Need Advice, never offered to signed lease, now there are 2 wells in pool & landman coming to talk

General Mineral Rights Discussion
#1

I & my Mother-In-Law are meeting with a Landman Friday morning to discuss 14 acres of minerals she owns. Apparently she was missed somehow, almost 3 years ago, when the rest of the mineral owners were offered leases, including her ex-husband (my Father-in-Law). Now there are 2 wells in the pool with one of them just coming online about 2 months ago. A Landman contacted her last week and left a copy of a lease agreement. This lease is only offering $200 acre and 3/16ths.

This seems really low to me considering there are many wells going in all around this property! The property is located in Robertson County, Texas. I think leases do not normally pay as much out here in the country like they do up around DFW, but this lease seems like an offer that would be given where there are no wells anywhere in site, let alone having 2 already drilled.

Neither of us are experienced with this and we have tried to contact a local lawyer, but he has not returned our calls. What should we be asking for from the Landman Friday?

Thanks,

Mike

#2

Dear Mr. Wilson,

Ask the landman for a copy of the current W-1for both wells with a plat showing the pooled unit(s) and your acreage identified on the plat.

At that point, sufficient information has been garnered so that you can get a professional to help you make informed decisions.

#3

Thanks Buddy, That sounds like good advice. Will do.

Mike

#4

Hey, Mike -

It would be wisest for you to put off signing anything until you have consulted an attorney.

Robertson County is a very active county for drilling activity, with some really productive wells being brought in.

If your land is unleased and within the boundary lines of an existing unit, it may be substantially more lucrative for you to leave it as such rather than sign what would be in essence a retroactive lease.

My contact information is below. If you will send me your legal description (a copy of the proposed lease would have that), I'll be happy to pull up what I can data on what's going on with your land.

Charles

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

713-408-2850 Cell

fieldlandservices@gmail.com

#5

Buddy always has good advice and he's right, they should provide you all the information you need for an informed decision.

If the Landman drags his feet, however, send me the legal and I will pull up the Drilling Permit (W-1) and the Pooling Agreement for you -

Charles

#6

Dear Mr. Wilson,

Actually, it does not make much difference if your interest (either divided or undivided) is within the unit. The big time, holy crap they messed up real bad controlling factor is whether your mineral interest is under the drillsite lease. At that point, you are a co-owner of the well, undiluted by any unit formed.

For example, if the operator formed a 700 acre unit and you were non drillsite and you leased for 3/16ths, your share of unit production would be 14/700 x .1875, or .375%. If you were non drillsite and unleased, your share of production would be 0 (subject to a few things that you might be able to do).

If you were under the drillsite lease, containing for example 120 acres, your ownership share of production would be 14/120, or 11.66% of the well, paying 11.66% of the costs and receiving a like interest in production. That gives you tremendous negotiating advantage. I would not necessarily recommend that you stay in a working interest position in the well, but a royalty of 75% or higher on a lease could easily be negotiated. As a matter of fact, I once negotiated a royalty of 92% on a similar situation. That was my all time record.

Just gather the information, collect their offer and get with someone whom you trust to advise and who also is well versed in the oil and gas law of Texas.

If the operator dropped the ball real bad, you could have a significant financial windfall.


Charles Emery Tooke III said:

Buddy always has good advice and he's right, they should provide you all the information you need for an informed decision.

If the Landman drags his feet, however, send me the legal and I will pull up the Drilling Permit (W-1) and the Pooling Agreement for you -

Charles

#7

Hi,

Thanks for all the replies and all your help. I want to give you and update on this. The Landman and his manager showed up for the meeting. They provided us with the Plat and showed us where the land is in relation. As it turns out, my Mother-In-Law was wrong about the location. The Plat went up to and around 2 sides of the property line she has minerals on, but it was not in the plat.

This made me feel (correctly I think) I had lost much of my thunder. But they still admitted they had screwed up in missing her when the leases were originally signed and that she was in a VERY good negotiating position. I told them the lease they were offering was not even close to what is fair considering the situation and we were going to get a lawyer. They agreed with me and the Landman's manager said he had to make some phone calls to his upper management (I know that is a well known sales tactic) .

They came back with a MUCH MUCH better lease offer! Then they let us go over and modify the terms according to information I found on this site. After they met every single demand, my Mother-In-Law decided she wanted to sign. So being her decision, I agreed they had really worked with us and she signed.

Thanks Again,

Mike

#8

Well... ?

We're all waiting with baited breath: What did you get?



Mike Wilson said:

Hi,

Thanks for all the replies and all your help. I want to give you and update on this. The Landman and his manager showed up for the meeting. They provided us with the Plat and showed us where the land is in relation. As it turns out, my Mother-In-Law was wrong about the location. The Plat went up to and around 2 sides of the property line she has minerals on, but it was not in the plat.

This made me feel (correctly I think) I had lost much of my thunder. But they still admitted they had screwed up in missing her when the leases were originally signed and that she was in a VERY good negotiating position. I told them the lease they were offering was not even close to what is fair considering the situation and we were going to get a lawyer. They agreed with me and the Landman's manager said he had to make some phone calls to his upper management (I know that is a well known sales tactic) .

They came back with a MUCH MUCH better lease offer! Then they let us go over and modify the terms according to information I found on this site. After they met every single demand, my Mother-In-Law decided she wanted to sign. So being her decision, I agreed they had really worked with us and she signed.

Thanks Again,

Mike

#9

My neighbors around me have been approached with an initial offer of a 3yr contract with 1/5th royalty,$400 per acre with a 2yr extension @ $300. 2 of them negotiated better, they said, with $500 on the 3yr and $500 on the 2yr extension. The other 2 just signed what was offered and did not negotiate. I'm sure that it is just a matter of time before I'm approached. What did you finally wind up with?

FM

#10