I'd appreciate any info on recent offers....per acre payments and royalty percent....have been told we ought to get $2500-3000 per acre and maybe 20% royalty on gross. Sound right?
Thanks for any info.
Paul
You should ask for that. Depends on how much they want it if they give it to you.
Nancy,
Thanks for the quick reply....very helpful to get your input.
By the way, the term of the lease offer is 5 years....I might look to reduce it to 3.
Paul
You could do that and use that to negotiate. They probably want the flexibility to wait to drill if they need to so probably won’t grant that, Read as much as you can k. This site to get some good information,
Here are links to documents somebody posted somewhere. I have saved them and they are very helpful. Parts are specific to Texas but most are general.
Links for Oil and Gas Lease Terms and Negotiation
http://www.gdhm.com/images/pdf/jbm-ogleasechecklist.pdf
CHECKLIST FOR NEGOTIATING AN OIL AND GAS LEASE
http://recenter.tamu.edu/pdf/229.pdf
Hints on Negotiating An Oil and Gas Lease
Nancy,
Thanks so much for the links. Very helpful. They make me think it is wise to hire
an attorney to go over the lease terms before signing.....although the Antero lease doesn't look
too bad. I am inclined to negotiate the deal up front and then have the attorney do a quick review of the final language....thus limiting the attorney billings but getting protection from unintended consequences of poor language in the deal.
Is anybody aware of particular problems with Antero?
Thanks!
That would be a first if Antero's lease looks good. If anyone signs a lease without several changes then, they will be kicking themselves later. The leases look great to the company and not so great to the person who they want to sign. You can do whatever but, you need to do your research on this leasing. This leasing stuff is not just an overnight thing and much reading and asking is a must unless you want little in return for signing. There are a lot of posts on these sites that can offer good info and help.
Thank you DT. It is great to get advice from folks with experience in this!
DT is right that there are some things that need to be changed with Antero's lease, but compared with some it is decent. The thing I liked was that there was some definitions in the Term part, saying how the lease stays in effect after the primary term, the 5 years or whatever. Another company has stuff like being in a search for gas or oil. Well, a search can be defined a lot of ways!
Do some negotiating yourself, but be prepared to have the attorney check things out before you finalize things. And remember, this is a fairly low point in leasing money. Prices are down, pipelines are not completed yet in many places including Ritchie, and Antero has a smaller budget this year. Things will get better. If they really want your tract they'll be more flexible. Your acreage is not big so that lessens your power, but they must be planning something there or they wouldn't be bothering now.
DT is also right about reading as much as you can.
Aw shucks Nancy, you are too kind. Paul, Nancy is the kind one and I just give it straight. Lol There are so many scenarios that can take place with these companies. Just take it one day at a time and anytime you don't understand something, ask. You will find out one thing with these companies and that is, all they say is not true. I posted some info over on the Tyler Co. site (I think it was there) about some things that need put in a lease and taken out.
DT,
Thanks for pointing me to the Tyler Co. site....lots more detailed info there as I guess there is more leasing/drilling going on there.
Will look for your posts too.
Paul
There is a lot of talk on the Doddridge site too. A lot of it is from folks waiting to get royalty payments though. A lot of Doddridge has been leased and a lot has been drilled. They are going to move over into Ritchie next and are drilling some there now. Not as much yet as in Doddridge. With prices down and pipeline issues it is hard to tell what their plans are.
Update:
Got them to increase the per acre signing bonus by 33% and increase the royalty from 15 to 16%. Also got indemnification for lawsuits language, no warranty of title and no language stating there were no pre-existing wells.
Have not signed yet as lease changes being plugged in. Did I miss anything important?
Thanks,
Paul
You can ask for a no deductions, gross royalty. They might say no.
Thank you Nancy! Paul
Nancy,
They agreed to gross proceeds....they will send language that supercedes deductions for post production costs.
Another item I see that I have questions about: "lessee shall have the right to use free of cost oil gas and water...for operations except for water from wells of lessor" Is that standard? Is it a big enough item to haggle over?
You and DT are fantastic...your posts here and elsewhere have been very helpul....as well as Kyle Nuttal's. Very appreciative!
Paul
Looking for info on "Shut in Royalty" paragraph.
The Antero proposed lease has this item. Antero can renew the lease forever by paying 10 dollars per year per acre. The landman said it is standard....but it looks to me like a perpetual cheap renewal. But maybe there is an industry standard definition of "Shut In" that limits them from invoking it when they are not producing and the lease should expire.
Looking for help.....thanks for any insight.
Paul
I would suggest trying to get rid of the use of gas and water. The water is mostly a surface issue. I forgot whether you have surface ownership. It isba standard clause but could cost something if they use a lot of gas. I’ll reply to shut in later.
Look at getting a Pugh clause and look at getting that $10.00 shut in out. The lease is a paid up lease for 5 years and if they are not using you mineral property then you want them to turn it loose. Then later you have negotiating power for a new lease. Check in on Pugh clauses and make sure you get all these additions and changes on paper as amendments that change the original language. Ask for no use of free gas for your acreage. I got that in a lease from them. If you don't then they will use all the free gas they want to run their operation.
My thoughts on shut in (borrowed from an attorney): if you can find good wording, allow shut in at a reasonable rate or free when the price of gas is really low. Keep the gas in the ground until it is worth bringing it out to sell.