Anyone have opinions/experience with XTO Energy? They don’t seem to be applying for many permits these days. We signed a lease with them about a year and a half ago. No activity as far as I know.
Kathleen:
XTO appears to be somewhat active in Dunn, McKInzie and Williams Counties but doesn’t appear to be a major player compared to Continental, Whiting, Brigham (which has sold). I haven’t kept up with XTO’s overall operations but they possibly are more involved in other shale plays such as Eagle Ford, etc. At one time they were were a major player in the Barnett and Haynesville plays which were primarily gas related. In regards to the Bakken, I believe we will see several buyouts in the coming years and the operator landscape will change drastically as time goes on. You can bet on the fact if XTO allows their lease holdings to expire, a new lease will be negotiated by another operator.
Kathleen, my family has leases w/ XTO :
McKenzie CO. T-148 R-104: Sec.34; 12 acres. HBP (Held By Production) , paying us $200 month +/-. I contacted them last month inquiring about their intent and informing them of Top Lease Offers on T 156 R95 property mentioned below. To date I have received no response. FYI we are staying away from top lease offers for the time being.
Kathleen:
You might want to take a second look at the top leasing issue. I have used that method as a bargining tool in the past in order to obtain better lease negotiations with the preent lessee. In a “hot” area, this is especially true as mineral acreage is in high demand.
Louise, thanks so much for responding and the info. Cheers, Kathleen
Charles, thanks much for your responses and advice. I am a newbie on this forum, but what I read so far will be very helpful. Cheers, Kathleen
Does anyone have experience with XTO energy after the well begins producing? we are having a devil of a time getting them to issue the division order and then to begin paying the revenue royalty payments
The well began producing in Jan 2011 and we still haven’t been paid for 90% of the royalties
XTO drags its feet on everthing I know we get 18% interest but we’d just like to get what they owe us, any thoughts on how to light a fire under them?
Mr. Gaffin, you may have equal difficulties getting paid the interest penalty, despite state law.
Does anyone have an idea what bonus/acre rates are currently being paid in the Western part of Williams County. I hold minerals in T157N;R103W;Section 29 which will be expiring this summer. I found out that the lease broker I leased to back in 2008, still holds the lease.
Cara:
Thanks for the info. If I get a chance to top lease or negotiate a new lease, this will give some idea about the bonus amount. What % royalty did you negotiate? I am firm on 20% with a 3 year lease. Thanks again.
I recently got $3000 an acre a little south of there. I think probly 10 or so miles away.
Cara:
That sound good to me even though I will still demand the 20% but it sounds like they will either drill in 2 years or the cost extend will put some major bucks in your pocket. Thanks for sharing.
Cara, when you grant an option in a lease, you are giving away your rights for free. You get 0 dollars for granting, and they won’t pick up the option unless it is worth more than the agreed on price. It’s a case that has two outcomes, 1 the oil company wins or 2 you lose, pick which one you want.
The point about the 2nd term option is precisely that - it is an option (gasco’s choice). They simply won’t pay it if the market value at the end of the 1st term is less then the option price.
The only way they would exercise the option is if the market price at that time was much more then the option price. See?! They simply chose to exercise the option if it is to there advantage - not the landowner.
Objective #1 is to negotiate a lease without a 2nd term option. Or construct the lease agreement so that the 2nd term is mandatory (I haven’t heard of that, but it may exist). That way the gasco is encouraged to drill during the first term or be required to pay a “bonus” again.
See, I’m not a lawyer, I should have included that the lease terminates according to the original term of years, if the option was not picked up as provided below. I was thinking it, just didn’t write it. That’s why we need lawyers.
It was 18% I think with an option to extend for 2 yrs at 200% of original lease bonus. Starting to mix everything up now
RW:
I agree with you about the option to extend and I have never agreed to an extension in a lease. On the other hand, I have never been faced with a two year option at 200% of the lease bonus. If an operator pays that kind of money for an extension, I’ll bet he’s very serious about drilling. On the other hand, my question is why would an operator negotiate a lease with those terms and not pick up the option to drill before the lease expires.
Something else occours to me. What if the lessee decides to exercise the option and doesn’t pay you? Sounds farfetched? Many people don’t get paid the original signing bonus on a lease, and since the court says that the mere possibility of future royalty is enough consideration to sustain a lease, you would be bound by the option and have to sue to get paid. You had better make sure you don’t use the lessees option clause and make very sure yours is well crafted, I would include language to the effect that the option must be paid by cashiers check 30 days in advance of the original lease expiration if the lessee chooses to exercise the option. I am not a lawyer, have your lawyer write it in the proper legaleaze.
Charles, you are not certain that they will pick up the option, so there is 0 upside for you no matter what they offer. It’s gambling on a coin flip where the rules favoring the lessee are, heads I win and tails you lose.
RW:
I think we are in agreement that the “option” end is not a good idea. As I said earlier, I will continue to negotiate minus the option package as my emphasis will remain on the highest royalty % and the least term years. Of course, the current average bonus amount for the area.