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Started By
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Anybody have experience with oil, gas, and mineral leases?
Posted on 6/12/13 at 11:32 am
Posted on 6/12/13 at 11:32 am
We have about 20 acres in Walker, LA...near the exit along I12. We were contacted by Strand Energy wanting to lease the land. They offered $150 an acre as a bonus plus 1/5 royalty if anything is found...3 year lease.
It didn't "wow" us and it appears to me as just a land grab by them. I haven't seen any new rigs pop up in the area. Does anyone know if anything is going on in Livingston Parish?
I told them we weren't interested at this time, but keep us in mind if anything changes in the area. I guess we'll see how motivated they are if we're ever contacted by them again or if anyone else contacts us.
It didn't "wow" us and it appears to me as just a land grab by them. I haven't seen any new rigs pop up in the area. Does anyone know if anything is going on in Livingston Parish?
I told them we weren't interested at this time, but keep us in mind if anything changes in the area. I guess we'll see how motivated they are if we're ever contacted by them again or if anyone else contacts us.
3
Posted on 6/12/13 at 11:45 am to cmlsu
i'll take the 1/5 royalty please
Posted on 6/12/13 at 12:01 pm to cmlsu
quote:
bonus plus 1/5 royalty
Thats a pretty sweet deal.
Posted on 6/12/13 at 12:03 pm to b-rab2
Yah, that part sounded nice but that's only benefiical if there's oil. We're currently trying to sell the land and didn't want to encumber it in any way...unless there was really something going on in the area in regards to the oil/minerals.
I probably should add that it's inherited land between my wife and her sister. So the bonus would equal about $1,500 for each and if oil is ever found then the 1/5th would come into play.
We're just at the point of trying to see how serious things are because of land being for sale.
I probably should add that it's inherited land between my wife and her sister. So the bonus would equal about $1,500 for each and if oil is ever found then the 1/5th would come into play.
We're just at the point of trying to see how serious things are because of land being for sale.
This post was edited on 6/12/13 at 12:06 pm
Posted on 6/12/13 at 12:05 pm to cmlsu
quote:
We're currently trying to sell the land and didn't want to encumber it in any way...unless there was really something going on in the area in regards to the oil/minerals.
yea I wouldn't worry about it then
Posted on 6/12/13 at 12:08 pm to cmlsu
quote:
Yah, that part sounded nice but that's only benefiical if there's oil. We're currently trying to sell the land and didn't want to encumber it in any way...unless there was really something going on in the area in regards to the oil/minerals.
1/5 royalty is the minimum they can offer under Louisiana Law. If you sell the land you will still retain mineral rights for 10 years, if there is no production in that 10 year period the rights convey to the new owner.
Posted on 6/12/13 at 12:08 pm to cmlsu
Couldn't you sell the land and retain the mineral rights? We have a few leases in Alabama with similar terms.
Posted on 6/12/13 at 12:09 pm to gsm1060
You could be losing out on a lot of money if it ever hits. A producing well @ 200 bbls a day could pay you $200,000.
This post was edited on 6/12/13 at 12:18 pm
Posted on 6/12/13 at 12:36 pm to EA6B
1/5 royalty is the minimum they can offer under Louisiana Law. If you sell the land you will still retain mineral rights for 10 years, if there is no production in that 10 year period the rights convey to the new owner.
This whole statement is false. If there is a minimum royalty, it's 1/8, but I don't think that's legally mandated. 1/5 is generally the going rate, but I'd ask for 1/4 and settle for 22%.
As for the production rights, you don't automatically get them, you have to specifically reserve them in your conveyance. Then and only then do you get them for a minimum 10 years.
I don't know if the bonus is good, but it sounds a little low. You're wise to wait and see what happens.
This whole statement is false. If there is a minimum royalty, it's 1/8, but I don't think that's legally mandated. 1/5 is generally the going rate, but I'd ask for 1/4 and settle for 22%.
As for the production rights, you don't automatically get them, you have to specifically reserve them in your conveyance. Then and only then do you get them for a minimum 10 years.
I don't know if the bonus is good, but it sounds a little low. You're wise to wait and see what happens.
Posted on 6/12/13 at 12:36 pm to EA6B
quote:
1/5 royalty is the minimum they can offer under Louisiana Law. If you sell the land you will still retain mineral rights for 10 years, if there is no production in that 10 year period the rights convey to the new owner.
Um....no on the 1/5th minimum by LA law. If he sells the land and wishes to retain mineral rights he must insert a clause in the deed noting that he retains his mineral rights, and then he would have ten years of time to lease, sell, or do what he wishes with his mineral rights. Dry holes and producing wells can extend a mineral servitude past its current ten year period, along with continual operations on contiguous tracts over the years. That won't come into play on a 10 acre standalone tract though.
This post was edited on 6/12/13 at 1:05 pm
Posted on 6/12/13 at 1:18 pm to TigerDog83
Yes, we will try to reserve mineral rights at the time of a sale. The lease would also be transferrable to a new owner if we convey the rights but some buyers might see that as hinderance. For example, somebody wanting to buy and build a shopping center but thinks twice because of fear somebody may put a rig in their parking lot down the road.
We didn't want to narrow the field of potential buyers by already having the land leased. Some buyers may wish to have the mineral rights for various reasons.
Now, if the oil company comes back with anything that looks "legit" then we would definitely reconsider. We just don't think it's worth putting any kind of encumbarance on the land for $1,500. If oil is in the area or the companies really want to drill then I can only assume they will be knocking down our doors.
Regardless, we're going to try and reserve mineral rights when selling but if a purchaser wants them, which most will, we can at least use this info as a negatioting tactic.
We didn't want to narrow the field of potential buyers by already having the land leased. Some buyers may wish to have the mineral rights for various reasons.
Now, if the oil company comes back with anything that looks "legit" then we would definitely reconsider. We just don't think it's worth putting any kind of encumbarance on the land for $1,500. If oil is in the area or the companies really want to drill then I can only assume they will be knocking down our doors.
Regardless, we're going to try and reserve mineral rights when selling but if a purchaser wants them, which most will, we can at least use this info as a negatioting tactic.
This post was edited on 6/12/13 at 1:23 pm
Posted on 6/12/13 at 1:37 pm to cmlsu
All of these are valid concerns. If you are approached to lease again, ask about surface restrictions that might quell some future buyers concerns. You can add in to the lease that the company has to get permission from the surface owner before commencing any work- then that right would transfer to whoever buys the land. The lease should also have a clause that no well can be drilled within 200 feet of any house, barn or other structure, so that will protect any buildings that are built during the term of the lease.
Posted on 6/12/13 at 2:16 pm to cmlsu
Retain those mineral rights no matter what. Just because they lease your 20 acres doesn't mean they put the wellhead directly in the middle of your land. They could do a directional drill anywhere in the quarter section. In my experience the oil company will work with you as both the landowner and mineral rights owner.
This post was edited on 6/12/13 at 2:19 pm
Posted on 6/12/13 at 2:38 pm to EA6B
quote:
1/5 royalty is the minimum they can offer under Louisiana Law
That's not true I have worked for companies that offer 1/8th, 3/16ths in Louisiana
ETA. Looks like I was late on my comment.
How much do they want to sell the land for??
This post was edited on 6/12/13 at 2:40 pm
Posted on 6/12/13 at 2:47 pm to thedogman
We have it for sale at $250,000.
Posted on 6/13/13 at 1:45 pm to gsm1060
bump
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