This is getting more interesting by the day. I sent an E-Mail to Shell’s land man this morning declining Shell’s offer to extend our existing lease that expires August of 2011. Existing lease bonus was $100/acre back in 2006, Shell offered a bonus of $100/acre to extend the existing lease, with same terms as before 12.5% royalty. The only new amendment was the unitization clause.
Tonight I get home and have an E-Mail counter offer from Shell for $200/acre bonus, and 17.5% royalty, 5 year extension of existing lease.
I thought for a few brief minutes that Shell might have figured this out, only to read Joel’s post, his bonus is $250/acre, same 17.5% royalty.
I seem to recall a fairly high offer from Core that Tim received late last month as well.
At this point, I’m going to contact Core’s agent on Friday and see what he will do, just as well get another offer to add to the mix.
Joel…What is being offered to you here is (in return for you leasing your mineral rights to Shell) is a cash bonus of $250/acre. This is typically a one time cash payment at the beginning of the lease. The royalty is the percentage of the well head market price of the oil or gas at the time it is extracted from the property. This assumes of course that they drill on your property and find commercially viable quantities of product. There is a glossary of terms from one of the pull down tabs on this web site that may help you also. Without looking at your lease, I can’t comment on the 3 year primary, 2 option.
This is getting more interesting by the day. I sent an E-Mail to Shell's land man this morning declining Shell's offer to extend our existing lease that expires August of 2011. Existing lease bonus was $100/acre back in 2006, Shell offered a bonus of $100/acre to extend the existing lease, with same terms as before 12.5% royalty. The only new amendment was the unitization clause.
Tonight I get home and have an E-Mail counter offer from Shell for $200/acre bonus, and 17.5% royalty, 5 year extension of existing lease.
I thought for a few brief minutes that Shell might have figured this out, only to read Joel's post, his bonus is $250/acre, same 17.5% royalty.
I seem to recall a fairly high offer from Core that Tim received late last month as well.
At this point, I'm going to contact Core's agent on Friday and see what he will do, just as well get another offer to add to the mix.
Joel...What is being offered to you here is (in return for you leasing your mineral rights to Shell) is a cash bonus of $250/acre. This is typically a one time cash payment at the beginning of the lease. The royalty is the percentage of the well head market price of the oil or gas at the time it is extracted from the property. This assumes of course that they drill on your property and find commercially viable quantities of product. There is a glossary of terms from one of the pull down tabs on this web site that may help you also. Without looking at your lease, I can't comment on the 3 year primary, 2 option.
So I take it that $250 is a good offer. is the royalty % good as well?
Joel Davis said:
Gerald Hicks said:
This is getting more interesting by the day. I sent an E-Mail to Shell’s land man this morning declining Shell’s offer to extend our existing lease that expires August of 2011. Existing lease bonus was $100/acre back in 2006, Shell offered a bonus of $100/acre to extend the existing lease, with same terms as before 12.5% royalty. The only new amendment was the unitization clause.
Tonight I get home and have an E-Mail counter offer from Shell for $200/acre bonus, and 17.5% royalty, 5 year extension of existing lease.
I thought for a few brief minutes that Shell might have figured this out, only to read Joel’s post, his bonus is $250/acre, same 17.5% royalty.
I seem to recall a fairly high offer from Core that Tim received late last month as well.
At this point, I’m going to contact Core’s agent on Friday and see what he will do, just as well get another offer to add to the mix.
Joel…What is being offered to you here is (in return for you leasing your mineral rights to Shell) is a cash bonus of $250/acre. This is typically a one time cash payment at the beginning of the lease. The royalty is the percentage of the well head market price of the oil or gas at the time it is extracted from the property. This assumes of course that they drill on your property and find commercially viable quantities of product. There is a glossary of terms from one of the pull down tabs on this web site that may help you also. Without looking at your lease, I can’t comment on the 3 year primary, 2 option.
