Mr. Meeker,
Thank you for the additional info. Much appreciated!
Will
My family has land at the corner of FM 2903 and FM 3334. We have been contacted by a broker trying to secure our MR at $250/acre so he can shop it around. We are trying to be patient. My feeling is the area has no way to transport easily as the pipelines are to the east and west of that area and therefore would be shut-in. And thus there are brokers trying to low ball the area.
Glen – with all due respect, it’s easy to be patient nowadays with an offer of $250/a.
Also, have you read the last dozen posts below? Later – Buzz
I’m curious why the well on H&GN RR CO BLOCK 13 SECTIONS 33/34, A-462/4667 is a shut-in? (API: 38932372) There is a gas gathering line within 350 ft of the wellhead. This line connects to the adjacent well on the same pad site but not this one?? Both of them were originally permitted in 2004-2005 by K2X but the one that is now in production was completed by Chesapeake. I wonder if this is an example of not having a strong shut-in royalty clause?
CORRECTION: The $4,125/acre bid by Cimarex last July in the GLO’s sealed bid sale was for PSL BLK 72 SEC 28 (NOT SEC 2 as I previously stated). Apologies for the typo.
The horizontal well at the top of the image is the shut-in that I was referring to. It’s just off FM 2903. A good ways south of Toyah. I’d be really upset to be so close to a gathering line and not be producing if I were the mineral owner.
Buzz - I stand corrected. The 2014 terms do show an increase to 25%. In 2013 and earlier, the terms include a variable royalty clause that reduced the 25% to 20% on the first well if drilled within 24 months (an incentive) or 22.5% for subsequent wells if that goal was met. The rates are found in the pdfs on the “Notice for Bids” on the GLO “Sealed Bid” website.
The “variable royalty” section is 4(E) on the following:
http://www.glo.texas.gov/what-we-do/energy-and-minerals/_documents/…
M A – I am not all that familiar… but theT&C of the July 1, 2014 GLO Sealed Bid Sale stated:
SURVEYED SCHOOL LAND
TERMS AND CONDITIONS
The royalty on all surveyed school land is 25% of the gross production of oil and/or gas…
Please explain the 22.5% reference. Thanks – Later – Buzz
M A – in my reading… and I’m certainly not an O&G attorney, I agree, the primary term is 5 years. However, other provisions of the Relinquishment Act lease form provide that after the first year delay rentals must be paid every year or the lease terminates if a well has not commenced. Thus, the lease term may run as little as a single year. Later – Buzz
When looking at the GLO lease bonuses, keep in mind that the royalty rate on those leases can be 22.5% rather than the 25% that is most common today. Since the royalty is lower, the bids often exceed the bonuses for other tracts in the area attached to a 25% royalty.
One additional factor is that these are 5-year leases rather than 3-year primary and 2-year renewal.
I should have been more specific. I meant how much success have any of you had in removing it from the contract before signing. Many thanks for your input!
Just tell them…Heck no!
That’s what I thought you meant, then thought I might have been wrong after Wade’s input. Because I would definitely have agreed with Wade. But like Stephen said, just tell them…Heck no!
Congrats Susan on getting those good terms!
Could you all please share how sucessful you have been at removing the two year option in your leases?
If you signed a lease with a 2 year option you agreed to let them have that. You can’t remove it. All you can do is hope the lessee doesn’t exercise it.
Just signed a lease with BHP on my 2.50 acres outside Orla(sec34, blk57, TP1). I negotiated for 3500.00 acre, 25%royalty, three year primary only, and not production costs. Does anyone know of anything already producing in that area?
Susan, BHP is acitively drilling all around Orla. Drilling five wells in Section 26 currently.
Thanks to all for your comments. I hope this small acreage proves to be lucrative for our family.