Smith County, TX oil & gas discussion group. Share your experience regarding lease bonus, royalty rates, drilling activity, and oil & gas news.
Good afternoon. I was asked to lease a small tract of land in the Thomas Rives Survey/Abstract 801 (Smith County). It's about 8 miles NNW of Tyler. What are leases around there going for? Gracias, David McL
Is anybody there? DHMcL
Hello McL,
I sent you a Personal Message pertaining to your question several days ago.
Clint Liles
Common question around here…my hubby was just contacted by a landman concerning inherited mineral rights for property in Smith Co that he had no idea existed. We are wondering how best to proceed, what a decent rate is for that area, and would love to hear other’s experience with this. Any feedback is appreciated! The company is looking for a 2 year exploratory lease, followed by a 3 year lease and 3/16ths royalties. Input?
Stacie,
Friends request sent.
Clint Liles
Thanks Clint, accepted : ) You seem to be the most knowledgable about this stuff, any advice is appreciated
At 11:29pm on March 4, 2014, r w kennedy said…
Stacie, don't let them bamboozle you into thinking there will be more agreements and bonus later on, get everything you are going to get in the first agreement, if they hit oil in the first 2 years, there will be no subsequent 3 year agreement because your minerals will now be held by production untill no more minerals are produced for the next 10 to 100 years. No do overs and no second chances. The mention of the subsequent 3 year contract "option" is in case they can't get a well drilled in 2 years, to take advantage of your not knowing that if they do get oil in the first 2 years that there will be no new contract, so you might take/want less if it's just "exploratory" and finally if they can get it cheap enough it gives them 2 years to speculate with it and they can sell your lease at a profit to someone else who can exercise the 3 year option. : ) Welcome to the oil business and the forum.
Thanks Clint for letting me in so quick! Knowing me, I would have had to check myself out to make sure I wasn't a member of some subversive mineral owner group. That's why I don't run one of these groups! ; )
interesting, and complicated! the abstract numbers are A 998 and A 945
So, the current offer is “not so great” I take it… Do ppl usually lawyer up, and provide a counter offer? or is it a good idea to just take the money, with the idea that you may never be approached again?
Stacie, some of the things I posted are somewhat contradictory but all of them are ways things can go that are not in your favor. I would say that practically if not every oil and gas lease should be negotiated. You may not need to lawyer up but you do need help and study.
R W, I am a researcher by nature, and a curious sort. Thats how I came across this forum, definitely wanting to learn. It isnt a huge amount of money, but I figure we should get what we can out of it. Sounds as if it is best if we ask for a full lease, without an “exploratory” option?
Stacie,
Abstract #945 is located behind John Tyler High School in Tyler, Texas. I see no production or activity in the area. I do see where a dry hole was drilled in 1978 in A-26 which is west of your A-945. Am posting a link to the approved drilling permit for rhe well that was drilled in 1978. API(American Petroleum Industry)# 423-30332:
Am including the GIS map of A-945 and surrounding area:
Now I will go check out your A-998.
Clint Liles
Stacie, all wells are "exploratory" in nature. Wells have been drilled that if they were 100 feet farther off, they would have missed entirely, not so much with shale wells but that's scary in a way too. They may hit something that is just good enough to produce, because that is the only way to get part of their money back, while it ties up your minerals for a decade and pays you very little. While that strata may be a flop, you could have a strata that is great below it that will not be soon produced. A stipulated minimum royaly and or defined paying quantities clause could help if they will go for it.
I would much rather turn down a bad lease and miss a bonus than be trapped in one. If you marry the wrong spouse, a judge may take pity on you and let you out, in an oil and gas lease they won't. Operators have been known to produce, or have claimed to have produced one barrel of oil a month to hold acres by production indefinitely.
Then too, some people are shocked at how little they actually realize from the sale of their oil, with transport / marketing charges taken out and the operator could, if not forbidden in the lease sell to an affiliate at half price and your royalty would be based on that much diminished amount. 3/16 or 18.75% could mean 8% for oil. Gas could be far worse, possibly 2%.
Stacie,
A-998 is in the same area of Tyler, Texas as A-945. They are both in the Northwest part of the residential area of Tyler, Texas.
GIS map of Smith County Texas A-998 H. Teal Survey:
Clint Liles
looks like there isnt much going on there, eh? I guess it is doubtful that they would find much anyway…haha
Stacie, they didn't think they would find anything in my minerals either for a long time, even drilled a few dry wells, but they have produced over 400,000 barrels of oil in the last 2.5 years out of two wells that they have drilled and a little over 10,000 barrels a month at present and they are drilling yet 2 more wells. At one point nobody would have bought those minerals even at $50 an acre.
wow RW, congrats : ) I guess one never knows!
Hi everyone. I just joined. My family owns mineral rights just north of Flint. We had activity there back in the 70s and 80s, but not recently, except one of the old wells was reopened in the last decade. Unfortunately, it seems laws have changed making the lease size smaller, and we did not receive any royalties on that well.
Does anyone know what mineral rights are selling for in that area now? My mom just died and I have to provide an estimate of the value of our mineral rights for the will to be settled.
Also, what sort of activity is happening around there now. I live in Maryland at the moment, and haven't been back for some years.
Thank you!