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re: OT oil tycoons that have property with oil/gas leases, a question:

Posted on 5/14/14 at 10:05 pm to
Posted by ForeverLSU02
Albany
Member since Jun 2007
52357 posts
Posted on 5/14/14 at 10:05 pm to
quote:

You'll never get a favored nations clause
Why not? They are included in almost all of our client's leases
Posted by KYINYOI
Lower St. Bernard
Member since Jun 2009
490 posts
Posted on 5/14/14 at 10:12 pm to
Depending on the play, it's been my experience that the majority of operators are not going to commit themselves into paying top dollar to landowners in case there is a major landowner who negotiates a high dollar deal. It's just not common place.
Posted by GaryMyMan
Shreveport
Member since May 2007
13498 posts
Posted on 5/15/14 at 7:06 am to
How many acres is it and what is your interest? It is very possible you will spend more on 1 hour with an attorney than you will receive in two years of oil royalties. We have some properties that pay $10/month . A standard lease pays 1/8 these days, my dad always tries to get them to at least 1/5 or 1/4. Sometimes it works, sometimes it doesn't. Rather than have an attorney review it, do you have any friends or family with experience?


ETA: 5 day late edit to say, yes, I meant 1/8 is standard - 3/8 would be great.
This post was edited on 5/19/14 at 10:24 pm
Posted by TheIndulger
Member since Sep 2011
19245 posts
Posted on 5/15/14 at 7:11 am to
Wouldn't 3/8 be better than 1/5 or 1/4
Posted by Bussemer
Heading South
Member since Dec 2007
2565 posts
Posted on 5/15/14 at 7:28 am to
What county is it in?

The Permian/Delaware Basins and the Eagleford are extremely busy right now and the average lease terms are much higher than most everywhere else in Texas.
Posted by Tchefuncte Tiger
Bat'n Rudge
Member since Oct 2004
60830 posts
Posted on 5/15/14 at 8:02 am to
quote:

You need an attorney that can look at it. You will want a favored nations clause and you will want to make sure you aren't getting screwed on the numbers.
Posted by saltybulldog
MS Gulf Coast
Member since Aug 2007
1149 posts
Posted on 5/15/14 at 8:02 am to
Eagle Ford area.

Have never laid eyes on the property.
Posted by Jakeyura
Belle Chasse, La / Gulf Shores, Al
Member since Nov 2012
1076 posts
Posted on 5/15/14 at 8:30 am to
I inherited 13% of my great grandmas land the has been leased to an o&g company for 10+ years. They have 1 well on the property and it has been doing pretty good. I'm 20 and I inherited the land when I was 12, but they couldn't give me money until I turned 18. They just got back with me last month, I had to fill out a w9 and sign off on some paperwork (my aunt told me it was legit) and the dude have me a check for 50 bucks and hauled arse.
Posted by lsujro
north of the wall
Member since Jul 2007
4031 posts
Posted on 5/15/14 at 8:37 am to
quote:

A standard lease pays 3/8 these days,


bullshite
Posted by Reel Tiger
Fishing Camp
Member since Dec 2007
124 posts
Posted on 5/15/14 at 8:37 am to
1/4 royalties are common in South Texas. 3 year primary term with 90 or 120 day continuous drilling obligations are as well. Lease bonus is determined by where in the play you are and can vary drastically from $500 - $20,00 pee acre. A companies willingness to negotiate will depend on your location and whether or not it's a large and or contiguous lease. An experienced oil and gas attorney can help you negotiate among other things how your royalties are calculated (deductions associated with treating and transportation for example).

You get a nice check with the lease bonus but you accumulate wealth through better royalty terms such as percentage , pricing used, and allowed deductions.

Hope this helps.
Posted by Putty
Member since Oct 2003
25804 posts
Posted on 5/15/14 at 8:48 am to
Insist on Louisiana choice of law so that after decades of revenue from shite land you can sue them for some unspecified contamination and rake them over the coals for 100 million in "remediation" costs and then put the money in your pocket without doing an ounce of remediation.

