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So an oil company wants to lease my mineral rights under my house...

N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
It's an oil & gas find called the Haynesville Shale.

Going rate is a 3 year lease for $6k per acer and 25% of royalties.

I have 5 other lots too.. this is kinda a nice surprise.

:)

The shale is deep... 10,500-12,000 ft down and requires horizontal drilling to extract it.
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
DRB said:
Which oil company? Best be VERY careful when you read the lease agreement you could give away alot more than you'd expect.
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Chesapeake Energy and one from Petrohawk.

3 year leases with 2 option years. Here in La mineral rights revert to the current land owner if there is no production for 10 years.
 
DRB

DRB

unemployed bum
Oct 24, 2002
15,242
0
Watchin' you. Writing it all down.
N8 said:
Chesapeake Energy and one from Petrohawk.

3 year leases with 2 option years. Here in La mineral rights revert to the current land owner if there is no production for 10 years.
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Their option? At what rate for the option? Does it include surface damage (both immediate and delayed) clauses? Are you on well water? Where is the establishment of the royalities? At the well or some other point? What is the calculation they are going to use?

What provisions are for resell of the leases?

What does LA define as production? I know what most states define it as and it ain't what you'd figure.

Seriously these things aren't simple and can lead to some very surprised land owners.
 
neanderthal

neanderthal

Monkey
Mar 1, 2005
215
0
Pittsburgh
I would approach this with a lot of caution. I worked for a guy who leased some of his property for surface mining of coal. The company who he leased his land removed the coal and went bankrupt. They abandoned their equipment on his property and never performed reclamation on the land. He still is dealing with the Pennsylvania DER who claims the landowner is now responsible for reclamation and any mine drainage.

This guy turned an asset into a liability.
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
DRB said:
Their option? At what rate for the option? Does it include surface damage (both immediate and delayed) clauses? Are you on well water? Where is the establishment of the royalities? At the well or some other point? What is the calculation they are going to use?

What provisions are for resell of the leases?

What does LA define as production? I know what most states define it as and it ain't what you'd figure.

Seriously these things aren't simple and can lead to some very surprised land owners.
Click to expand...
good points... all my land is subdiv lots within city limits on city water.

There is a kind of Black Gold Rush going on right now with several drilling companies wanting to secure as much land as possible. The whole thing might be a total bust you never know. I doubt it tho... our area is going thru what Ft Worth did a few years ago with their discovery.

It isnt like they are going to set up a rig in my front yard or anything... the law says they need 15 acres to set up a rig. Not sure about resale of the leases but will check.
 
DRB

DRB

unemployed bum
Oct 24, 2002
15,242
0
Watchin' you. Writing it all down.
N8 said:
good points... all my land is subdiv lots within city limits on city water.

There is a kind of Black Gold Rush going on right now with several drilling companies wanting to secure as much land as possible. The whole thing might be a total bust you never know. I doubt it tho... our area is going thru what Ft Worth did a few years ago with their discovery.

It isnt like they are going to set up a rig in my front yard or anything... the law says they need 15 acres to set up a rig. Not sure about resale of the leases but will check.
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When they start f'ing around at 10000 feet all sorts of crap can translate badly to the surface.

Make sure that there are not any surface structure/feature clauses. The law may say 15 acres BUT the law can be changed way too quick. (And even more importantly make sure that it is in fact a law and not some policy/guideline that can be changed by some administrator at the flick of a pen.) A common thing is to include clauses and stipulations that may be in complete conflict with the law at the time of signing BUT laws get changed and all of a sudden the scope of your agreement as changed. You aren't just looking for wells but all sorts of other hardware that is just as undesirable to have on your property. And I'd bet there isn't sh!t on the books regarding that crap.

I doubt seriously it will be a bust so odds are there is going to be active usage which is more the reason that you are covered. It's not unusual for some landowners to get better and more importantly safer deals because they paid attention and didn't get rolled by the dollar signs.

I'm figuring your getting what I'm trying to say.
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
LOL!!! i just got a call from an atty who says the develpoer I bought some lots from back in Dec had 'forgotten' to retain the mineral rights when he sold the lots...

and wants me to sign a document just to clear up the matter... it's totally legit says the lawyer...

:p :p :p!!!
 
dante

dante

Unabomber
Feb 13, 2004
8,807
9
looking for classic NE singletrack
N8 said:
There is a kind of Black Gold Rush going on right now with several drilling companies wanting to secure as much land as possible. The whole thing might be a total bust you never know. I doubt it tho... our area is going thru what Ft Worth did a few years ago with their discovery.

