Looking for help putting together a final lease contract with Superior Resources - Our minerals (100 acres) are located in N. W. Alfalfa County, Oklahoma.
They have offered $500.00 per acre, 3/16, 3 year Primary Term.
However; the clauses in the lease agreements may not necessarily be in the best interest of our family.
Anyone know of or have a lease form which has equitable terms, or know how to get one for review prior to finalizing our lease.
I realize an Oil & Gas Attorney would have one, but was hoping to get one (a sample form) at a very minimal cost.
You can go to pagaslease forum and find a lot of lease clauses and comments to read to educate yourself. However, you are not doing yourself a favor by not getting a good oil and gas attorney (I would recommend board certified if Oklahoma has these certifications) to assist you with your lease. Have you accepted their offer or made a counter-offer? I would think that you could get at least a 20% royalty. If you accept Superior Resources’s offer of $500 an acre, you will be receiving $50,000 for your lease and can spend a thousand or so dollars to protect yourselves. I am a land and mineral owner myself and would never consider doing otherwise after the experience my parents went through. There land was tied up for over twenty years and a number of leasing opportunities lost. Most people don’t realize that signing a lease is far more than that. You are essentially giving up a great deal, and perhaps for a long time if production is established. There is no such thing as a “standard lease,” although the oil companies would like to have you believe otherwise. It may be their standard lease that they hope people will sign, but it will be for their benefit and not yours. Please do not be penny-wise and pound foolish. Seek a reputable and well qualified oil and gas attorney to aid you.
Thanks for the input 6th Generation Texan. We are 4th Generation Oklahoma.
No, I have not signed a lease. They have however mailed over a contract with an attachment I requested Exhibit "A" to include property damage and so forth. $10,000.00 for the first well, and a Bank Draft. (collection item) The negotiation process started at $250.00 per acre, 3/16th production royalty but that was it. Then up to $400.00 per acre, 3/16thand then the mention of a 3 Year Primary Term.
I told them I would shop around for a better deal and they immediately bumped it up to $500.00 per acre.
Exhibit "A" shows various clauses such as: Depth, Pugh, Use of Surface, Water, Deductions and a Shut- In Royalty, which is where I am now.
Superior is in with Chesapeake and their land-men are canvassing pretty heavily up in our area.
The only other one of any count would be Sandridge, and I emailed them today for info.
If all I can hope to get is a generic form, then yes I agree with you, I should probably retain an Attorney.
6th Generation Texan said:
You can go to pagaslease forum and find a lot of lease clauses and comments to read to educate yourself. However, you are not doing yourself a favor by not getting a good oil and gas attorney (I would recommend board certified if Oklahoma has these certifications) to assist you with your lease. Have you accepted their offer or made a counter-offer? I would think that you could get at least a 20% royalty. If you accept Superior Resources's offer of $500 an acre, you will be receiving $50,000 for your lease and can spend a thousand or so dollars to protect yourselves. I am a land and mineral owner myself and would never consider doing otherwise after the experience my parents went through. There land was tied up for over twenty years and a number of leasing opportunities lost. Most people don't realize that signing a lease is far more than that. You are essentially giving up a great deal, and perhaps for a long time if production is established. There is no such thing as a "standard lease," although the oil companies would like to have you believe otherwise. It may be their standard lease that they hope people will sign, but it will be for their benefit and not yours. Please do not be penny-wise and pound foolish. Seek a reputable and well qualified oil and gas attorney to aid you.
You are welcome. If they are canvassing the area pretty heavy, then $500 may be a low offer. This is where a very knowledgeable oil and gas attorney may be able to negotiate a better deal for you. I would ask neighbors and others in the community what the offers have been or they have accepted, if you can find out. It may be possible to get in excess of 22% royalty with no deductions for transportation, marketing, etc. All is negotiable. The $10,000 damages for one well may be a low figure as well, if the number of acres they can use is not restricted. When my parents went through litigation for a several years with a oil and gas company, I educated myself about everything I could and I still have a lot to learn. All oil and gas lawyers are not equally competent either. In Texas, there are lawyers that are board certified in oil and gas law. Hopefully Oklahoma has the same. You need to find someone who does not work for Chesapeake, first of all, and who does a lot of work on behalf of mineral owners. Also, I have read too many stories on the forum about bank drafts not being honored after people signed the leases, so I would request a cashier's check. If they tell you they need to run title first, they can run the title and then you can execute your lease. I read on the forum where one bank held the original lease until the draft was paid, but this is very unususal. If your courthouse accepts copies of documents, the company could take the lease and file it and the draft not be paid. I read this topic on an attorney's blog (about not accepting bank drafts for lease payments). These are all things the attorney can assist you with. Good luck!
