Sign lease for rights to drill in Eagle Ford shale, Texas?

Background:

I own mineral rights to land in Maverick County Texas, which has under it the Eagle Ford shale formation. I know absolutely nothing about oil leases, let alone the law in general. I've been approached by a Canadian oil exploration company to lease to it the right to drill in the above mentioned area. The bonus is $150 per "net acre," whatever that means. The royalty rate is 20%.

Questions:

(1) Should I sign?

(2) Can anyone recommend a good oil and gas attorney (I live in San Diego) to review the lease?

Thanks for any help

Jason,

Don't sign anything yet. Everything is negotiable. There is a lot of activity going on in that area. You might also look on some of the other post on this site regarding the Eagle Ford. You'll gleen alot of good info there. How many net acres do you own? That will play a big part in your negotiating leverage.


I co-own about 1,000 acres.
Joel King said:

Jason,

Don't sign anything yet. Everything is negotiable. There is a lot of activity going on in that area. You might also look on some of the other post on this site regarding the Eagle Ford. You'll gleen alot of good info there. How many net acres do you own? That will play a big part in your negotiating leverage.

Jason, I manage hundreds of acres of inherited mineral rights in your general area of the Eagle ford play… The proposal you got is a starting point for the area. More important to you are whether the lease terms meet your plans for your property.

I would definantly use an attorney at some point. Before that, it would be good to educate yourself on the leasing & negotiating process of this industry.

Jason Nelson said:


I co-own about 1,000 acres.
Joel King said:

Jason,

Don't sign anything yet. Everything is negotiable. There is a lot of activity going on in that area. You might also look on some of the other post on this site regarding the Eagle Ford. You'll gleen alot of good info there. How many net acres do you own? That will play a big part in your negotiating leverage.

look to:

eaglefordshaleblog.com

eaglefordinfo.blogspot.com

... you'll find more than you'll want to read! As to your offer, re: Maverick County ... the $150/ac. sound pathetic in contrast to what is both known and rumored in neighboring Counties, should be nearer or more than $1,000/acre. ? NET ACRE: if you own 1/5th of 150 acres, you own 30 net acres. There should be a stated primary term, say 3 years on the lease and the royalty might be negotiated toward 25%, of which you'd get your net acres/gross acres x royalty% for your owner net royalty. Also, check and get advise on the pooling provisions. I'm guessing that's San Diego CA, not San Diego TX, right?