My cousins and I have been contacted by Basin Oil & Gas with a lease offer (Gaines County, league 317) of $250/net mineral acre for 3 years and $250/net mineral acre for an option to extend by two years. They are offering a 20% royalty. Each of us only own a very small portion of the mineral rights (.0006+) of a 4400 acre tract. Can anyone tell me if this is fair?
Tell them you want a 25% royalty, your net acres are so small the decrease in bonus money paid between the two royalty rates is negligible. Focus on the provisions and language of the lease, more than the bonus $ amount.
Is your description Parmer CSL, League 317, Labor 19, Abstract 1380? This link Form W-1: Field List will open to a page regarding a drilling permit filed by Basin Oil and Gas and issued this month. If you open the permit, scroll down to “API #” and click on the square with the word “MAP” inside a Texas icon to open the GIS Map viewer. If you own an undivided interest in League 317 which is 4400 acres in size and has existing production, it seems as if you might ought to be receiving royalties. If your interest is in a single Labor in the League, you could have more bargaining power. The permit indicates 200 acres. If the permit affects your minerals, it might serve you well to learn more about exactly what you own. Is it possible you could have money from existing production which has been held in suspense? Ask the landman if you own an undivided interest in the 4400 acres, or if your interest is isolated in a specific Labor [I think it’s pronounced lah-BOR], and if the latter, what Labor that is. If a vertical well is drilled which includes your minerals, will you receive royalties on only that well? More information is needed all round. I agree with the 25% royalty, but be prepared to be a non-consenting mineral owner if they are entrenched, and since so much seems to be unknown, a lease which is fair to you is even more important.
“The well will be drilled in a pooled unit (CONEJOS QUEEN UNIT) owned by the operator.”
Go to the courthousedirect [.com] website and choose Gaines county. Enter “B A F I I PERMIAN LLC” in the grantee box, click the search, and scroll down to the latest recordings where you will see several mentions of League 317. I looked at two of the leases and saw some very interesting language in the descriptions which might better inform you in how to proceed.
AJ11,
I will do as you suggest. Can you help me focus on the “interesting” part?
AJ11,
I was able to see a list of all of the latest recordings and mentions of League 317, etc. as well as the names of relatives who obviously have signed leases with BAFII Permian. I don’t know where to open the corresponding leases to see what you were talking about.
You have to sign up for an account and/or sign up for courthousedirect’s fantastic “Lease Alert” service. One description I saw is Gerry Family Limited Partnership to BAFII Permian LLC, the memo acknowledged March 2, 2022 but which has an effective date of 12:03AM December 31, 2021 in part reads: “All of League 317, Parmer CSL, Gaines and Andrews counties, Texas, Save and Except the 160 acre proration unit in Labor 1 surrounding the Parmer 1-317 well (API#4216537567; the 80 acre proration unit in Labor 3 surrounding…;the 80 acre proration unit in Labor 19…; the 80 acre proration unit in Labor 22… all in Gaines county, Texas and Save and Except the 160 acre proration unit in Labor 25…in Andrews county, Texas, being 3868.4 acres more or less” <–I have omitted most of the surrounding well language and APIs to ease my typing burden. Please know I am not an oil and gas attorney or otherwise an expert in interpreting oil and gas lease language or other legal instruments. Again, I would ask the person who is presenting you with a lease if your interest is in the undivided League consisting of several thousand acres, or if it is limited to a specific lah-BOR. If you have an undivided interest in the entire League, are you currently being paid royalties on the producing wells? If not, why not? Do you have money in suspense? By signing a lease, would you forfeit those monies? Will the lease provide that all of your acreage is included in the well unit which might be 200 acres in size: x/200 vs x/4400?
Thanks for responding!
Ok, this is confusing. I was originally contacted by EOG Resources and was presented with a bill for about $140 total from two “division orders” and my understanding was that I would have payable “working interests” once I paid my portion of the expense bills. They were described as:
80.000 acres, more or less sec. 317, Parmer csl svy, Labor 3, A-1380 Gaines County , Texas 80.000 acres, more of less sec. 317, Parmer csl svy, Labor 19, A-1380 Gaines County, Texas
A couple of months later I received a royalty check for about $400, give or take. Then the payments stopped.
Then I got called by Basin Oil and Gas wanting me to sign a lease. I called EOG to find out what had happened and they said that Basin had acquired the interest (not sure what that meant exactly but they said I wouldn’t get any more checks from EOG).
In the Basin Lease the exact description is: “All of League 317, Parmer County School Lands Survery, A-1380 of Gaines County and A-967 of Andrews County, Texas.”
(I do notice that “A-967 of Andrews County” is now coming into play with Basin which was never mentioned before by EOG.)
I was told that I have an indivisible portion of the minerals on a 4428 acre tract that amounts to 2.81 net acres which is my “Interest in total production” (.00063652) x 4428.
I understand a lot of this except the 80 acres vs. the 2.81. I’m assuming that Basin is drilling on different land.
Thanks again, AJ11!
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Thank you SO much for responding, I really appreciate it.
My plan, before messaging with you, was to accept the $250/net acre offer for the first year but to ask for 25% royalty…and $500/net acre on the two year extension. I will try to focus on the language as you suggest. THANK YOU.
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I am responding to your latest two posts. If there is any way for you and your relatives to split the cost of having an oil and gas attorney or landman type pro review your position, please do so. Perhaps a forum member with a better understanding of this will also chime in. It sounds as if Basin acquired EOG’s interest. The 80 acres is apparently Labor 3. Checking the RRC GIS Map, the Parmer 3-317 is a producing well in that labor. Parmer 3-317 has produced 39,861 barrels of oil since it was drilled. The lease query shows EOG being the operator through Dec 2021 and Basin being the operator January 2022. Similarly, the Parmer 317 well in Labor 19 has produced 63,434 barrels of oil since it was drilled. VERY IMPORTANTLY, there are four permitted wells in Labor 19. It sounds as if the producing wells have paid out and you are now have “in pay” working interest in the wells. I suggest you contact Wade Caldwell or another attorney who advertises in this forum. I have no financial interest in referring you and I do not know if any of them give free initial consultations. An oil and gas lease can be a minefield. Again, do more due diligence and consult with an oil and gas attorney if at all possible. PS In common lease, once there is a producing well or wells, there will be no need for the company to exercise the right to extend the term of the lease by two years with the payment of additional bonus money. Get the most bonus dollars per acre with a 25% royalty up front. Exceptions to the above could be and are not limited to continuous drilling clause and/or depth clause. Stating the obvious, what reads as favorable language to you could turn on a word or legal precedent. If you are using an unmodified lease from an oil an gas company, in whose favor will it likely have been written?
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