My family has received a similar offer from Superior Resources for a quarter section SE of Cherokee in Alfalfa County. Our property is a wheat farm, and we are concerned about surface damage. We are seeking recommendations for a respected attorney, and are interested in comparing notes on prices and terms.
Wanted to chime back in with you and give you my blessings.
I have taken your advise and checked out pagaslease forum and others links on the internet to educate my self to the clauses of an Oil & Gas Lease Agreement. Have even watched the movie "Gas Land" of which opinions vary.
Aslo, in talking around to other property and mineral owners in Alfalfa County, most of them just said, "well he (The Landman) seemed like a nice guy (or girl) so we went on and signed up." None of them were even aware they could have at least requested an addendum to include Exibit "A" for other protection and this is just for starters. Then you go through the clauses one at a time.
It just blows me away what these lease companies are getting away with. Check stubs showing deductions accounting for upwards of 1/2 of the Royalty Commission. Wow! And they probably sold it to one of their affiliates wholesale. Talk about rubbing your nose in the dirt. Absolutely Incredible!
I also found out mineral acres are going for $4,250.00 an acre just 80 miles south of my property if a person was willng to sell outright. What are your thoughts on that issue. Selling minerals outright and just exiting the Casino, so to speak? Would still have surface rights to sell them water.
Haven't hired an Attorney but have a few leads. I've slowed down to a crawl and am exercising patience in the final decision making process. The $50,000.00 check can wait.
Again, thank you so very, very much for your replies and may God Bless.
You have done some good homework Larry! It is hard to believe that people are so naive. Please do not consider selling your minerals outright. This happened to a man in our community. The oil company offered him $50,000 for his minerals and he thought, wow, they may never find oil and I am going to take the money. The company drilled the well on his place and it was the best one ever in the community. Had he not sold, he would have made a million dollars or more in royalty (based upon the actual total production of the well and not just a number pulled out of the air) and this was 30 years ago when oil was selling for $40 a barrel.
I believe if anyone is offering to buy your minerals, then you have something valuable that they know about and you don't. My dad and his ancestors never believed in selling minerals and he instilled that in me. I sold two tracts of land and kept all of the minerals. The owners wanted some minerals, but I stuck to my convictions and no minerals were conveyed with the land. I have now leased the minerals under their tracts with a no surface use clause. The land can be drilled under, but not on. In Texas, leases in the Barnett Shale have paid over $10,000 an acre bonus - some up to $25,000 acre. Can you imagine how sick those people feel who sold their minerals for practically nothing when the first offers came along? Who would have ever dreamed that leases would be bringing $500 to $25,000 an acre bonus? $500 or more an acre is common in our area, but in another six months the bonus will probably be over $1,000 an acre or more since drilling is just getting started in the area. The first ones on the leasing band wagon are the losers.
The oil companies lease whatever they can cheaply and then pay more to people that won't accept their cheap offers. This is where a knowledgeable oil and gas attorney should be worth the money. They should know what minerals are worth and what the going rate is in the area, especially if they have represented other landowners. I recently read that it takes 2-3 million gallons of water to frac a well. Some astute people in Texas are putting clauses in their leases that they will be paid 30 cents per metered gallon of water. However the oil company has to drill the water well, supply the well equipment and maintain, and pay the electric bill. That is a lot of valuable water to not give away for free. Thirty cents a gallon is not chump change either. These are things that the ordinary landowners just don't stop to think about. I am in the process of negotiations with two companies to lease my minerals. I am hiring an attorney to prepare me a lease and do the negotiating, because I feel that I have gone as far as I can dealing with the companies.
I wish you and your family the very best of luck and fortune! Keep me posted.
Larry Turner said:
Wanted to chime back in with you and give you my blessings.I have taken your advise and checked out pagaslease forum and others links on the internet to educate my self to the clauses of an Oil & Gas Lease Agreement. Have even watched the movie "Gas Land" of which opinions vary.
Aslo, in talking around to other property and mineral owners in Alfalfa County, most of them just said, "well he (The Landman) seemed like a nice guy (or girl) so we went on and signed up." None of them were even aware they could have at least requested an addendum to include Exibit "A" for other protection and this is just for starters. Then you go through the clauses one at a time.
