "Rate and Damage Schedule" it says $400/day for "Stacked Drilling Rig". There's no royalty in the contract so I called and was told that if they install a "pump", I'd get $400/day.

Now that they finalized their decision to explore, the agent said they will install a "pad" on my property. However, I'd only get one time payment of $15,000. Nothing else for next 10 years.

I inquired about $400/day offer they gave me but he said nothing in contract indicated that I'd get that.

Now I am really confused and don't know what to do. The agent sounded dishonest. I feel like I've been cheated.

Can anyone give me any advice?

Thank you very much in advance.


You most likely own only surface for your 5 acres and no minerals. This is a common situation in quite a few Ward County sections where someone acquired all the surface and subdivided it into lots which were then sold. The minerals in Texas are dominant to the surface estate and you cannot prevent use of surface for drilling and development. It seems that Jagged Peak is planning to drill from your surface lot. For a horizontal well, the well pad (location of wellbore and related equipment) is often larger than 5 acres and so may also spread over onto an adjacent lot. In that area, the companies base the damages on the Rate and Damage Schedule of the University of Texas Lands which is published every September 1 and is available online. Currently, the damages are based on the length of the wellbore and size of the pad. Length of 8,000 to 13,000 feet is $16,000 for maximum of 200,000 square feet = 4.59 acres and Length over 13,000 feet is $20,800 for maximum of 250,000 sf = 5.74 acres. The wellbore is vertical depth plus horizontal length. Jagged Peak has permitted several wells in nearby sections and all of them are over 13,000 feet in total. Tell the agent that you expect a written offer of $20,800 for the first well on the pad, as is standard based on the University Lands rates. In addition, you expect additional payments of $5,600 for each additional well on the same pad, or the then-current University Lands rate for wells permitted and drilled on or after September 1, 2017. Has he made the offer to you in writing - ie by email? If not, then ask for a written offer of compensation in line with these standard rates. If Jagged Peak is only using part of your 5 acres for the pad and so wants to pay proportionately less, then tell them that you expect to be compensated for any roads, pipelines and electric lines that cross any part of your lot that is not on the pad. Here is the link to the University Lands website where you can find the Rate & Damage Schedule.

Hi TennisDaze,

Thank you very much for your valuable information. I really appreciate it.