I just got an oil and gas lease from a company called Shale Exploration. I remember my grandparents talking about an oil and gas lease on their land in Montana. This is the same land. I see some posts about the company but I am new to this. The offer is for $150 for a bonus for 5 years and royalties for 1/8th. I've done a little research, but don't have a clue. Help!
Art Vandelay,
Loved your TV show. For O&G you should start by spending the next couple of days reading up on Leasing. On this very site go to the tab along the heading "Mineral Help". Read through the various entries "Oil & Gas 101", "Lease My Land", "Oil & Gas Terms", "Leasing: What Not To Do". Then read through all the posts within this Daniels County Discussion for a little more specific info on current terms offered in the area. Doing a Google search on "Oil & Gas Leasing" will bring up several other sites and posts with useful info on the other important aspects when leasing your minerals.
In part their location and the number of net acres owned will influence the minerals value. So it's hard to say if you should take this offer. Yet I'd start by asking for 3 years instead of five, and 3/16th royalty instead of 1/8th, and something higher for the bonus. Then begin to negotiate with them to see which of these you can obtain. Though as I started this response, begin by learning more about the leasing process as there are many important terms to secure beyond how long, how much, and how much royalty. Good Luck.
Good advice from Art above and I found a book on this site which I purchased at Amazon. 'Negotiating oil and gas leasing ...' by Mike May, P.E. Good information, writing okay, and an easy read. We are dealing with the same company. I ended up contacting a 'local Colorado' lawyer (also a friend) just to get a feel for the document.
As you will see in the book and Art mentions above everything as far as your terms and negotiating wiggle-room depends on 'location, location, location'.
Thanks! I will research this and get back because I am sure I will have many questions. The offer has a Montana number on it and it looks like an office in Scobey, Montana. I'm going to call them tomorrow. Are there other oil companies leasing in Scobey?
Thanks Bob and I will get that book!
Bob Shivley said:
Good advice from Art above and I found a book on this site which I purchased at Amazon. 'Negotiating oil and gas leasing ...' by Mike May, P.E. Good information, writing okay, and an easy read. We are dealing with the same company. I ended up contacting a 'local Colorado' lawyer (also a friend) just to get a feel for the document.
As you will see in the book and Art mentions above everything as far as your terms and negotiating wiggle-room depends on 'location, location, location'.
There is lots of info here. Read the Bakken and Daniels cty forums, plus follow threads. Sometimes people don't use the layout very logically. Too many times it's not easy to follow.
You have received some very good advice. I believe that you can do better then this offer. I might also suggest that you contact a knowledgable attorney located in Daniels County to look over your lease especially since this is your first experience with this business. I have been pleased with the work of Mr. Halversland who is located in Scobey. Good luck to you!
Hello Mr. Rothstein, There are other companies starting to progress on leasing in the Daniels Co. area... Shale Exploration is not the only one to lease to .. in fact there has been some issues with Shale .. There is a company that is offering bigger royalties and better up front money .. When my family was approached by Shale it was a 5 year deal with another 5 year option... that would tie you up for 10 years... most of the leases ar 3 years with a 2 year option.. There is a company starting to look at our area that is offering some different options such as, a 3 year up front and a 3 year option , or a 4 year deal with a 2 year option.. they are looking at specific areas though.. they are paying over 200 dollars an acre up front so things are getting more competative in the leasing arena..plus the royalties are from 15 percent to 17 percent and of course they pay more on the option years... as I say it is just starting to get active here in D.C. so more and more offers will come ... hope this helps
Absolutely it helps. I am excited about the bonus money, but I want more assurances on royalties from actual drilling. What were the problems with Shale Exploration because I do not want to lease with a company that is not going to drill? That is what my attorney friend told me today. I told him about this and he contacted another friend attorney who has done oil work. They said to size up the companies that compete for the leases and figure out which one looks like its making in-roads on drilling because that is where the real money is.
Egl,
What company is this?
There is a company starting to look at our area that is offering some different options such as, a 3 year up front and a 3 year option , or a 4 year deal with a 2 year option..
Please give me names of these other companies. I just cannot see going with these companies I cannot find who backs them and that do not have offices there in the county. I would think if a company is going to drill, like Shale Exploration says they are, they would have an office in this town. I was told Shale Exploration has an office in Scobey, and they said they were in Scobey when I called them. I would think that would be important if they are drilling there to have an office there. Someone told me about flipping leases and I am worried about this with a company that doesn't even have an office where they say they are going to drill. Where am I going wrong here? What are these other companies?
Ted,
Don't let having an office in the county they are leasing sway you. In my mind, it doesn't mean anything. In fact, isn't it what a "flipper" would do also - set up a local presence. So I don't think there is any meaning in that. Also, imagine a gas/oil company having an office in every county - probably too much and not necessary. Now a presence (i.e. crews and drilling equipment and drilling activity, ok, but maybe not a "business office" per se.
