I'm reading up on a new term. "Natural Gas Glut". Would that explain the lower proposal on Gas vs. Oil?
I guess I'm a pessimist. I still feel that they lease is geared toward extracting gas, and not oil.
thank you,
John, I would pay close attention to the shut in clause. You wouldn't want them to be able to hold your lease for $1 per acre per year forever, or until they decided it was worthwhile to produce. I think the biggest consideration to the mineral owner is the drilling of the well, it amounts to thousands of dollars per acre. If they can shut in your well and hold it indefinitely without producing, they have taken away the greatest incentive to lease, drilling the well that you could not do for yourself. I would demand a much higher shut in royalty. I think the offered royalty is low, maybe not low for the area, but if you don't own a section, it might not be worth your time. I have come to the conclusion that if there isn't enough money in the lease to make it worthwhile to enforce the contract, $50,000 to $100,000, I don't want to put my name on it. When negotiating, it's helpful to let them know what you want to lease your minerals, once you have that information imparted and they counter offer, the words no, and goodbye come in handy. If they call back, tell them how glad you are that they have decided to see things your way, of course they didn't call to tell you that. Tell them it was nice talking to them and to call back when they do. There is no point spending countless hours on the phone with them trying to wear you down. It's a landmans job to lease acres, the operator needs to lease acres because he doesn't have enough acres of his own and he needs yours or they can't make money off them. I would look into the blog and threads on shut in royalty that are to be found on this site. Good luck with your minerals.
Thank you, I appreciate your advice.
I'll re-read/highlight/underline sections of the proposal pertaining to the shut in clause and take advantage of the information on this site. The proposal is about 3 pages long.. It's a lot to digest.
Have a nice evening.