We have two sections of land that we are negotiating. The landman tells us that we do not need two separate leases (that we have asked for) that one lease can be written so that if treats each section independently.
Has anyone had experience doing leasing on two sections in this manner.
Ken and Marie Haag
That is correct. They can put in a pugh clause that will release the land that is not included in the unit. However, it is still held by the lease until the lease expires. There is a explanation of the pugh clause under home>owner's guide>lease proposals>pugh clause.
AKG
Just be sure the pugh clause is adequately drafted. My parents thought they were protected with a pugh clause written by their attorney. However, when the oil company completed a well on their land and did not pool it with anyone else, they tied up all of of my parents’ minerals several miles away with a so called “lease well.”
Kenneth:
AKG is correct in adding a Pugh Clause to the lease. This will protect your holdings for future leasing. Also, you can google "pugh clauses" on this forum to view past posts dealing with this matter.
Your landman is misleading you. Mineral acreage that is not adjacent to each other should be in separate leases, at least in Texas. Asj him if he is too lazy to type and prepare two separate leases for you? It would on take him probably less than 5 minutes. He is just trying to tie you up forever. After all most leases are really nothing more than a mineral deed to the company, less your royalty lease portion.
Wrong on several points there Walter.
Ken and Marie,
Unless your sections are subject to 1280 spacing units (as in North Dakota Bakken) and you can get a generous incentive for a combined lease and commitment for combining into one unit, stick to your guns on two leases or grant one lease and give the lessee time to perform to your liking before granting a second to them or someone that has proved themselves capable of performing. After all, they are your minerals and there is no need for you to take risk that you may not be able to control. With that much acreage, I hope you will have an attorney look over any lease to protect your share of minerals extracted.
Gary, Do you have a phone contact I can call you on about acreage in East Texas? Or a business web site?
Gary L. Hutchinson said:
Ken and Marie,
Unless your sections are subject to 1280 spacing units (as in North Dakota Bakken) and you can get a generous incentive for a combined lease and commitment for combining into one unit, stick to your guns on two leases or grant one lease and give the lessee time to perform to your liking before granting a second to them or someone that has proved themselves capable of performing. After all, they are your minerals and there is no need for you to take risk that you may not be able to control. With that much acreage, I hope you will have an attorney look over any lease to protect your share of minerals extracted.
Gary Hutchinson
Minerals Management
Boy, I would never have thought of waiting to lease the 2nd section at a later date. Thanks for the info.
Gary L. Hutchinson said:
Ken and Marie,
Unless your sections are subject to 1280 spacing units (as in North Dakota Bakken) and you can get a generous incentive for a combined lease and commitment for combining into one unit, stick to your guns on two leases or grant one lease and give the lessee time to perform to your liking before granting a second to them or someone that has proved themselves capable of performing. After all, they are your minerals and there is no need for you to take risk that you may not be able to control. With that much acreage, I hope you will have an attorney look over any lease to protect your share of minerals extracted.
Gary Hutchinson
Minerals Management
There are always different opinions regarding subjects such as this with most of them worthwhile. It can also depend on how bad you want the money. Waiting can be good but remember that there is always the possibility of the offer being withdrawn for the other tract if you do wait. You may want to consider how long it has been since it was last leased. If it has been leased pretty consistantly, waiting is not a bad move. If it's been years or if it has never been leased, you may want to consider this point a little more while making your decision.
Kenneth L. Haag said:
Boy, I would never have thought of waiting to lease the 2nd section at a later date. Thanks for the info.
Gary L. Hutchinson said:Ken and Marie,
Unless your sections are subject to 1280 spacing units (as in North Dakota Bakken) and you can get a generous incentive for a combined lease and commitment for combining into one unit, stick to your guns on two leases or grant one lease and give the lessee time to perform to your liking before granting a second to them or someone that has proved themselves capable of performing. After all, they are your minerals and there is no need for you to take risk that you may not be able to control. With that much acreage, I hope you will have an attorney look over any lease to protect your share of minerals extracted.
Gary Hutchinson
Minerals Management
Also, the company may not take a lease at all if both sections aren’t on the lease, depends on how bad they want the lease and how busy the area is. I was leasing in another part of the state in which the landowner had at least 15 different tracts of land and he wanted separate leases for them. He was told they all go on one lease with a pugh clause or he won’t be leased at all. The tracts hadn’t been leased in a number of years so he decided having all of them on lease wasn’t such a bad deal after all.
AKG said:
There are always different opinions regarding subjects such as this with most of them worthwhile. It can also depend on how bad you want the money. Waiting can be good but remember that there is always the possibility of the offer being withdrawn for the other tract if you do wait. You may want to consider how long it has been since it was last leased. If it has been leased pretty consistantly, waiting is not a bad move. If it's been years or if it has never been leased, you may want to consider this point a little more while making your decision.
Kenneth L. Haag said:Boy, I would never have thought of waiting to lease the 2nd section at a later date. Thanks for the info.
Gary L. Hutchinson said:Ken and Marie,
Unless your sections are subject to 1280 spacing units (as in North Dakota Bakken) and you can get a generous incentive for a combined lease and commitment for combining into one unit, stick to your guns on two leases or grant one lease and give the lessee time to perform to your liking before granting a second to them or someone that has proved themselves capable of performing. After all, they are your minerals and there is no need for you to take risk that you may not be able to control. With that much acreage, I hope you will have an attorney look over any lease to protect your share of minerals extracted.
Gary Hutchinson
Minerals Management
I have been leasing since 2004, both in Montana and ND. In every case, when acreages are leased in two separate sections, the sections are always adjacent to one another. I don’t know whether this is a rule but in my case, that’s how it occurred. Needless to say, I have numerous leases.
Our sections are adjacent to one another.
Marie
charles s mallory said:
I have been leasing since 2004, both in Montana and ND. In every case, when acreages are leased in two separate sections, the sections are always adjacent to one another. I don't know whether this is a rule but in my case, that's how it occurred. Needless to say, I have numerous leases.
Two seperate leases is safer. AKG seems to be the only one arguing the other way. It's your descision.
You can "lead a horse to water, but you can't make him drink"!
Your land man is a liar. Lease one section to one company and the other to another then you might have two chances for drilling and production.
We have found out from GLO that we can do either, two separate leases or both sections in one lease. Two sections with one company. I also would have never thought of leasing to two different companies. Had never heard of that.
You can lease to two seperate compnies but in reality, neither may end up drilling as it may come down to the company who holds the majority of the mineral acreage in a spacing unit. Sometimes these companies will participate in a well. This whole process is sometimes like a rollercoaster ride with all the trading/swapping that is done between companies.
Boy that is the truth. The last time we leased and they drilled the land changed hands 4-5 times in 5 years. The thing that irritated us was that our lease had expired on Oct 5, 2011 but the operator had terminated the lease and site in March of 2011, and of course we didn't know until I contacted GLO this past month that it had been terminated early. Are the land owners the last to know these things?
I think when the lease is signed, the lessor just becomes a spectator in this whole process with only one action left and that is to one day negotiate a top lease near the end of the leasing period. Been there done it many times in the past. Very frustrating in a way but on the bright side, the bonuses are always much more than you originally recieved. At least they were in my experiences.
Kenneth L. Haag said:
Boy that is the truth. The last time we leased and they drilled the land changed hands 4-5 times in 5 years. The thing that irritated us was that our lease had expired on Oct 5, 2011 but the operator had terminated the lease and site in March of 2011, and of course we didn't know until I contacted GLO this past month that it had been terminated early. Are the land owners the last to know these things?