My family has mineral rights in 300 acres in Colorado (T22S,R46W) just north of Lamar. The acreage is contiguous but is in 3 Sections.
We received a offer to lease 32 acres and it is 2 separate partials of land and they are in separate Sections. The potential lessor is scheduling Seismograph activities in the area. My question is would the leasing of these partials possibly effect leasing the remaining acreage to other companies in the future.
Any information would be greatly appreciated.
William Matthews
When my family was negotiating an oil and gas lease last year, several companies wanted to hand-pick the acreage they leased. We told them "all or none" and stuck to it. As a result, we leased all of our minerals. There are down sides to only leasing part of your minerals or all of your minerals. If you don't lease all your minerals and several bad wells are drilled in your area, it lowers the value of your minerals and interest in leasing. On the other hand, if you only lease part and a great well or two are drilled near you, the value of your minerals go up. This is a decision each mineral owner has to make and it is somewhat like gambling.
In our case, the company wanted certain acreage enough to lease all of our minerals, including noncontiguous acreage. Our land had been unleased for a long time and there hadn''t been any wells drilled in the direct vicinity of our property. We felt that if we didn't go for the "whole enchilada" that we would be leaving too much money on the table and the risk was more than we wanted to take that some great oil wells would be drilled near our acreage.
I recommend that you find a good mineral manager or board certified oil and gas lawyer to negotiate for you. They can accomplish much more than a mineral owner can do on their own. Too much is at stake to try to walk through the minefield by yourself! (We hired a mineral manager and an oil and gas attorney to get our deal done. and it was money well spent.)
Good luck!
Thanks for your response. You have brought up several views we had not thought about. I think your word "gambling" sums it up pretty well.
Thanks again.
William
6th Generation Texan said:
When my family was negotiating an oil and gas lease last year, several companies wanted to hand-pick the acreage they leased. We told them "all or none" and stuck to it. As a result, we leased all of our minerals. There are down sides to only leasing part of your minerals or all of your minerals. If you don't lease all your minerals and several bad wells are drilled in your area, it lowers the value of your minerals and interest in leasing. On the other hand, if you only lease part and a great well or two are drilled near you, the value of your minerals go up. This is a decision each mineral owner has to make and it is somewhat like gambling.
In our case, the company wanted certain acreage enough to lease all of our minerals, including noncontiguous acreage. Our land had been unleased for a long time and there hadn''t been any wells drilled in the direct vicinity of our property. We felt that if we didn't go for the "whole enchilada" that we would be leaving too much money on the table and the risk was more than we wanted to take that some great oil wells would be drilled near our acreage.
I recommend that you find a good mineral manager or board certified oil and gas lawyer to negotiate for you. They can accomplish much more than a mineral owner can do on their own. Too much is at stake to try to walk through the minefield by yourself! (We hired a mineral manager and an oil and gas attorney to get our deal done. and it was money well spent.)
Good luck!
To answer your question, no, it would not affect your ability to lease to other companies.
William,
The township is blanketed with leases going for 10 years and some probably have extension rights. The middle strip of sections has some very good production from multiple zones. Eastern strip of sections likewise. In your situation, and assuming the 32 acres in all in one section. (very important assumption) I would encourage you to grant them a short term lease (3 years max) at high royalty rate. I have my suspicions of their plan so make certain that all rights come back to you that are not in an approved production unit a year after the primary term, the acreage leased is explicit and limited, no water rights are leased, and all that good limiting stuff.
Top force them to take all your acreage for a bonus could be shooting yourself in the foot for the long term. Do what you can to get a well drilled within your contiguous block. You have nothing to lose and lots to gain for doing so.
Gary L Hutchinson
Minerals managment.