Where to get the basic samples of the best leasing terms & conditions

I have property that is situated at the northwestern side of Lavaca county. I was approached by a couple of mineral leasing companies. Both leasing companies informed me that we have a lot of oil on that property. An offer of $1750 mineral/ac for a 3 year term plus 2 year option for renewal. If a well in place, my royalty offered is 25%. Realizing that these leasing companies are like a middle man to oil companies, how can I get the best deal out of my minerals from my property? I have 100% mineral & surface rights. Please advise me.

Sam:

I can't advise you if the bonus/acre amount is a good offer as I am not familiar with that area, but the lease term and royalty rate sounds very fair. You might contact other mineral owners in the area in regards to the bonus amount. Further, you may want to educate yourself on negotiating a lease such as Pugh Clauses and other areas which will directly effect your royalty payments. Also, be sure to find out the method in which you will be paid your bonus amount as a real check is my preference. You might read over other posts on this forum in regards to lease contents.

THANKS a $ for your advise. I will take your advise to educate myself a bit more before signing in the dotted line. Best regards,S.

Make sure you get paid at least $20,000 surface damage for each well drilled. Also, make

sure your lease indicates that your royalty will be free of all these charges: Production cost,

processing cost, marketing cost, gathering cost, transportation cost, etc. Before you sign,

please have someone like John McFarland who is an oil and gas attorney in Austin, to refine

the lease....Very Very Very Important. Don't do it by yourself.

I don't know very many oil and gas attorneys, but John McFarland is the Best one I know.



sima furtick said:

Make sure you get paid at least $20,000 surface damage for each well drilled. Also, make

sure your lease indicates that your royalty will be free of all these charges: Production cost,

processing cost, marketing cost, gathering cost, transportation cost, etc. Before you sign,

please have someone like John McFarland who is an oil and gas attorney in Austin, to refine

the lease....Very Very Very Important. Don't do it by yourself.

I don't know very many oil and gas attorneys, but John McFarland is the Best one I know.

Bonus is “in the ballpark”, perhaps $2000 can be negotiated, I’d recommend not to be either too hasty or drawn out, competition can only increase your leverage to negotiate. Royaty/term are competitive, but sure to get a good lease form for limitation on pooling, especially horizontal-drilled and depth reversion provision. I’d also favor an increase in the amount of extension bonus … who knows what it will be in 3 years and I’d rather favor on the side of increased value, if they decline on increasing the ext’n bonus then I’d be inclined to decline the extension provision altogether … you want it drilled not deferred by rental payments! The size and location of your fee-owned land is also a factor in its negotiation value. For the moment, NW Lavaca is out on the unknown edge of the rapidly-emerging Eagle Ford Shale play and drilling could result in bonus going from $1750 to either $4000 or $40! Hallettsville attorney Jesse Allen or Yoakum’s Charles Kvinta are my trustworthy referrals.

Hey Sam -

Land services companies buying leases on behalf of a client company will be limited by as to what terms they are authorized to offer.

The proposed 3 yr + option for additional 2 yr term is typical throughout the Eagle Ford play, from Eagle Pass back to you, so that's well within the norm. And the 25% royalty is the highest any company will be willing to offer, so I'd say you are good there.

I have put in calls to a couple of friends that are active in the area on the Bonus Payment per acre amount and will let you know what they say - probably later today.

How much acreage are we talking about?

If the people I have asked about the Bonus rates about want to put in a bid for your lease, would you be interested in talking to them?

Charles

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

fieldlandservices@gmail.com

713-408-2850 Cell

Here’s a few basic guidelines to look for in the attached files. Make sure that you do, however, have any lease you are offered looked over/amended by a good Oil and Gas attorney prior to signing. 3010-jfhintsonlease1997.pdf (170 KB) 3011-oilgasleasechecklist.pdf (20.1 KB)

After reading both pdfs, I learned a lot. I humbly THANK YOU so, very much for your help! However, we have a well established pasture grazing land consisting of 26.+ acres. The forage consisting of well established Coastal Bermuda grass & Ball Clover. We have been grazing pure bred Red Brangus cattle on this pasture for over 10 years. Our son lives on this particular parcel of land caring for our livestock. I checked around with neighbors, who may be pooling in this oil lease project. Everyone I spoke to has already reached a lease agreement with a company. According to a couple of leasing companies, it is estimated the ground below contains an abundance of oil & wet gas reserves. The current bonus lease price is $1750/ac/3years primary term. I need someone to assist me in customizing my lease terms & conditions that will be most suitable for me. I know someon suggested above that “Hallettsville attorney Jesse Allen or Yoakum’s Charles Kvinta” would be my trustworthy attorneys. Please advise, Sam.

Sam, we were very pleased with the work that Eric Camp did for us regarding a recent lease in East Texas.


His firm is based in Ft. Worth, but they are well versed in Oil & Gas activity throughout the State.

Eric C. Camp
Whitaker, Chalk, Swindle & Sawyer L.L.P.
301 Commerce St. Suite 3500
Fort Worth, Texas 76102
817-878-0529 office
817-308-0865 cell
817-878-0501 fax
ecamp@whitakerchalk.com

Sam,

I have used Errol John Dietz in Cuero several times and been very satisfied.

John

Dear Mr. Sugg,

You might want to strongly consider a no surface operations clause in your lease. Given that your neighbors are all leased, you might easily get this concession.

As you have been properly advised, get some good representation.

sam sugg said:

....grazing land consisting of 26.+ acres. The forage consisting of well established Coastal Bermuda grass & Ball Clover... Our son lives on this particular parcel of land caring for our livestock. I checked around with neighbors, who may be pooling in this oil lease project. Everyone I spoke to has already reached a lease agreement with a company.

Thanks for all of your comments. You have aroused my curiosity. Can you briefly elaborate on the “no surface operations clause” ? Best regards, S.

Buddy can probably answer that more precisely than me, but it basically just means that no drilling operations take place on your land. The oil from underneath your land is accessed through wells on adjoining properties. You can negotiate such that they never step foot on your land.

sam sugg said:

Thanks for all of your comments. You have aroused my curiosity. Can you briefly elaborate on the "no surface operations clause" ? Best regards, S.

If the oil underneath my land is extracted/depleted from adjoining properties, will I still receive a royalty? I thought in order to receive a royalty, the well head should be on my property. Please advise, S.

Sam:

I believe if you were in the "pooling unit" of the well, you would continue to recieve royalties.

sam sugg said:

If the oil underneath my land is extracted/depleted from adjoining properties, will I still receive a royalty? I thought in order to receive a royalty, the well head should be on my property. Please advise, S.

Hello Buddy, I noticed you are a wonderful adviser & surly welcome comments made a great asset to this site. I have offered $2,500/m.ac for 3 yrs & 25% royalties for my land. How long will takes to close one contract? Where can I obtain my land formation info & for future drilling site or its pooling unit with my land? Thanks again, S.

Buddy Cotten said:

Dear Mr. Sugg,

You might want to strongly consider a no surface operations clause in your lease. Given that your neighbors are all leased, you might easily get this concession.

As you have been properly advised, get some good representation.

Best,

Buddy Cotten

www.cottenoilproperties.com

www.cottenoilproperties.blogspot.com

sam sugg said:

....grazing land consisting of 26.+ acres. The forage consisting of well established Coastal Bermuda grass & Ball Clover... Our son lives on this particular parcel of land caring for our livestock. I checked around with neighbors, who may be pooling in this oil lease project. Everyone I spoke to has already reached a lease agreement with a company.