Proposed Oil and Gas Lease from Nextenergy - Moffat Co CO

We own oil and mineral rights in Moffat County, CO.

Section 20, 29, Township 8 North, Range 89 West

Our family was sent out drafts for gas and oil toplease agreements for us to sign by a company called Nextenergy from Denver Co. They say they are in partnership with HRM Resources, LLc which owns and operates the Buck Peak and Grassy Creek Niobrara oilfields. Anybody hear of this outfit? Is this another brokerage for oil and mineral rights or do these people actually drill?

Offer is $35.00 / acre initially with $100.00 per acre when the previous lease terminates. 15% royalty and 5 year lease. Does this sound fair?

What does" 21.73 net acres under 239.03 gross acres" mean?

Thank you for any information you may have to share with me. I am trying to learn all I can before I sign anything!

Your 21.73 net acres is the actual number of mineral acres you own. The 239.03 gross acres is the original Grantor’s conveyance to your family. After dilution through succession of Heirs, the 21.73 is your portion.

Royalty can range from 12% to 25% through negotiation fueled by the “play” or production around your parcel. Lease terms are from 3 years to 5 years usually. I do not understand your offer…it sounds like they are buying an option for futures…I would not sell an option, as it only benefits the buyer, especially when no up front money is paid for the option.

Go online to the Colorado Oil and Gas Commission site and look at the permits for your county. This will tell you who the players are and much more.

Look for other investors to offer you a cash settlement to sell them your mineral rights prior to drilling.

I hope this helps…Thomas

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Thomas Mullins said:

Your 21.73 net acres is the actual number of mineral acres you own. The 239.03 gross acres is the original Grantor’s conveyance to your family. After dilution through succession of Heirs, the 21.73 is your portion.

Royalty can range from 12% to 25% through negotiation fueled by the “play” or production around your parcel. Lease terms are from 3 years to 5 years usually. I do not understand your offer…it sounds like they are buying an option for futures…I would not sell an option, as it only benefits the buyer, especially when no up front money is paid for the option.

Go online to the Colorado Oil and Gas Commission site and look at the permits for your county. This will tell you who the players are and much more.

Look for other investors to offer you a cash settlement to sell them your mineral rights prior to drilling.

I hope this helps…Thomas

Thomas,

Thank you very much for taking time to answer my questions. Yes, I believe they are buying an option for futures. It's $35.00/acre now with the hope that the company currently leasing our rights doesn't start drilling or something like that. When the lease expires in Jan., Nextengery will pony up an additional $100.00/per acre for a total of $135.00. I think that is buying for futures ... unless I may be misunderstanding what "buying for futures" means.

I will look up the link you suggested.

Thank you again. And speaking of ponies, nice horse!

Dianne

You are welcome…The URL address I mentioned is http://cogcc.state.co.us/

With oil prices going through the roof, I advise you to hold-em…don’t sell a future for $100 when it could be worth several times that in January…have a merry Christmas thinking about the possibilities…Thomas…

Yes, very nice horse…



Thomas Mullins said:
You are welcome.....The URL address I mentioned is http://cogcc.state.co.us/

With oil prices going through the roof, I advise you to hold-em......don't sell a future for $100 when it could be worth several times that in January........have a merry Christmas thinking about the possibilities........Thomas......

Yes, very nice horse........

Thomas, Happy holidays to you too! Thank you for the advice on holding off signing, I didn’t know that oil prices were going to get so much higher. I will have to deal with this I get back from Haiti. Dianne Silktea3@aol.com

We just received the same letter - have you found out any further information?

Dianne said:



Thomas Mullins said:
You are welcome…The URL address I mentioned is http://cogcc.state.co.us/

With oil prices going through the roof, I advise you to hold-em…don’t sell a future for $100 when it could be worth several times that in January…have a merry Christmas thinking about the possibilities…Thomas…

Yes, very nice horse…

Thomas, Happy holidays to you too! Thank you for the advice on holding off signing, I didn't know that oil prices were going to get so much higher. I will have to deal with this I get back from Haiti. Dianne Silktea3@aol.com

Hi Harris,

No, I have not contacted the company because I don’t think it’s a good offer. I did call SWEPI and asked them to consider leasing our oil and gas rights as it looks as though there offers to others seem more generous. I have not heard back from them and plan to call SWEPI again next week. Dianne

I recently received a very similar letter. This business is all very new to me and I feel totally lost. I appreciate everyone’s information. I dont want to get excited and run headlong into a bad deal - does anyone have more suggestions as to where to do some research on how this should actually work?

Again, thank you in advance for your expertice!

Kathy

Dear Mr. Mullins,

Just to cleaify my thinking, exactly what are you forcasting WTI to average (or monthly high) on he spot market in January, 2011?



Thomas Mullins said:
You are welcome.....The URL address I mentioned is http://cogcc.state.co.us/

With oil prices going through the roof, I advise you to hold-em......don't sell a future for $100 when it could be worth several times that in January........have a merry Christmas thinking about the possibilities........Thomas......

Yes, very nice horse........

I called SWEPI again, and they’ve immediately assigned an agent to my request. I told them I’ve had other offers and our current lease expires Jan. 2011. Hope I hear soon. Perhaps I should contact another company too. Anyone give me some names of companies offering leases in Moffat Co? I’ll keep you posted what I find out. Dianne

Dianne said:

Hi Harris,

No, I have not contacted the company because I don’t think it’s a good offer. I did call SWEPI and asked them to consider leasing our oil and gas rights as it looks as though there offers to others seem more generous. I have not heard back from them and plan to call SWEPI again next week. Dianne

Hi Dianne , I also own mineral rights in Moffat County and wonder which company your dealing with as I have had similar offers,any help would be appreciated. Bill

Dianne said:

I
called SWEPI again, and they've immediately assigned an agent to my request. I told them I've had other offers and our current lease expires Jan. 2011. Hope I hear soon. Perhaps I should contact another company too. Anyone give me some names of companies offering leases in Moffat Co? I'll keep you posted what I find out. Dianne

Dianne said:
Hi Harris,

No, I have not contacted the company because I don't think it's a good offer. I did call SWEPI and asked them to consider leasing our oil and gas rights as it looks as though there offers to others seem more generous. I have not heard back from them and plan to call SWEPI again next week. Dianne