It isnt like they are going to set up a rig in my front yard or anything... the law says they need 15 acres to set up a rig. Not sure about resale of the leases but will check.
Click to expand...
so wait, with a required 15 acres, is that $90k/year plus royalties? or are you looking at an acre or two, and the 15 acres covers other peoples properties as well?

sounds to me like there is a definite scramble to lock in rights, and then they'll figure out whether it's profitable or not to actually do anything about it in the future... could be a nice $6k/year for 3-5 years, and they might not even do anything.
 
Westy

Westy

the teste
Nov 22, 2002
54,404
20,194
Sleazattle
N8 said:
LOL!!! i just got a call from an atty who says the develpoer I bought some lots from back in Dec had 'forgotten' to retain the mineral rights when he sold the lots...

and wants me to sign a document just to clear up the matter... it's totally legit says the lawyer...

:p :p :p!!!
Click to expand...
Sounds like the letter I got from a developer asking me to be a good neigbhor and sign over a 20 foot easement for a waterpipe so he could build 2000 McMansions down the road.
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
dante said:
so wait, with a required 15 acres, is that $90k/year plus royalties? or are you looking at an acre or two, and the 15 acres covers other peoples properties as well?

sounds to me like there is a definite scramble to lock in rights, and then they'll figure out whether it's profitable or not to actually do anything about it in the future... could be a nice $6k/year for 3-5 years, and they might not even do anything.
Click to expand...
not to mention that drilling horizontally at that depth is expensive from what i understand...
 
UNHrider

UNHrider

Monkey
Apr 20, 2004
479
2
Epping, NH
I dont know much about the actual lease terms, id definitely have a lawyer look it over. But i know with some of the places i work with, the land owners are allowed to put in their own stipulations about when the land can be used. For instance one particular lease doesnt allow for activity after it rains due to the land being torn up when it gets muddy.

They also dont allow any work when their cows are calving, etc...etc...

Also FYI, with horizontal drilling they can drill a number of wells off the same pad, ive heard of up to 32 wells being drilled off of the same pad.

Drilling anything is quite expensive. Do you know if the formation theyre looking at is 10-12k feet deep, or if thats how much they are going to drill?

The horizontal stuff im familiar with, theyll drill down to the formation about 9k feet down then kick off the horizontal for another 4-5k feet horizontal.

Keep us updated im curious to see how this will turn out, as i only ever see the production side of things once everything is drilled.
 
splat

splat

Nam I am
Apr 27, 2002
14,751
318
Well Maybe Windows is Bearable ! Unix Rules !
Good luck N 8

Two things to add , don't get 1 laywer , get 2 or 3 to look at it.

and also Stipulte an Escrow account for repair to any damages , with some serious stipulations on that account. ( IE . if the go belly up it and you are protected ) .


Otherwise :popcorn:

and good luck
 
Serial Midget

Serial Midget

Al Bundy
Jun 25, 2002
13,053
1,896
Fort of Rio Grande
McCain would have already had it in the bag...

My parents leased oil rights on some property they had in Souther Colorado in the mid 1970s. They, along with their neighbors, made a few dollars but certainly nothing they could live off of. I'll ask my dad about it when I call for father's day.
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
Serial Midget said:
McCain would have already had it in the bag...

My parents leased oil rights on some property they had in Souther Colorado in the mid 1970s. They, along with their neighbors, made a few dollars but certainly nothing they could live off of. I'll ask my dad about it when I call for father's day.
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i figure at the most i'm looking at a few hundred bucks a month... at the most..
 
BIGHITR

BIGHITR

WINNING!
Nov 14, 2007
1,084
0
Maryland, east coast.
Oil company's 25% royalties? How bout a 100%. Get yourself the rig and drill it yourself! Then sell it for $50 a barrel, force the oil companies to compete, and bring the price of gas back down to under a buck a gallon! "N-8 saves the U.S.A.!," the headline reads in the New York Times. A N-8 Station on every corner as far as the eye can see! Heck, I can see myself pulling into a N-8 Station and saying, "A BUCK TEN!!!? WHAT!? What are they crazy!? I'm checking Exxon's price down the street..."

I guess RM will have to change it to "The sharpest tool in the shed" now...
 
N8 v2.0

N8 v2.0

Not the sharpest tool in the shed
Oct 18, 2002
11,003
149
The Cleft of Venus
It's getting crazy here...


http://www.nytimes.com/2008/07/29/us/29boom.html?em&ex=1217476800&en=73e96d26d3904434&ei=5087

Already, several dozen people who own parcels of land over the field are becoming instant millionaires as energy companies pay big money for the mineral rights to the gas, which like other energy sources is worth far more than it was last year. Jalopies are being traded in for Cadillacs, plans for swimming pools are being hatched in rusty trailers, and the old courthouse here is packed to the rafters day after day with oil company “landmen” (and women), whose job it is to frantically search the record books for the owners of the mineral rights to land that has become like gold.

In the space of months, the price of such rights on an acre has shot up to $30,000 from a few hundred dollars and is still climbing.
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