SWD well contract terms

#1

I am negotiating a salt water disposal well agreement and would love some of the pros here (Wade, Clint, Tennis Daze maybe) to tell me if these terms are “standard”,

5 cents/bbl for a noncommercial well, that does not benefit our operations, They are saying 20K bbls per day( is that reasonable for the long term). It is there own produced water

NO mechanism for price adjustment or renegotiated terms

Unlimited term, no expiration except after 48 months of complete non use( “because it costs so much to drill”)

10K bonus , but no payment for pad or pipeline/road easements

They wanted exclusive access to 300+ acres, but I limited that to two small pads plus plus pipe/road/electricaccess.

They are unwilling to deal more. It is " take it or leave it " time

Thanks,

MIck

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#2

I suggest that you contact Nicholas Miller, attorney at Graves Dougherty who is experienced in negotiating SWD agreements. Or some other attorney who is knowledgeable in this area. SWD agreements generally do not have an unlimited term with no chance of price increases. The exact written terms of the agreement are very important. How many pipelines, roads, electric lines? Legal expertise is needed up-front and not after you sign.

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#3

Thank you for the advice.

Is anyone else out there ( Reeves) getting similar offers?

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#4

I am familiar with SWD leases and those are not good terms. I’d suggest just walking away.

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