Vanna Production has leased some acreage in an adjacent survey, the S Davis A-241. The Surprise Valley lease area is nearby, and Comstock acquired some Held By Production acreage in the vicinity as well.
Thanks! What is the “free royalty”?
You say that Comstocks early wells have been highly productive, what does that mean to me? If i have a 1/4 lease deal with them, they drill on the property, the well is productive, what kind of money are we talking?
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40 million cubic feet per day of Natural Gas x $2.50/1000 cu. ft. = 40,000 x $2.50 = $100,000 per day gross dollars. That’s before deductions depending upon your lease and the unit size.
Can you explain what “free” royalty means?
Most production cost are not deducted from your interest like transportation and treating cost. It’s real “tricky”. Pretty dirty business best addressed by oil and gas attorneys that work in your best interest and not the oil company that holds the lease. Review post in this Leon County Group. It has been discussed before. The “point of sale” where the price is determined. Having the correct lease form is the most important thing. There is no PERFECT lease form. You can’t cover all the bases. Don’t get in a big hurry and sign something that you will regret later. Like I said before 1/4 royalty, 3 year term with no options. But have the right lease form. Lease to a company that is actively drilling in the area if you can. Don’t be fooled by fancy websites.
Thanks! It’s Surprise Valley working for Comstock so they are drilling in the area.
Companies are leasing in area’s were there may or may not be drilling. Things are changing constantly. Firm plans today may fall apart overnight. Try to make sure the name of the company is on the lease, not the lease broker. I would speculate that Comstock is the only active company AT THIS TIME that has the budget and technology to drill a $20 million to $25 million dollar well in LEON County.
Comstock will be drilling deeper wells in Leon County…$30 to $40 million per well!
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Who are the “few other players”?
Is there some reason not to insist that that the bonus payments are listed in the lease?
Also, which lease was it that Alan found that listed the bonus & royalty?
There is no reason to put your personal financial information on display in the public records. Everybody has different reasons for conducting their business the way they do.
That makes sense, but, to me, it’s just price info, same as in any real estate transaction. Seems, to me, to be an attempt by lessees to keep lessors from figuring out a fair value for their property. What’s way more worrying from a privacy perspective is all the SSNs in the old leases & that you have to make a special request not to have your SSN published. Also, makes me worry that you have to do a separate document for the bonuses & that doc isn’t recorded. Sounds like you want to cash your bonus check BEFORE you sign any lease. Or am I missing something here?
The only oil and gas leases which list a bonus are those executed by State of Texas as that is public information. I have not seen any private leases with bonus information. Body of lease will state royalty rate as part of the terms, but not all memorandums of lease will note the royalty rate. Real estate deeds to not set out any sales price in Texas. A separate mortgage document will specify the total loan as that is how the lender perfects its rights. That is not usually the price paid. Texas is a right to privacy state and the private sales prices are not public information.
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OMG. Did not know that (& I did 2 years in Houston, a long time ago). Texas really is a whole different country!
I sent that offer to them and here is what they countered with. 3-year lease, but we would require the 2-year option so that we can plan accordingly. I can’t get to the 25%, but I can agree to 22.5% with a cost free royalty provision at $850/ac.
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You can’t get it if you don’t ask for it. Surprise is leasing for Comstock.They are active drillers. I would go with Comstock. Make sure you have a good “out of town”, not local, Oil and Gas attorney do your lease to make sure it is a TRUE cost free Royalty. Try to get the 1/4 again and if you do the 2 year option ask for $2,000/net acre. Get you a cashier’s check WHEN you sign the lease. Get them to tell you how many net mineral acres or royalty acres you have up front. Good luck.
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Good advice. I hadn’t thought of asking for more on the option. Great idea. Thanks. One more question: seems the convention in Texas is to only list the payment details in the offer letters, so sounds you want to make sure the check has cleared before you sign the lease. Some folks email photos (signed contract - cashier’s check) to each other; seems like that’s a reasonable compromise? Weird to me that I haven’t seen any clauses that void the contract for non-payment nor one that references the offer letter. Does that mean that there’s some statute or case law that established that the offer letter is a binding contract?
I never trust lease brokers representatives. If you propose a price or a lease they usualy tell you the company won’t agree to it. Ask them to send you their proposed lease offer by e-mail. Get the Brokers phone # and their name, get the landman’s name, email address and cell # also. It’s not the landman nor the broker’s decision in the “long run”. I believe that only Comstock, at this time, are the only capable and active actual drillers in the Leon County, Texas area play. The others are “flippers” at your expense.
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