Things to avoid

General Mineral Rights Discussion
1

Try to avoid leasing without a dry hole bonus in the lease. You can easily regret leasing to a hard luck poor boy operator. One dry hole for whatever reason destroys mineral value. At least with dry hole payment you can offset lost royalties.

2

Never heard of this. What does it look like? How do you structure? Like another lease bonus payment?

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3

This is to be included in basic lease agreement. Fracing pay is a separate operation on a separate form.

  1. move in pay $3000

  2. Spud pay $3000

  3. Drilling under basic lease agreement

  4. Completion pay (run casing)

    $3000

  5. if not completed $25000 for loss of projected royalty (dry,hole problems, etc) and destroyed value of mineral property

  6. If completed and fracing is recommended with high hopes and against the odds

    $25000. Don’t let them destroy your mineral value forever then scram out.

  7. Further life lessons available

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4

$25.000 Frac fee. To surface owner. Before Frac. In case it doesn’t produce and the value of your minerals is gone​:white_check_mark::fire_extinguisher:

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5

It’s separate from basic lease agreement Completion memorandum. Get operator rep to sign and print and date when leasing. Can be notarized but not required. Take pictures of signed document keep original

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6

Rockhound, agree that lose some marketability and value with a dry hole when dealing with marginal companies, and I like the concept of the upfront payments. Couple of questions. 1) do you have a draft of the letter presented to company that you can share? 2) how do you suggest the previous payments be handled if well is commercial? Refund monies or let lessee take from proceeds of the well that are due the mineral owner? 3) assume you only use when well will be first in a unit. What about when have wells producing and new drilling company moves in that may not put out the effort needed and end up with a dry hole? Thanks for your comments.

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7

All I know is be real careful who u lease to. Lot of pie in the sky. Once they drill and it’s dry your minerals have been proved non productive

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8

Out of curiosity, what state(s) are you leasing in? I’m pretty new to all this with my properties in Oklahoma. In Oklahoma, It seems to me in most situations the future operator would ignore these clauses/demands and wait for the unsigned mineral owners to accept a pooling order option that would not have those clauses in it. I could see it applicable if you own a significant amount or majority of the acreage spacing the aspiring operator or lessee is after. Then perhaps they’ll be more willing to agree to less conventional lease arrangements?

As someone that is always trying to learn more and protect my interests, I’m genuinely curious about this. Would this apply in all states, do people with small to fractionalized acreage have any skin in this game or is it more situational?

If it would be applicable in Oklahoma with someone like myself, that has several 13.33 or less NMA plots across Oklahoma, I’d definitely like to learn more about utilizing it?

Thanks!

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9

I’m a surface owner no minerals but I know a dry hole when I see it and all hope is gone. Make it count the first time then if the experts are wrong again you don’t get hurt on the deal. They sell hope. We can’t eat hope

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10

These kind of “terms” are waayyyyyy outside industry norms. After 40 years of direct experience in this business, I’ve never seen or heard of such.

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11

The old script has flipped. These are new terms. Now we use consulting geologists first. Then attorneys. It’s better for the whole game. If a geologist says ok then ok. If no then no. Simple. Takes out the guesswork so mineral and surface owners aren’t forced to gamble

12

You’ve heard of it now. Let’s avoid dry holes and remove the incentive to drill dry holes. Once you’re dry holed your minerals are gone. We will help u avoid dry holes

13

Who is protecting u the mineral owner. Get with a consulting geologist he can tell you within a day and 1000 dollars yes or no. If he won’t buy your interest it’s a no

16

This is crazy talk. You will never never ever get a lessee to agree to this in Oklahoma or any other state.

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17

Then don’t ask to lease I guess

18

I used to promote units in drilling programs. Don’t think I don’t know pay half get a quarter and other odd things

19

I was thinking it was crazy talk as well. Certainly seems that way:)

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20

What’s crazy is leasing without an independent geologists opinion

24

The idea of not leasing would only work if the mineral owner owned a large tract and a large interest in that tract. Most people on this website own a fractional share. If they don’t lease, they will get pooled and then the well will be drilled. If that condemns the acreage, it will condemn it and they won’t even get a lease bonus. Or the company will drill and the owners will go nonconsent.

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27

Ai is pulling all the threads together for leasing. Old days are gone. Any funny business bad math or outright fraud will be caught and prosecuted. No more slicking these people.