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Old 12-03-2009, 01:29 PM   #1
McPatrickClan
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Default Going Rates for Natural Gas Lease/Rights

I missed out on the previous bonanza of leasing the mineral rights under my home (I live on the Barnett Shale). It appears that the company doing the drilling has enough leases signed to start drilling in 2010, so they are offering me a reduced amount to sign now.

I was always taught never to sell something you do not know the value of, so can any of you guys tell me the going rate for natural gas leases right now?

Thanks!
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Old 12-03-2009, 01:37 PM   #2
Peyton
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Ask your neighbors...... I've heard of some high numbers in the past, but those days of the Barnett may be over now. Get what you can get, take the money, and remember you're not selling your mineral rights, you're leasing them.

Eagle Ford shale is where it's at now
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Old 12-03-2009, 01:42 PM   #3
quarterback
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Probably doesn't have Eagle Ford shale in Arlington (it outcrops in Grand Prairie and western Dallas). I agree with Peyton, take what you can get but don't sign a long term lease (maybe 3 years max.). Just remember that natural gas is selling for a whole lot less now than it was a few years ago, so offers (if any) will be a lot lower.
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Old 12-03-2009, 02:01 PM   #4
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Quote:
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Probably doesn't have Eagle Ford shale in Arlington (it outcrops in Grand Prairie and western Dallas). I agree with Peyton, take what you can get but don't sign a long term lease (maybe 3 years max.). Just remember that natural gas is selling for a whole lot less now than it was a few years ago, so offers (if any) will be a lot lower.
Especially since drilling costs are still very high in that area. PUTI is one of the highest (I know I work for em).

I'd even say take a 18 month lease if they'd be willing to pay you the same bonus (paid up) for a 3 year lease... it's worth a shot, they may say no though. 3 years is definitely the max I would take as well.
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Old 12-03-2009, 02:35 PM   #5
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Question for you oil/gas fellows:

Let's say that tomorrow McPatrickClan signs a 3-year lease for $500/acre bonus & 25% royalty. Let's also say that he gets pooled and they drill & discover gas on the pooled property. Is he locked in to those figures as long as the well(s) on said property are producing, or just for the lease period and then the contract is renegotiated? My point being, can you be "locked in" indefinitely at an old lease price, no matter what the current market is?
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Old 12-03-2009, 03:13 PM   #6
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I signed my lot in Euless for a 2 year lease with an option. They have about 9 months left before option time.
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Old 12-03-2009, 06:27 PM   #7
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You need to hire an oil and gas lawyer and get him to add a favored nations clause if he does not already have one, a favored nations clause makes the oil ompany pay you at least what they paid the neighbors. Go to the county clerks office and check the neighbors gas leases and see what they were paid. But get a lawyer and a good one and get what you deserve, the time to act is now, a good oil and gas lease only comes to those who have a skilled and knowledgeable lawyer, dont leave money on the table!!!!
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Old 12-03-2009, 06:33 PM   #8
McPatrickClan
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Rat- wouldn't they just say "forget it?" Some neighboors were paid $3,000+ and I am getting a fraction of that because the demand for natural gas has dropped significantly. I am thinking I have very little leverage here, since they already have those "measuring" boxes out in front of plenty of houses.
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Old 12-03-2009, 06:45 PM   #9
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Quote:
Originally Posted by cj7zrcool View Post
Question for you oil/gas fellows:

Let's say that tomorrow McPatrickClan signs a 3-year lease for $500/acre bonus & 25% royalty. Let's also say that he gets pooled and they drill & discover gas on the pooled property. Is he locked in to those figures as long as the well(s) on said property are producing, or just for the lease period and then the contract is renegotiated? My point being, can you be "locked in" indefinitely at an old lease price, no matter what the current market is?
Yes he will be locked in.
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Old 12-03-2009, 07:05 PM   #10
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You need to find out what the going rate is, ask the neighbors what lawyer they used and then call him and ask him how much are the neighbors getting and how much are the oil companys paying for new leases like yours, a good oil and gas lawyer will know and will save you money, also the oil and gas producer has a fidicuary duty to sell your product at the highest going rate especially if you add language in your oil and gas lease to make them do so. Sometimes a gas operator will create a buyer and hide his interest in the buyer with a cloaking device, them he sells gas to himself and reports to you that he got the going rate in the area, but then you discover he is selling gas to himself to cheat you and then reselling it at a higer pricer after the fake paper movement, get a lawyer asap!!!!
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Old 12-03-2009, 07:33 PM   #11
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make sure you only lease them the rights to this play only, and not anything deeper. My uncle has a ranch in palo pinto county that he lease the oil rights in the 80's. The same company that did the oil has all of the rights to the gass play for free. BTW $8,000 an acr. in Fort Worth.
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Old 12-03-2009, 07:33 PM   #12
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Probably doesn't have Eagle Ford shale in Arlington (it outcrops in Grand Prairie and western Dallas).
Yeah, but where there's Eagle Ford shale at 15,000 feet (in S TX) it's producing big dividends

Predictions say it will be bigger than the Barnett shale!!
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Old 01-08-2010, 02:07 PM   #13
McPatrickClan
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make sure you only lease them the rights to this play only, and not anything deeper. My uncle has a ranch in palo pinto county that he lease the oil rights in the 80's. The same company that did the oil has all of the rights to the gass play for free. BTW $8,000 an acr. in Fort Worth.
The company has pretty much agreed to 18 mos. but how deep should I limit them to?
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Old 01-08-2010, 02:17 PM   #14
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I can help you out if you'd like. Feel free to PM me.
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Old 01-08-2010, 03:09 PM   #15
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Definitely talk to one of our landmen on here. A word of caution: don't get too greedy if you don't own a lot of land. They can simply skip over you and leave you out of the unit if your terms are to onerous. While Rat makes some good points, if you make it too tough the company can and will just leave you out. Also, correct me if I'm wrong (Ouch) but understand that all terms (i.e. cash bonus) doesn't always end up being disclosed in recordable instruments. Good luck!
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Old 01-08-2010, 03:27 PM   #16
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Quote:
Originally Posted by quarterback View Post
1: A word of caution: don't get too greedy if you don't own a lot of land. They can simply skip over you and leave you out of the unit if your terms are to onerous.

2: While Rat makes some good points, if you make it too tough the company can and will just leave you out.

3: Also, correct me if I'm wrong (Ouch) but understand that all terms (i.e. cash bonus) doesn't always end up being disclosed in recordable instruments.
1. Very true. Sad, perhaps, but true. If it's a large enough tract, they probably would have already met any demands made.

2. I've never bought a lease with a Favored Nations clause. I've worked for 4 of the 5 largest producers in the state, and they won't allow one, period. Never heard of a car dealership refunding money to anybody after they sell a car at a lesser price, either.

3. You are correct. It is extremely rare for a lease form to make any reference to Bonus amounts, unless the lease has an option to extend.
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