Posted by Kajungee
South ,Section 6 Row N
Member since Mar 2004
17033 posts
Posted on 5/15/14 at 8:48 am to
quote:

turn them down the first time they ask. They will come back offering you more money. Turn them down again. They will come back again offering your more money. Balls in your court now



This

30 years ago, first offer $1,000 per acre 30 days later $10,000 per acre
Posted by deSandman
Member since Mar 2007
969 posts
Posted on 5/15/14 at 8:48 am to
If you are looking for Texas O&G attorney to take a look at your lease, shoot me an email @ bonicay@gmail.com

I'm in-house now so I can't do it myself (although I don't mind answering basic questions), but I have former co-workers who do that kind of thing routinely and would not charge much to take a quick look at your lease and explain things to you.
Posted by JoePepitone
Waffle House #1494
Member since Feb 2014
11450 posts
Posted on 5/15/14 at 8:54 am to
I want to shake the hand of the fellow who can negotiate a 3/8ths royalty on an oil and gas lease.
Posted by saltybulldog
MS Gulf Coast
Member since Aug 2007
1149 posts
Posted on 5/15/14 at 9:22 am to
I have an attorney friend that I have asked to review. I dont know that he is seasoned in O&G, but i will give him a chance. IF I did get anywhere, I will take you up on your offer.

One of the clauses that really gets me, ...

"Lessee shall pay Lessor as royalty, 1/4th of the net amount received by Lessee for the gas so sold, less its proportionate share of all taxes, costs of transportation, compression, processing, treating, [i]all all other costs of marketing.

From what i have learned, most of the royalty payments are 1/4, but it seems the "all other costs of marketing" bit allows them to hide alot of costs.

At the end of the day, I am not really counting on any real money from this, but might as well do what I can, in case this ends up being profitable. Of course, my other concern, as someone else suggested, is unforeseen costs I might incur for remediation or some crap like that.
Posted by MillerMan
West U, Houston, TX
Member since Aug 2010
6513 posts
Posted on 5/15/14 at 9:27 am to
quote:

SW Texas


Where exactly?

quote:

I am not really counting on any real money from this


We are in SW Texas as well and have relieved a very good amount of real money
This post was edited on 5/15/14 at 9:32 am
Posted by saltybulldog
MS Gulf Coast
Member since Aug 2007
1149 posts
Posted on 5/15/14 at 9:33 am to
apparently near Atascosa County
Posted by deSandman
Member since Mar 2007
969 posts
Posted on 5/15/14 at 9:38 am to
Yea, you really want your royalty to be out of the amount paid or market rate, without any deductions (especially vague ones).
Are you dealing with a broker or is this directly with an O&G company?
I don't mind taking a quick look over the lease this morning if you want to email it over. Nothing too detailed (and certainly not as your attorney...), but I'll give it a once over and see if there are any big red flags.
Posted by MillerMan
West U, Houston, TX
Member since Aug 2010
6513 posts
Posted on 5/15/14 at 9:40 am to
We are in McMullen county just south of you, that is a busy area. If it a decent amount of acreage, you will be set.
Posted by Clyde Tipton
Planet Earth
Member since Dec 2007
39859 posts
Posted on 5/15/14 at 9:43 am to
quote:

I want to shake the hand of the fellow who can negotiate a 3/8ths royalty


No shite. There is some bad advice in this thread. Forget the bonus, he'll never get a lease at 3/8ths.

You'll never get a favored nations clause, because they will pay somebody with a bigger tract more than you and they are not going to come back and "settle up" with you.

Also, like someone else said, Texas is different, they'll draw unit lines however they want around consenting property owners and drain your land for free if you frick around with them. It's not pretty squares like it is here in Louisiana.

Seek an attorney if the land is of decent size and you care about it. If it is out of sight/out of mind, you may do best just to sign it and collect your check. It's different if we are talking about your back yard.

I don't know if this has been mentioned, but if you are negotiating ask not to be charged "transportation costs". If not they'll build pipelines on your dime before they pay you.

Basically, in the end if they want the resources, they'll take them. You'd rather play ball then be left on the bench.
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