It just blows me away what these lease companies are getting away with. Check stubs showing deductions accounting for upwards of 1/2 of the Royalty Commission. Wow! And they probably sold it to one of their affiliates wholesale. Talk about rubbing your nose in the dirt. Absolutely Incredible!
I also found out mineral acres are going for $4,250.00 an acre just 80 miles south of my property if a person was willng to sell outright. What are your thoughts on that issue. Selling minerals outright and just exiting the Casino, so to speak? Would still have surface rights to sell them water.
Haven't hired an Attorney but have a few leads. I've slowed down to a crawl and am exercising patience in the final decision making process. The $50,000.00 check can wait.
Again, thank you so very, very much for your replies and may God Bless.
Hi Larry,
I want to follow up and make a correction to my statement about the value of water paid to the mineral owner. It is 50 cents a barrel, not 30 cents a gallon. I misread the article.
How are you coming along with your negotiations? Did you find an oil and gas lawyer to assist you? I wish you the best!
6th Generation Texan said:
You have done some good homework Larry! It is hard to believe that people are so naive. Please do not consider selling your minerals outright. This happened to a man in our community. The oil company offered him $50,000 for his minerals and he thought, wow, they may never find oil and I am going to take the money. The company drilled the well on his place and it was the best one ever in the community. Had he not sold, he would have made a million dollars or more in royalty (based upon the actual total production of the well and not just a number pulled out of the air) and this was 30 years ago when oil was selling for $40 a barrel.
I believe if anyone is offering to buy your minerals, then you have something valuable that they know about and you don't. My dad and his ancestors never believed in selling minerals and he instilled that in me. I sold two tracts of land and kept all of the minerals. The owners wanted some minerals, but I stuck to my convictions and no minerals were conveyed with the land. I have now leased the minerals under their tracts with a no surface use clause. The land can be drilled under, but not on. In Texas, leases in the Barnett Shale have paid over $10,000 an acre bonus - some up to $25,000 acre. Can you imagine how sick those people feel who sold their minerals for practically nothing when the first offers came along? Who would have ever dreamed that leases would be bringing $500 to $25,000 an acre bonus? $500 or more an acre is common in our area, but in another six months the bonus will probably be over $1,000 an acre or more since drilling is just getting started in the area. The first ones on the leasing band wagon are the losers.
The oil companies lease whatever they can cheaply and then pay more to people that won't accept their cheap offers. This is where a knowledgeable oil and gas attorney should be worth the money. They should know what minerals are worth and what the going rate is in the area, especially if they have represented other landowners. I recently read that it takes 2-3 million gallons of water to frac a well. Some astute people in Texas are putting clauses in their leases that they will be paid 30 cents per metered gallon of water. However the oil company has to drill the water well, supply the well equipment and maintain, and pay the electric bill. That is a lot of valuable water to not give away for free. Thirty cents a gallon is not chump change either. These are things that the ordinary landowners just don't stop to think about. I am in the process of negotiations with two companies to lease my minerals. I am hiring an attorney to prepare me a lease and do the negotiating, because I feel that I have gone as far as I can dealing with the companies.
I wish you and your family the very best of luck and fortune! Keep me posted.
Larry Turner said:
Wanted to chime back in with you and give you my blessings.I have taken your advise and checked out pagaslease forum and others links on the internet to educate my self to the clauses of an Oil & Gas Lease Agreement. Have even watched the movie "Gas Land" of which opinions vary.
Aslo, in talking around to other property and mineral owners in Alfalfa County, most of them just said, "well he (The Landman) seemed like a nice guy (or girl) so we went on and signed up." None of them were even aware they could have at least requested an addendum to include Exibit "A" for other protection and this is just for starters. Then you go through the clauses one at a time.
It just blows me away what these lease companies are getting away with. Check stubs showing deductions accounting for upwards of 1/2 of the Royalty Commission. Wow! And they probably sold it to one of their affiliates wholesale. Talk about rubbing your nose in the dirt. Absolutely Incredible!
I also found out mineral acres are going for $4,250.00 an acre just 80 miles south of my property if a person was willng to sell outright. What are your thoughts on that issue. Selling minerals outright and just exiting the Casino, so to speak? Would still have surface rights to sell them water.
Haven't hired an Attorney but have a few leads. I've slowed down to a crawl and am exercising patience in the final decision making process. The $50,000.00 check can wait.
Again, thank you so very, very much for your replies and may God Bless.