I am negotiating a salt water disposal well agreement and would love some of the pros here (Wade, Clint, Tennis Daze maybe) to tell me if these terms are “standard”,
5 cents/bbl for a noncommercial well, that does not benefit our operations, They are saying 20K bbls per day( is that reasonable for the long term). It is there own produced water
NO mechanism for price adjustment or renegotiated terms
Unlimited term, no expiration except after 48 months of complete non use( “because it costs so much to drill”)
10K bonus , but no payment for pad or pipeline/road easements
They wanted exclusive access to 300+ acres, but I limited that to two small pads plus plus pipe/road/electricaccess.
They are unwilling to deal more. It is " take it or leave it " time
I suggest that you contact Nicholas Miller, attorney at Graves Dougherty who is experienced in negotiating SWD agreements. Or some other attorney who is knowledgeable in this area. SWD agreements generally do not have an unlimited term with no chance of price increases. The exact written terms of the agreement are very important. How many pipelines, roads, electric lines? Legal expertise is needed up-front and not after you sign.
I’ve recently read of much higher per bbl rates. More like .25 to .50 per, if my recollection is correct. I spent an ~hour reading SWD articles. The SWD agreements can bring in quite a bit of revenue annually per site. I recommend locating a lawyer or similar that is familiar negotiating those terms. Also, if the permitting is done, that’s all the better as that’s a very long process. Good luck!