The Centennial lease is a good offer. There is always a chance that you could negotiate a little better but Centennial is also a very reputable operator so I would feel good about it if they continue to be reasonable with the lease modifications. Good luck!
What were some of your change requests if you don't mind me asking?
After having been burned in the past, these represent the changes that I normally request. The really significant part involves Shut-Down provisions. These provisions have generally been acceptable to the Lessees, although some of them have just not responded. However, I am still learning after a lot of years now, and as I now live far out of state, I do not have ready access to a good attorney. Any additional items or assistance would be appreciated.
EXHIBIT A
G. The "amount realized" (as referred to in Paragraph 3.A. and elsewhere hereof) shall be computed at the point of sale without deduction for transportation or marketing costs, including, but not limited to compression or dehydration.
H. Lessee shall notify Lessor when drilling operations commence and progress thereafter.
I. Payment of lease bonus shall be made within 40 days of signing of the lease or Lessor has the option of terminating the lease.
J. Not withstanding any other provisions contained in this lease, it is expressly understood and agreed that, after the primary term, this lease cannot be maintained in force solely by the payment of shut-in royalties for any continuous period of non-production in excess of two (2) consecutive years and following such period, the lease shall terminate as to all lands not included in a producing unit. If wells are shut-in or production is ceased, the Lessee is required to notify Lessor within 30 days of said action. If, for a period of 90 consecutive days such well or wells are shut-in or production therefrom is not being sold by Lessee, then Lessee shall pay an aggregate shut-in royalty of $1,000.00 per acre then covered by this lease, such payment to be made to Lessor on or before the end of said 90-day period and thereafter on or before each anniversary of the end of said 90-day period while the well or wells are shut in or production therefrom is not being sold by Lessee; provided that if this lease is otherwise being maintained by operations, or if production is being sold by Lessee from another well or wells on the leased premises or lands pooled therewith, no shut-in royalty shall be due until the end of the 90-day period next following cessation of such operations or production.
K. In the event Lessee pools the leased premises with any other lands to form a pooled unit, then all the lands described in this lease will be included in such pooled unit. Any unit so formed
shall consist of no more than 640 gross acres, including all of the lands described in this lease.
L. If Lessee fails to properly or timely make shut-in payments to Lessor, Lessor shall thereafter provide Lessee with written notice to Lessee of such event and Lessee shall have within 90 days after actual receipt of Lessor's written notice to make the relevant shut in payment(s) or the lease shall terminate. Lessee shall be obligated to pay to Lessor interest on the delinquent amounts at the rate of Twelve percent (12%) per annum, or the highest rate then permitted by law, whichever is lesser, calculated from the date such payment is due and continuing until such delinquent amount is paid.
Thanks for your input!
My cousins tell me that the oil companies leasing their property in Section 265 are trying to get everything set up for the commencement of a drilling schedule. The oil companies want to start drilling. They leased at $3000 a nma. some three or four years back, with a recent extension of even more.
Something is moving Good Luck.
I just received a phone call from a landsman representing Wheat Resources, L.L.C. He offered $9500/acre bonus for the same property I described above. Can anyone tell me anything about this company?
Hey J. How send me a friend request as we also signed with Centennial in 266
Hi JT, Not sure what you mean by a "friend request." If you are talking about Facebook, I do not have a Facebook page. Never really interested in getting involved in social media and don't have much time for it.
Have you ever heard of Wheat Resources, L.L.C.?
Wheat Resources LLC is the real deal. I was pleased with the lease I signed with them in sect 271. Lots of my family signed as well and all got their checks. Much wiser now I would say if your looking at their offer seriously I would have attorney look it over especially with 5 nma. Remember continuous drilling cause and you have what they want so you hold the cards.
Looks like these blank sect. (271,266) are fixing to drill so this will probably be your only lease so get all you can!
Where can you find information to see what the status is on an outfits drilling status?
Wheat Resources is an agent which represents other companies. You can ask what oil company they are representing for this offer. Also, be sure to check the Reeves County records to find the assignment of your lease so that you stay on top of what company or companies own your lease over time. Remember that the lease rights can be divided by depth so one company may own shallow rights and a different company may end up with the deep rights.
Go on the RRC website and look at list of operators to see if a company is an operator. If you mean the well status, look at the permit and watch to see the spud date.
TennisDaze - please give direction on '... look at the permit and watch to see the spud date.'... might that appear well after the fact? Thanks -- Later -- Buzz
RRC requires the operator to immediately report when a well is spud and that information is attached to the permit. Most recent example - Apache spud the Grant 404BR well on January 19. Pull up the permit - District 8, Permit 834558, API 42-389-36674. Once the notice that well was spud, a new section at the top of the permit page opens up - titled Completion Information. There are 4 blocks - Well Status Code; Spud Date; Drilling Completed; Surface Casing Date. Spud date for Grant well is January 19 and Surface Casing Date is January 20. This box does appear on any permit where the drilling has not begun. So it is a quick way to see if the operator has begun drilling a well which is permitted on your property. Keep checking those permits!
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TennisDaze -- got it... just goes to show one should not use a dated bookmarked 'Drilling Permit' Query. Thanks -- Later -- Buzz
Landman contacted us about a lease for Wheat Resources, LLC in Lots 1-4, Blk 8, Sec 266, Blk 13. Planning to make offer next week.
lease extensions of 12,000 an acre have been paid in that area. Retain an attorney so that you get a good lease, covering not not only bonus money, and royalty standard of 25% but also to check the method of calculation for payment, and which horizons or plays or levels you are leasing.
This is a complex field with many layers of petroleum. You want to make sure you understand what you are leasing. Please have a lawyer negotiate or review the lease before signing. This way you understand what you are doing and protect your side of the contract. The other side is in business, and most likely honest, but their job is to get the best deal they can for themselves in the current situation, it is not to make sure you get the best deal for yourself.
Good Luck
To Lynn Wood.
Good advice, but I am a long way from Texas. Do you know any good attorney's that you could recommend to look over a lease? Would greatly appreciate any information.
Wade Caldwell in San Antonio and a member of this forum. Our family has used him and his firm to form our LLC, negotiate our current lease , ROW easement, seismic survey and other issues.
(210) 225-1655
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MIKE MORGAN
of morganleetonpc.com