As the topic states. How much stock do you put into who you lease out to when signing a lease? I have two similar offers. One a big oil company (continental) and the other a smaller land man who I think is working for northern oil. Both have very similar leases and offers.
Do you go with the big oil company or the smaller company/ landman ? I have quite of pros and cons for each. But biggest question would be if I don’t go with the big oil company could I ruin plans in the area that make it harder for them to drill? I have about 120 net acres in Roosevelt county Montana. But asking overall consensus about big oil vs little oil.
It depends upon the area. It is common to have many groups lease within a section as there are multiple working interest owners, but only one operator. The operator will have to abide by all of the leases. With certain operators, I can usually get better terms from the smaller company who may be easier to work with. Always wise to get a good oil and gas attorney to review any lease as the draft is rarely in the favor of the mineral owner and has quite a bit of room for improvement.
It is safer to not hand over a lease without getting paid. I send an email copy of the notarized lease with every page marked COPY DO NOT FILE in big black letters. This shows good faith on my part that the lease is signed and dated and being held for payment. My attorney or accountant third party holds the original signed lease until payment is received. Then they turn it over to the leasing agent. Instructions are clearly stated in a cover letter. I do not accept draft payment letters. That way a lease is not filed without payment.
I will not deal with any agent who tries to file the lease before paying me. If they try it, I ask if they are a Registered Petroleum Landman or Certified Petroleum Landman as ethics are important to me. (Compensation must be exchanged before I hand over a lease.) If they are not, then I ask for someone who is or go with a different company, Also, some agents will try to “threaten” with forced pooling. I happen to like forced pooling as it as some advantages. I frequently go with forced pooling if I cannot get a good lease with an operator.
Question about this, after talking to one of the landmen today (and i assume it somewhat goes for both but only one said it out right) but they need to file the lease before payment can be released. If i put fat COPY DO NOT FILE on it is this going to suffice?
Question being is that when talking to this landman he said that continental is in
the area with equipment on the ground but they havent started drilling yet, he alluded to the spud date happening sooner rather than later and even as soon as next week. I try to take what they say with a grain of salt but he seemed more concerned about me not signing in time with anyone let alone just his company. So his salt hit a little bit harder in my book. And to add to the “legitimacy” of his claims, the landman from continental has said that they have been sending out notices to the people who haven’t leased yet to be a working interest or sign a lease or be sent into forced pooling, and this was happening a week ago, so my time table is shortening kind of quick and I am trying not to mis-step and ride the fine line.
I agree with M Barnes. A lease is not in the mineral owners favor. When I have 2/3 offers, my family and I go with company thats paying most per acre, with no deductions for processing. All those deductions will seriously trim your net check results. It’s those deductions I think is unfair expense for mineral owners. Tax deductions are always an expense. Do your research. Good luck!
If your acreage was pooled, you only have 30 days to elect. It happens all of the time on here, people drag their feet, dont pay attention to the deadlines or try to play hardball thinking they are pulling one over on the land company and then are force pooled and lose out on hundreds of dollars per acre and the ability to negotiate beneficial terms in their lease and then freak out and ask how and why this happened to them?
Very Poor advise! When you agree with the terms of the lease in a “Written Hard Copy” finalized agreement, have him bring you a cashier’s check and the complete lease documents and only sign when he gives you the cashier’s check at the signing. If a landman threatens with “Force Pooling” It’s time to deal with someone else.
So, please explain in detail to your members that take your word as gospel. When you receieve a pooling, what do you select, as this is important to everyone on here? Are you really saying that you take the pooling as a “threat”, let the time expire due to “said threat” and agree to the terms of the pooling if you have better offers on the table?
My comments are for Oklahoma pooling, not other states. My preference is to get an excellent high royalty lease with mineral owner protections. In some cases, that is not possible due to timing or lessees not budging on terms. Some landmen use force pooling as an implied threat in their correspondence. I see poolings as an opportunity and do not take them as a threat.
In most cases, if I am going the pooling route, I will pick the highest royalty option in an area where there is known production and a pretty good chance of success. The lower bonus does not bother me as the long term payout from a higher royalty in a successful well or wells will far outweigh the one time bonus. If the well is not successful, then that is the risk of this business.
I send the dated pooling letter by certified mail (to have a dated return receipt) to the operator attorney listed in the order within the 20 calendar days that it is required. I also want proof of mailing and that they received it. I make a calendar note to contact the operator if they have not paid within the 30-35 days listed in the order. I keep copies of the certified receipt and the pooling letter for proof. Have had to use those backups in the past.
If I have leased and the timing is very close to the pooling order timing, then I will often respond to the pooling letter and tell them that I have leased with “so and so” and tell them that if the lease is not filed in a timely manner, then I select the pooling royalty that matches the lease as a backup. You can either lease or pool, but not both. Having the backup letter tells them that I do not want to be assigned the lowest royalty by default.
Other folks may have differing opinions based upon their goals and experience. In a few rare cases, I have been paid multiple pooling bonus amounts because the wells have not been drilled on time and they need another year or so. In other cases, I have chosen to pool different reservoirs in the same section and have received more in bonus money by the separate poolings than I would have gotten if I had leased all zones with one lease. Just depends upon the situation at hand.