Hello,
What does this mean not to warranty the mineral title when negociating for oil lease.
Thanks,
RK
Mr. Leonard,
If you wait until Thursday, I will blog on it and post here the blog location on this board.
Mr. Cotten,
Thank you I look forward to your post.
RK Leonard
I am also very interested in this subject, since I have a lease in my hand, waiting for my signature. I had requested that the Warrant & Defend part be struck out, and also that they split the two, not contiguous properties onto separate leases. They refused to do either. I am at a point where I just sign it as is, or go find another landman that will work with me. If I refuse this lease, can they 'force pool' me, while I am looking for better offers?
Since Buddy is going to cover why you don't want to warrant and defend tomorrow, I will leave that alone. I do not believe they have a leg to stand on in not leasing each parcel seperately. If they use several pages of lease form, the recording fees need not be much because they can record 1 page memorandums of lease for each lease. I think most companies and lease agents have a lease form they generally use that has been working well for them for some time. It shouldn't be overly burdensome to them to generate seperate leases for each parcel. I think you are asking for the bare minimum and if you don't get it, I think I would walk. I haven't read your leases, but I'm already getting the feeling you should be asking for dinner and a movie first. BTW don't let them have the executed lease on the basis of a draft. Send them a copy of the executed lease, boldly marked copy, and hold the original until you actually have cash you can spend, if you continue to deal with this potential lessee at all. You can conceivably, give up all right to your minerals for no money in your pocket, with no recourse but to sue. If you have to sue I would consider that you will be at least $10,000 out of pocket before you may recover, and probably more. Is the potential bonus money worth taking such risks to obtain? I recommend you protect yourself to the greatest extent possible unless you had no need for the money in the first place.
Sean Clay said:
I am also very interested in this subject, since I have a lease in my hand, waiting for my signature. I had requested that the Warrant & Defend part be struck out, and also that they split the two, not contiguous properties onto separate leases. They refused to do either. I am at a point where I just sign it as is, or go find another landman that will work with me. If I refuse this lease, can they 'force pool' me, while I am looking for better offers?
My parents leased their minerals a number of years ago and had all of the tracts listed on one lease with a pugh clause. Unfortunately they thought they were protected, but they were not. The oil company drilled a gas well, did not pool them with anyone (called a lease well) and tied up all of their non-contiguous land for years and years (even though they had an oil and gas lawyer assist them with the lease wording). When they finally got free of this company, they leased to someone else with a separate lease for each non-contiguous tract.
Sean Clay said:
I am also very interested in this subject, since I have a lease in my hand, waiting for my signature. I had requested that the Warrant & Defend part be struck out, and also that they split the two, not contiguous properties onto separate leases. They refused to do either. I am at a point where I just sign it as is, or go find another landman that will work with me. If I refuse this lease, can they 'force pool' me, while I am looking for better offers?
Hello Mr. Cotten,
I'm not sure if I missed the blog/post?
Thanks,
RK
Buddy Cotten said:
Mr. Leonard,
If you wait until Thursday, I will blog on it and post here the blog location on this board.
Congratulations! They look very happy and healthy. You are indeed blessed.
Nancy
You did not.
please see the picture of my daughter, who gave birth to my grandson last night. I did some preliminary writing but do not have it in final form.
Also, it takes several days for a blog post to be approved and posted by the Administrator,
RK Leonard said:
Hello Mr. Cotten,
I'm not sure if I missed the blog/post?
Thanks,
RK
Buddy Cotten said:Mr. Leonard,
If you wait until Thursday, I will blog on it and post here the blog location on this board.
Mr. Kennedy,
Off subject and I'm new to the site but reading your posts prompted me to join. Question: We own mineral rights along with our cousins (total 80 acres) in Divide County. 22, 160, 98. We were told that a well was going to be drilled in the 1280 and that we needed to sign on for the lease. The offer was 500/ 18.75. I'm really intreagued by your comments about forced pooling. Is that something we shoud consider individually since we have 20 of the 80 acres? Thank you, Mike
r w kennedy said:
Since Buddy is going to cover why you don't want to warrant and defend tomorrow, I will leave that alone. I do not believe they have a leg to stand on in not leasing each parcel seperately. If they use several pages of lease form, the recording fees need not be much because they can record 1 page memorandums of lease for each lease. I think most companies and lease agents have a lease form they generally use that has been working well for them for some time. It shouldn't be overly burdensome to them to generate seperate leases for each parcel. I think you are asking for the bare minimum and if you don't get it, I think I would walk. I haven't read your leases, but I'm already getting the feeling you should be asking for dinner and a movie first. BTW don't let them have the executed lease on the basis of a draft. Send them a copy of the executed lease, boldly marked copy, and hold the original until you actually have cash you can spend, if you continue to deal with this potential lessee at all. You can conceivably, give up all right to your minerals for no money in your pocket, with no recourse but to sue. If you have to sue I would consider that you will be at least $10,000 out of pocket before you may recover, and probably more. Is the potential bonus money worth taking such risks to obtain? I recommend you protect yourself to the greatest extent possible unless you had no need for the money in the first place.