The clause reads as follows: “Unitization: Notwithstanding anything contained in said lease to the contrary, Lessee also shall have the right to unitize, pool, or combine all or any part of the leased premises with other lands in the same general area by entering into a cooperative or unit plan of development or operation approved by any governmental authority and, from time to time, with like approval, to modify, change or terminate any such plan or agreement and, in such event, the terms, conditions, and provisions of said Lease shall be deemed modified to conform to the terms, conditions, and provisions of such approved cooperative or unit plan of development or operation, and particularly, all drilling and development requirements of said Lease, plan or agreement, and said lease shall not terminate or expire during the life of such plan or agreement. Lessor shall formally express Lessor’s consent to any cooperative or unit plan of development or operation adopted by Lessee and approved by any governmental agency by executing the same upon request of Lessee.”
Just my two cents but the figures you are talking about seem to be way low especially when Chevron, Exxon/Mobile and Chesapeake are paying $10,000/acre for the mineral rights in the Northeast where I live and own 150+ acres. I would definitely consult a good gas lease attorney on this issue. Also do some research on the web and check out land coalition web sites in your area. For example check out a couple in our area for valuable info:
What a surprise we had thinking Williams county North Dakota was dead, now I have a $650 an acre offer coming to over $30,000 cash for something we can’t even find our paperwork because we thought it was worthless. I would say yes probate, never know when you might be surprised. I haven’t signed the lease yet because I really don’t know if that’s a good offer. They say William County North Dakota has the potential of having as much oil as Saudi Arabia. Is $30,000 for 40 acres a good price? If anyone knows anything please advise.
if you search the forum discussions on williams county or mckenzie county or mountrail county, you will find a lot of information on the going rates for this area. $650/acre is not bad but there are higher rates being paid for that area. More important is the royalty percentage they will pay you and the term (length) of the lease. Do some research before signing your lease offer. Starting a new discussion may be more effective for your question, especially if you include your township, range and section.
Congratulations on finding you have a valuable asset!
H.N. Bye said:
What a surprise we had thinking Williams county North Dakota was dead, now I have a $650 an acre offer coming to over $30,000 cash for something we can’t even find our paperwork because we thought it was worthless. I would say yes probate, never know when you might be surprised. I haven’t signed the lease yet because I really don’t know if that’s a good offer. They say William County North Dakota has the potential of having as much oil as Saudi Arabia. Is $30,000 for 40 acres a good price? If anyone knows anything please advise.
if you search the forum discussions on williams county or mckenzie county or mountrail county, you will find a lot of information on the going rates for this area. $650/acre is not bad but there are higher rates being paid for that area. More important is the royalty percentage they will pay you and the term (length) of the lease. Do some research before signing your lease offer. Starting a new discussion may be more effective for your question, especially if you include your township, range and section. Congratulations on finding you have a valuable asset!
H.N. Bye said:
What a surprise we had thinking Williams county North Dakota was dead, now I have a $650 an acre offer coming to over $30,000 cash for something we can't even find our paperwork because we thought it was worthless. I would say yes probate, never know when you might be surprised. I haven't signed the lease yet because I really don't know if that's a good offer. They say William County North Dakota has the potential of having as much oil as Saudi Arabia. Is $30,000 for 40 acres a good price? If anyone knows anything please advise.
Check my above post as I think this is still low. Remember to get a Royalty payment after expenses are taken out of at least 18%. Consult your gas lease attorney to make sure everything is in order.
Moffat County currently (ends next week) has some of their mineral rights up for lease by sealed bid. You can look at their requirements and lease contract here:
Thanks for this information regarding the Moffat County sale, I do appreciate it. There are mineral rights on that list that appear to be adjacent to ours. Do you know if the results of the auction will be posted on Moffat County’s website, following the county commissioner’s meeting on Tuesday 11/23? That should be public information I’m thinking, so we should be able to see what the county does or doesn’t get.
Gerald - I don’t know. You could contact the county, I’ve found them very helpful. Our contract is still not resolved. We are currently being offered $250/acre 15% royalties.
My family owns the mineral rights to 325 acres about 10 miles notheast of Craig. We have been offered $135 per acre, 5 year lease, 15% royalty.
I have several questions that I hope someone can help with:
Is this a fair price?
Why all the activity in the area now? We haven’t had a lease for about 15 years, and now it looks like there are several companies competing with each other.
