We had two leases on land located in Wilson County, TX. Part of the land from one lease is in the Lang unit. A young Landman, Paul Boland, with EOG has contacted us regarding the land. He stated that EOG intentionally put a clause in their leases so that they could hold a lease even if the well is not economically feasiable so long as it is producing. This argument seems to be inequitable and conniving on the part of EOG. We heard and thought EOG was a much more reputable company than that. Whhen we informed them about other royalty owners in the unit, they claimed they have everyone else tied up until 2014 and they were not complaining. Holding 1300+ acres with a well producing 60-80 barrels a month seems to us as being abusive to the royalty owners. I guess they are counting of us (royalty owners) to be docile and take the abuse without doing anything.
To add insult to injury, they offered to re-lease the other property for a bonus that was less than they paid the first time and for less royalty. We atold them they now had the benefit of three additional 3-D surveys. From the tone of the conversation, they insinuated that the area was not very worthwhile. We argued that if the surveys showed that, why were nuemrous wells drilled in every direction for the Land Unit after the surveys were done.
Needless to say, we are extremely disappointed with the professionalism and tactics being used at this time. We are trying to determine if it is EOG or Mr. Boland who is utilizing these tactics. Not being familiar with industry what do you all think about this situation?
First, in regards to addressing the low producing well situation, when a lessor and lessee enters into a lease agreement and signs on the dotted lines, the lessor needs to fully understand the conditions he is agreeing to. The time to call an oil companies hand on this matter is during the negotiation period. Second, the re-leasing matter is strictly up to you. If you feel that more money is needed, simply don't lease and begin to market your minerals to another operator who is willing to pay more for the lease. All in all, these are minerals and you have the final say in how you want to lease. The aim of most companies is to acquire drilling rights for the least amount of money and the best terms so that leaves the lessor to make the ultimate decision. It is my opinion that you should not be in hurry to re-lease and begin to shop around. If your area is active, other offers will come your way.
Jess, get a-hold of HUNT and see if they will lease; They have an office right there in Poth.
EVEN if Hunt is not drilling in your exact area, they may jump at the chance to lease your place (for much more than what EOG is offering) SO that they have some trade-bait to swap with EOG to help round out their acreage.
Seems these oil-co's value acreage at tens of $1000/ac when they're buying and selling (or trading) amongst themselves.
Well obviously I don't know what happened in your particular situation, but what I DO know is that I would NEVER do anything as a landman that was not approved by my client because I love my job and flying by the seat of one's pants is usually antecedent to getting kicked to the curb. In other words, I would never offer a bonus or royalty amount not already specifically approved in advance by the client. Also, I don't know about your particular landman, but none of my clients has ever given me latitude to negotiate on the spot with a mineral owner. Some of the "old hands" on this Forum who have 20, 30, or 40 years experience might have done so in their careers, but the vast majority of field landmen these days I would bet do not have that latitude.
We are truly greatful for all of the people that took their time to visit, comment and advise us out on our situation with re-leasing our property in Wilson County, TX. It really has been a learning process for us, these oil companies are a strange breed.