To figure out Shale exploration better, ask them if they have any wells ANYWHERE. Ask them if they have applied for any permits ANYWHERE. Ask them where there crews are at and what they are doing? If they don't have these things, ask them what they are waiting for, because they have leased land in the county.
There are other ways to do further investigation and I have started looking at a few things. I have said before, I don't know if Shale Exploration LLC is good or bad. But I can tell you I have found they formed the LLC less than 1 year ago.
Continue what you are doing; take your time, investigate, learn, be cautious, etc.
Wilson
Michigan Mineral Owner
Right.....I see what you are saying about having rigs and drilling crew out there, but to me, you have companies flipping leases and they would be less likely to invest in the community and have an office like that. What are these other companies offering? Where are they? Not having an office and not disclosing anything about their backing is a problem that indicates a show string budget.
Do the other companies that all these people are talking about have any wells anywhere? This is what I do not understand. You have a company that is on the internet - minimal research shows major backing with Greehey, etc... They have an office there in the County. Then you have all these other shadow companies with dinky looking websites and no apparent backing. Where are these other companies and what is there backing? Where would I meet them face to face. I think that speaks volumes, but I could be wrong on this.
Ted,
I can't say about other companies and I can't tell you if Shale Exploration is legit and meets your criteria of being a producer. But here is some other info that I found looking into Shale for you. First I went to the MT government website to see what I could find in the business registry; that is where I determine Shale Exploration LLC was formed in June 2011.
But when investigating the address provided for the principal I see Shale Exploration (in MT) also appears to be Westover Energy LLC out of Texas.
http://westoverenergycompany.com
Then reviewing both westover energy and shale exploration websites we find that Sam Tallis is the President of both.
So taking it a step further, let's learn more about Mr. Tallis; you can do that by going to the following websites:
http://sam-tallis.newsvine.com/?more=About
or see him here:
http://gomarcellusshale.com/profile/Sam_Tallis?xg_source=activity
or here…
http://pennsylvaniashale.blogspot.com/
and
https://profiles.google.com/sam.tallis/about
Now, I must emphasize, that I am not passing judgement on Shale Exploration or Mr. Tallis. I do not know good or bad or their intentions. I am just trying to illustrate by this example that quite a bit can be found on the internet.
Keep digging and good luck!
Wilson
Ted,
It also takes more then an office in town to be legit. Here is an article from Jan 2011 where an office had been set up for leasing in Michigan in 2010 and it can blow away in the wind just like a bad lease deal. In his example, it was Chesapeake using shell companies and landman firms to lease and then bail and cancel. So again, point is an office doesn't mean legitimacy.
Wilson
Food for thought....
A family member talked to one of our neighbors in Montana who owns adjoining acreage in Daniels County.
This neighbors stated she was approached by Bakken Oil LLC to lease. Oddly.. the mailing address and phone
number was the exact same as Shale Exploration LLC in Scobey. It's no secret that Sam Tallis owns and operates
multiple companies such as this that all do the same thing. Our property is shared by my siblings and our cousins.
Our cousins signed with Shale Exploration on December 15 and has not seen any money to date.
Jack
I just called and talked to Shale Exploration about how long it takes to fund a draft. They said 90 banking days and that they are trying to get everything funded by April 30th even if it is before the money would be due under the lease. John...let me know if and when they get paid. I agree with you Wilson that an office can disappear, it just is more evidence of commitment in my mind and Shale Exploration is the only one in Daniels County with an office and real people you can talk to and hold accountable. I'm just saying that there is more evidence that Shale is legitimate than any other company. Instead of trying to prove that Shale is not legitimate, where is the proof that the other companies operating in the area are legitimate. I think the burden is on the company to prove its legitimacy. Shale Exploration has done some things to prove their legitimacy (office it town, donations, leasing up many acres). That is why I am flying out there next week. The only think I have found about Bakken Oil, LLC is that it has an office in Sidney, is somehow connected with someone in Arlington, TX and they have a little website. I didn't see an address connection to Shale Exploration. I'm just looking for evidence of legitimacy. I just read this article in Oil Patch.
All,
I don't have anything further to contribute to this particular Shale Exploration dialog. People will need to do whatever "investigation" they feel is warranted to make their decision. I wish everyone the best. However, please do keep the board posted on what people's experience is with Shale Exploration et al (good or bad).
Caveat Emptor
Good Luck,
Wilson
I will update after I go to Scobey and actually meet these people. Thanks for all the good information everyone.
I just got a letter from Shale that says they are drilling test wells this year and they are ramping up their leasing program. I did not choose to go with them because we got better offers. Montana Lease Holdings is offering a better deal.