A group of 13 grandchildren have received offers from RedSky for our 50% mineral interest in a 20 acre plot in NorthWest La Salle County. The offer is for a Paid Up Lease at $1,000/acre and a 25% Royalty with a 3 year primary term and a 2 year option.
I have been trying to contact Buddy Cotten, but understand that he may be unavailable for now because of his wife's illness.
I don't know if our small interest in these mineral rights is worth hiring an attorney to negotiate on our behalf. Any comments would be appreciated.
Thanks - Don Brown
Don,
Personally, I wouldn't sign with Redsky/Chesapeake. They have pulled some unacceptable tactics of leasing minerals and then not paying and canceling the leases. Thus I don't trust them.
Please spend some time on this site searching redsky related posts to become informed about some of the things the redsky/chesapeake team has done.
At that time, if you decide to proceed with them at least you have educated yourself first.
Regarding an attorney, if you don't use one, you should expect to have a lease that is drastically in favor of the gas/oil company. Thus I strongly suggest you have an experienced attorney assist you in negotiating a strong lease. Keep in mind that a lease can end up being a life-long, generations-long agreement and you want it right!
Since you have so many in your family, the sign bonus isn't what is important - the terms of the lease are what is critical. Take your time, get educated and get assistance. This is a good place to start.
Good luck,
wilson
Hi Don,
We are in a similar situation to you and have dealt with Redsky and other land men for Chesapeake. We inherited mineral interest in central LaSalle, and were offered $1000/ac bonus and 25% royalty, but after negotiation it went up to $2500/ac. I think it all depends on if you are in the condensate region or not, and a mile can make a big difference. Look at the TX Railroad Comm website and check out the maps for the area around your property to see what wells have been permitted near you. Read a lot on this website to get a better understanding of the oil business.
We tried to go it alone, to avoid the thousands in atty fees, but decided it’s very complex and we don’t have the knowledge or credibility with CHK to negotiate effectively. The atty fees are small compared to the potential payoff, but you never know if you will strike oil or not, so you have to look at the atty fees as a sunk cost. With only 20 acres, you may not have much room to negotiate, but only a knowledgeable and informed mineral owner, landman, or atty can give you real insight. I think it’s smart to select one of the heirs to speak for the family, to avoid confusion and division.
It is very important that your lease have the right provisions in it to protect your interest, and it may be difficult for you to know what is worth fighting for and what is unrealistic. Chesapeake has a bad reputation, but if they have the surrounding land leased up (as they did with us) you may need to work with them. The Eagle Ford play in LaSalle county is one of the best in the country, so you are in a serindipitous position. If you go with an atty, make sure they charge a flat or hourly fee, and not a percentage of the bonus or royalty.
Remember that the land men represent Chesapeake, but they don’t always accurately speak for them. We’ve found again and again that the left hand doesn’t know what the right hand is doing with CHK and their land men. You may end up with 2 land men trying to sign you up for the same oil company. In our experience, they have made serious and repeated errors in their representations and paperwork.
Finally, make sure you get paid for your bonus by check when you turn over the signed lease and don’t allow them to offer you a bank draft. Good luck.
An attorney should only charge less than half of what your current bonus offer is, with an offer in hand. The more important thing is to,try to get a fairer lease. Whether you sign with CHK’ depends on whether they control the surrounding acreage. Hard to get a lessee for 20 acres if another company has leased everything around you.
Thanks for you replies to my question. I have found an oil & gas lease attorney in TX who has redone the lease language for my (our) protection. We'll see how the lease negotiations go with the RedSky landman. I'll report back when there is more information about our progress.
Aloha everybody
Not knowing anything about this group and also receiving a lease contract to sign while out of the Country with a deadline date to sign, we ended up signing the contract as proposed to you (Paid Up Lease at $1,000/acre and a 25% Royalty with a 3 year primary term and a 2 year option.) with RedSky /Chesapeake . The whole thing came as a surprise because we didn’t even know about we had this land/ mineral rights. We received our initial bonus check a few months back.
I phoned this wk and was told the well broke ground but was not yet complete.
Do I just sit an wait and hope they drill and hit oil? Or should I be doing something else? We are locates in the Eagle Ford Shale, La Salle County area.
Would appreciate any comments.
Check back in about 60 days to see if they have initial results and when they will put you in pay status. You can also monitor completion reports with the RRC if you cannot get info.
Hi Beverly. Your story sounds like ours. We didn't even know we owned the mineral rights until contacted by the land man. Our parcel sounds like it might be near yours. Our lease is with Chesapeake in La Salle Co. Do you know your Pooled Unit Name, or the Survey Number? I wish I knew some of the other mineral owners in our pooled unit.
mineral owner said:
Hi Beverly. Your story sounds like ours. We didn't even know we owned the mineral rights until contacted by the land man. Our parcel sounds like it might be near yours. Our lease is with Chesapeake in La Salle Co. Do you know your Pooled Unit Name, or the Survey Number? I wish I knew some of the other mineral owners in our pooled unit.
Not sure what the Pooled Unit Name is? I saw this when looking for survey# IRR CO. (Doesn’t look like a number? But that is what was in the box for the number) I know the well was permitted in March and "spotted(broke ground) in April but no pipeline yet
What about your well, is it completed yet?
Hi all,
Sorry I'm so late in updating our progress in this discussion. We did locate an attorney in Dallas to look over our proposed lease with Chesapeake. He recommended some changes which we presented to the land man, and Chesapeake accepted those changes. We ended up with a Paid Up Lease at $1,500/acre and a 25% Royalty with a 3 year primary term and a 2 year option.
The property is about 9 miles north of Cotulla and just on the west side of Interstate 35, in LaSalle county.
I have no idea of how many acres are required for a well, so I don't know what percentage of the 25% royalty our small parcel would amount to. We'll just have to be patient and see what the future brings.
Don Brown
Wade Caldwell said:
Check back in about 60 days to see if they have initial results and when they will put you in pay status. You can also monitor completion reports with the RRC if you cannot get info.
How Do I monitor completion reports with the RRC i??? Thanks
Beverly,
See this link.
http://webapps.rrc.state.tx.us/CMPL/publicSearchAction.do;jsessionid=RFGJtwnsGk6rh3n92Jcp7QmvFC3vxFn6ppWJxGrVLhgLYSysTS70!154044229?formData.methodHndlr.inputValue=init&formData.headerTabSelected=home&formData.pageForwardHndlr.inputValue=home