Is there any drilling or producing wells already in the area?
What is a “unit”. The leasing company keeps referring to a “unit”, and that we have 1/2 of a unit. They talk about drilling 1 well per unit.
What would a typical well produce in barrels per day, and what would generally be used as the pricing mechanism (Texas Crude)?
My family has a lot of questions on the leases, but we will probably have a lawyer look them over.
Any advise, suggestions, or information you can give me would be appreciated.
Today I received an Oil and Gas Lease Proposal from SWEPI on mineral interests I hold In Moffat County, CO. I have read the prior postings and would like any feedback on their proposal. My interests are in Twp. 7 North, Range 93 West of the 6th PM, Section 22: Lots 5,6 and Section 23: Lots 3,6 totalling 160 net acres. Their terms are as follows: for an “up-front” lease, bonus payment equal to $250 per net mineral acre for a 3 yr. paid-up lease term with an option to extend the lease for an additional 2 years for an additional bonus payment of $250 per net mineral acre and a royalty rate of 17.5%. The letter goes on to say that it shall be considered for all purposes as though said lease originally provided for a primary term of 5 years. They included a bank draft and a W-9 form and they state they will have 60 banking days to examine title because they have not been verified by their title examiners, in which case, the amount of the draft would change. They go on to say that upon completion of their research, the will amend the lease and adjust the amount of the draft accordingly.
It feels like going on a blind date and want to know if this is the “norm” for this area, their credibility as a Lessee and the reason for the exploratory drilling in this region? The last company who leased from me filed for bankruptcy, which for me, may or may not have been a good thing. If anyone would be kind enough to provide me with any information that would assist me in making a somewhat informed decision, I would be ever so grateful. They would like their documents signed and returned by Dec. 15th, with all documents signed and notarized prior to Dec. 10th. Thanks and please contact me if you require any further information.
Today I received an Oil and Gas Lease Proposal from SWEPI on mineral interests I hold In Moffat County, CO. I have read the prior postings and would like any feedback on their proposal. My interests are in Twp. 7 North, Range 93 West of the 6th PM, Section 22: Lots 5,6 and Section 23: Lots 3,6 totalling 160 net acres. Their terms are as follows: for an "up-front" lease, bonus payment equal to $250 per net mineral acre for a 3 yr. paid-up lease term with an option to extend the lease for an additional 2 years for an additional bonus payment of $250 per net mineral acre and a royalty rate of 17.5%. The letter goes on to say that it shall be considered for all purposes as though said lease originally provided for a primary term of 5 years. They included a bank draft and a W-9 form and they state they will have 60 banking days to examine title because they have not been verified by their title examiners, in which case, the amount of the draft would change. They go on to say that upon completion of their research, the will amend the lease and adjust the amount of the draft accordingly.
It feels like going on a blind date and want to know if this is the "norm" for this area, their credibility as a Lessee and the reason for the exploratory drilling in this region? The last company who leased from me filed for bankruptcy, which for me, may or may not have been a good thing. If anyone would be kind enough to provide me with any information that would assist me in making a somewhat informed decision, I would be ever so grateful. They would like their documents signed and returned by Dec. 15th, with all documents signed and notarized prior to Dec. 10th. Thanks and please contact me if you require any further information.
Hi, we have acreage pretty close to yours. Section 20, 29 Township 8 North Range 89 West. Our offer was for much less so I am wondering how to get ahold of the people who made your offer to get the a similar offer. Our family is still trying to get things figured out and weigh all the pros and cons.
Hi Diane - We were contacted by a Lease Agent named Cab Kervin of SWEPI LP though the return envelope indicates M & J Land Services. Mr. Kervin can be reached via telephone at (970) 824-9231. I hope this will be helpful for you. I would be interested in hearing the outcome of your inquiry.
Dianne said:
Jamie Velsor said:
Today I received an Oil and Gas Lease Proposal from SWEPI on mineral interests I hold In Moffat County, CO. I have read the prior postings and would like any feedback on their proposal. My interests are in Twp. 7 North, Range 93 West of the 6th PM, Section 22: Lots 5,6 and Section 23: Lots 3,6 totalling 160 net acres. Their terms are as follows: for an “up-front” lease, bonus payment equal to $250 per net mineral acre for a 3 yr. paid-up lease term with an option to extend the lease for an additional 2 years for an additional bonus payment of $250 per net mineral acre and a royalty rate of 17.5%. The letter goes on to say that it shall be considered for all purposes as though said lease originally provided for a primary term of 5 years. They included a bank draft and a W-9 form and they state they will have 60 banking days to examine title because they have not been verified by their title examiners, in which case, the amount of the draft would change. They go on to say that upon completion of their research, the will amend the lease and adjust the amount of the draft accordingly.
It feels like going on a blind date and want to know if this is the “norm” for this area, their credibility as a Lessee and the reason for the exploratory drilling in this region? The last company who leased from me filed for bankruptcy, which for me, may or may not have been a good thing. If anyone would be kind enough to provide me with any information that would assist me in making a somewhat informed decision, I would be ever so grateful. They would like their documents signed and returned by Dec. 15th, with all documents signed and notarized prior to Dec. 10th. Thanks and please contact me if you require any further information.
Hi, we have acreage pretty close to yours. Section 20, 29 Township 8 North Range 89 West. Our offer was for much less so I am wondering how to get ahold of the people who made your offer to get the a similar offer. Our family is still trying to get things figured out and weigh all the pros and cons.
Jamie - We own acreage in Sec 17 and Sec 18 so we are just a few miles from you. We have the same offer from SWEPI. We had an offer from another company a couple of months ago for less than $100 per acre and less royalty. We did not accept that offer. I don’t know if this is the best we can get from SWEPI but they are offering the same terms to everyone it looks like. Our main concern is the Unitization clause in the Oil & Gas Lease. It gives them a right to form a unit which could be several thousand to tens of thousands of acres. One producing well can hold all of the acreage in the unit though they have to have a plan of development and continue to drill in the unit over time. We asked if we could change the Unit clause and did not really get an answer.
SWEPI is Shell Western one of the majors and a publically traded company. You will not have to worry about bankrupcy with them. They are looking for Niobrara oil. They are drilling horizontal wells in the DJ Basin of Colorado with good success.
Jamie Velsor said:
Today I received an Oil and Gas Lease Proposal from SWEPI on mineral interests I hold In Moffat County, CO. I have read the prior postings and would like any feedback on their proposal. My interests are in Twp. 7 North, Range 93 West of the 6th PM, Section 22: Lots 5,6 and Section 23: Lots 3,6 totalling 160 net acres. Their terms are as follows: for an “up-front” lease, bonus payment equal to $250 per net mineral acre for a 3 yr. paid-up lease term with an option to extend the lease for an additional 2 years for an additional bonus payment of $250 per net mineral acre and a royalty rate of 17.5%. The letter goes on to say that it shall be considered for all purposes as though said lease originally provided for a primary term of 5 years. They included a bank draft and a W-9 form and they state they will have 60 banking days to examine title because they have not been verified by their title examiners, in which case, the amount of the draft would change. They go on to say that upon completion of their research, the will amend the lease and adjust the amount of the draft accordingly.
It feels like going on a blind date and want to know if this is the “norm” for this area, their credibility as a Lessee and the reason for the exploratory drilling in this region? The last company who leased from me filed for bankruptcy, which for me, may or may not have been a good thing. If anyone would be kind enough to provide me with any information that would assist me in making a somewhat informed decision, I would be ever so grateful. They would like their documents signed and returned by Dec. 15th, with all documents signed and notarized prior to Dec. 10th. Thanks and please contact me if you require any further information.
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment … do we owe money?
One other question about the company SWEPI … has anyone else received a better offer than $250.00/acre and 17.5%?
Dianne
We are not in negotiations with SWEPI so I can’t address that issue. The clause in your lease you’re asking about, we had a similar one in ours and our attorney advised us to negotiate a cap of no more than royalties due to prevent owing the company money liked you asked about.
Good luck, Christa
Dianne said:
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment ... do we owe money?
One other question about the company SWEPI ... has anyone else received a better offer than $250.00/acre and 17.5%?
Dianne