Melissa- I recommend you talk to an oil and gas attorney and have them read the lease. I can recommend Wade Caldwell who helped me negotiate price and language. You have a valuable asset and should not take any chances with the lease.
Thank you all for your advice. I am going to go over each clause and diagram the things I donāt understand/find questionable. Then reach out for professional guidance.
It is very complex, especially since I am in Maryland, not Texas!
Melissa, I agree with Georgia, you can find Wade Caldwell on this forum and Iām sure heād be willing to split his fee amongst all of you which would definitely be the way to go. He can answer all your questions and negotiate not only a good bonus, but prepare a lease that is more in your favor than the oil/gas companyās.
Thank you Dusty for your help!
Dusty, you answered a question I had as well, thanks.
Not only that, but the oil company would be allowed to keep equipment, put power lines, pipelines, or anything they wanted on the property after the lease was completed, for as long as they wanted.
For some reason other family members are pressuring me to sign. I own 1/8 of a 160-acre tract. Is there any public record of leases signed by owners of the tract?
Melissa, Iād highly recommend you seek the assistance of an oil and gas professional. The terms you are describing are quite bizarre.
Alex, what company is APA?
(co incidentally my brotherās initials)
I think it must be Apache. They are apparently the ones who are active in the area. I was approached by a rep for Gram.
Wolfcamp
Thank you for your words of advice. Yes, I am new to all of this. That is why I am being extra careful. I do not want to sign up for a bad deal.
I am very concerned that I was offered no payment schedule and the oil company can use the land indefinitely, without compensating me. Is that a standard inclusion in a lease?
Melissa, Iāve never heard of such and certainly would NOT sign something like that.
I will not lease for more than 3 years or lease with an option.
I will give my Lessee the option to meet or beat any other offer I get. IE I will not top lease without giving my Lessee this opportunity.
Melissa, I agree with the advice Wolfcamp Shale gave you. I think some of your concerns may come from misunderstanding the offer. You said at the start you have a 1/8th in 160 acres and other family members are pressing you to accept this lease. If any of those other owners who received the same offer have more knowledge about leasing Iād discuss it and see if they can answer your questions. But if all of you have the same level of understanding on this but they are just more anxious to get a lease signed, you might propose that your whole group agree to hire an attorney and split the cost since it would benefit everyone.
Iād definitely sign a top lease. It motivates the owner of the base lease to do something to keep their lease active, i.e., drill. However, the lease bonus prices have changed dramatically since 5 years ago, and I would request $3k+/ac.
This may sound dumb but what is the downside of a top lease?
My sisters and I have a lease acquired by Silverback that is in Section 6, Block 54, Township 5 and it expires in August. Now we are offered a top lease from someone at the same terms we received 5 years ago.
In my opinion - if a company wants to top lease they must feel the minerals are a good prospect. I think the odds are the mineral owner can get better terms than the first lease.
At one time top leasing was considered a no-no, i.e., a poor business practice. In more recent years it has been much more accepted.
Thanks for the feedback ~ I really needed that ~ so no problem doing a top lease.
So sounds like I need to keep them on hold while I prospect for more offers ~ itās at $2100 per acre right now, same as 5 years ago with Petro Hawk. I start with Silverback.
Thanks again.
John
Folks - some have inquired/wondered of late regardingā¦
SILVERBACK OPERATING, LLC ā Reeves Drilling Activity:
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FOLK ROLWING A 4-34 33 #1H, 8.2 miles NW of Pecos, A1393, SECTION 34 BLOCK 4 H&GN - Spud 11-11-15
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WILLIAMS 4-53 #2H, 6.2 miles NW of Pecos, A-407, SECTION 53 BLOCK 4 H&GN, Spud 1-3-16
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ICEMAN 4-24 21 #1H, 8.2 miles NW of Pecos, A-5812, SECTION 24 BLOCK 4 H&GN, Permit Submitted 5-26-16
All three (3) are Phantom (Wolfcamp) tests in the area of significant activity by Petrohawk/BHP in 2011-12. Sorry, I have no well results.
60 million barrels of oil per Section, per article ā
http://www.epmag.com/stacked-pay-potential-lures-oil-companies-delaware-basin-850446#p=1
Although I am wary of projections from publicly traded companies, who are always pushed to support their stock price, it helps explain why Reeves and surrounding Counties have seen little to no pullback in bonus prices and royalty rates.
Our lease expires in July 2016. Iāve been called by CW to extend. Iām holding out for a better lease bonus. How do you find out if anyone would be interested in giving me a reasonable offer? How do you find out the phone numbers of other companies and who to contact? My lease is in Section 136, Block 13, H&GN, Reeves County.
James,
Some of the other operators in the area are Primexx Operating, Arabella Petroleum, and Panther Exploration.
This link is to contact information for Operators in Texas: