O&G Mineral Lease - Brazoria County, TX

Hello All,

We have an offer from Century Exploration Houston, Inc.to lease a tract of land in Brazoria County, TX for investigating, exploring, drilling, mining, etc. The lease offer is for a three year term. From reading other posts on this site it would seem that an offer of $150/acre might be a little low, although a 20% royalty seems appropriate.

Being a newcomer to this process, several questions come to mind:

Has anyone dealt with Century and what was your experience?

What would be a reasonable amount/acre for a three year lease term in this area?

Is the first offer usually negotiable and is a counter offer typically expected?

Thanks in advance for any input.

Century is a good outfit. They have been active (somewhat) in my part of Texas without a whole lot of success.

The offer is modest. I bought leases in Brazoria County almost 10 years ago at that rate.

How many net acres do you own?

Hi Buddy. There are a little over 90 net acres in this tract.

Thanks.

What area of Brazoria County is your mineral property located? Either survey or nearest town. Some areas are more suitable for deep gas drilling and others shallow Miocene oil wells. The last lease we signed in Brazoria County was for a 22% royalty interest rate. Our mineral property is located near Manvel and another tract along the ICW.

Hi Mike, H&W Survey - Section 6 A-457

Thanks.

Dear Mr. Schenck,

You have enough interest to get quite a bit more and 1/4 to 22.5% royalty, I wager – especially if your interest is undivided. The head of Century’s land department started with me at Shell over 30 years ago. I suppose that you can say that we go way back.

Mike Schenck said:

Hi Mike,
H&W Survey - Section 6 A-457

Thanks.


I checked the activity in your survey and found a plugged well that was drilled back in 1995 by Gaither Petroleum Company. The well had very good initial production figures but declined over a period of three years. It also produced gas condensate which is very attractive to today’s producers. The P-12 showed the Schenck Estate having 22 acres in this pool. I would think that with better completion and producing technologies this area should have good potential for future exploration.
Buddy Cotten said:

Dear Mr. Schenck,

You have enough interest to get quite a bit more and 1/4 to 22.5% royalty, I wager – especially if your interest is undivided. The head of Century’s land department started with me at Shell over 30 years ago. I suppose that you can say that we go way back.

Best,

Buddy Cotten
www.cottenoilproperties.com



Mike Schenck said:
Hi Mike,
H&W Survey - Section 6 A-457

Thanks.

Thanks for the input gentlemen. This is all very interesting.

Mike, I was wondering if you could tell me how you were able to check activity in the particular surveys. Do you use the public GIS on the TRRC website or is there a better resource?

Thanks again.

Mike: I used the GIS Map from the TRRC. I selected the County and survey and use the map tool “drilling wells” Click on the oil or gas symbols located in the survey and the well data should display.

Mr. Schenck, you just drill your own well! Can't do that? Then use your comprehensive knowledge of geology, reservoir engineering and energy economics to make a fair deal!

DrillingInfo is a great site for getting info.

Buddy, I just received an offer for $200/net mineral acre in Brazoria County, 47 acres near Damon. One issue is a well operation would take a significant percentage of the acreage. Do you know anything about EELL Development out of Lafeyette, LA?

Dan

Buddy Cotten said:

Century is a good outfit. They have been active (somewhat) in my part of Texas without a whole lot of success.

The offer is modest. I bought leases in Brazoria County almost 10 years ago at that rate.

How many net acres do you own?

Best,

Buddy Cotten
www.cottenoilproperties.com