Sean Clay said:I am also very interested in this subject, since I have a lease in my hand, waiting for my signature. I had requested that the Warrant & Defend part be struck out, and also that they split the two, not contiguous properties onto separate leases. They refused to do either. I am at a point where I just sign it as is, or go find another landman that will work with me. If I refuse this lease, can they 'force pool' me, while I am looking for better offers?
Here you go.
http://www.mineralrightsforum.com/profiles/blogs/warranty-of-title-oil-gas-lease
Buddy
RK Leonard said:
Hello Mr. Cotten,
I'm not sure if I missed the blog/post?
Thanks,
RK
Buddy Cotten said:Mr. Leonard,
If you wait until Thursday, I will blog on it and post here the blog location on this board.
Mr. Orsborn, I have signed 2 leases in the past and neither of them led to bonus money and I have filed suit against the lessor who did not pay, recorded the lease after the draft had expired, the other lessee released the lease when I informed them I was going to file suit. My brother has had even worse luck with the one lease he signed, Diamond Resources recorded a memorandum of lease then sent a new lease agreement, essentially repudiating the first lease and slandering his title, then claiming they could not find either of us and setting up an emergency unlocatable mineral owner trust. We will have to sue them also. On the other hand the wells my brother and I are carried in, we have been paid without delay less than 150 days after first sales. To me lease means I'm forking out money for lawyers and being a carried interest (force pooled) means I get paid. If you don't have any oil under you, leasing is the better option, but make sure you are paid before you let go of the executed lease. I still have a couple of parcels that aren't drilled or leased, I doubt anyone could make a lease offer I would accept at this point. I would say yes, you should educate yourself and consider being a carried interest, read the century code in regards to being a carried interest. Think about what it means to give up the signing bonus, and the possibility of having a lien placed against the future production of your minerals if you get a poor well that never pays out and retires the penalty of 50% of the drilling cost. Balance that against the chance that you will make significantly more money and the fact that the 16% royalty that you will get from the very first barrel is nothing to sneeze at. Alot to consider.
Thank you,
Do I have to pay any out of pocket expenses if we go to forced pooling? If the well never makes the % share of my acreage (0.015625) + 50% of say the 7-8 million dollar well, am I liable for any costs? I know we lose the bonus. Will the oil company that liens the assets of our Royalty, only be able to recover their costs from our Royalty's production? Also, am I calculating this right? 8,000,000 dollar well x our % of 1280 (0.015625) 20 acres = 125,000 + 50,000 penalty = 150,000 total before we receive 100%?
Mike
r w kennedy said:
Mr. Orsborn, I have signed 2 leases in the past and neither of them led to bonus money and I have filed suit against the lessor who did not pay, recorded the lease after the draft had expired, the other lessee released the lease when I informed them I was going to file suit. My brother has had even worse luck with the one lease he signed, Diamond Resources recorded a memorandum of lease then sent a new lease agreement, essentially repudiating the first lease and slandering his title, then claiming they could not find either of us and setting up an emergency unlocatable mineral owner trust. We will have to sue them also. On the other hand the wells my brother and I are carried in, we have been paid without delay less than 150 days after first sales. To me lease means I'm forking out money for lawyers and being a carried interest (force pooled) means I get paid. If you don't have any oil under you, leasing is the better option. I still have a couple of parcels that aren't drilled or leased, I doubt anyone could make a lease offer I would accept at this point. I would say yes, you should educate yourself and consider being a carried interest, read the century code in regards to being a carried interest. Think about what it means to give up the signing bonus, and the possibility of having a lien placed against the future production of your minerals if you get a poor well that never pays out and retires the penalty of 50% of the drilling cost. Balance that against the chance that you will make significantly more money and the fact that the 16% royalty that you will get from the very first barrel is nothing to sneeze at. Alot to consider.
Mr.Orsborn, those are the numbers we are talking about. You won't know actual cost until the well is completed. Nothing out of pocket untill you have paid off well cost and penalty and receiving 100% royalty. I will send you a friend request so we can discuss further without highjacking this thread any farther than we already have.