Oil and Gas Leases -Good or Bad?

[back40]

Help! We own property (less than 100 acres) in south central Texas. We have lived here for less than a year so are not familiar with mineral rights issues. The energy people are all over our area trying to sign up oil and gas leases. We own 50% of the royalty rights to our minerals. The neighbors on all four sides have signed leases for 3 years with an option for 2 additional years. I just received the contract and although the signing bonus check sounds good we am wondering if we could be signing ourselves up for misery for the rest of our lives. This is our home and not a huge acreage. Any advice or experiences that might help us decide whether to do this or drop the idea like a hot potato?
Thanks!

 

[Frankie]

Help! We own property (less than 100 acres) in south central Texas. We have lived here for less than a year so are not familiar with mineral rights issues. The energy people are all over our area trying to sign up oil and gas leases. We own 50% of the royalty rights to our minerals. The neighbors on all four sides have signed leases for 3 years with an option for 2 additional years. I just received the contract and although the signing bonus check sounds good we am wondering if we could be signing ourselves up for misery for the rest of our lives. This is our home and not a huge acreage. Any advice or experiences that might help us decide whether to do this or drop the idea like a hot potato?
Thanks!

Find an attorney to look at the paperwork and explain it to you. IMO, this is not something you want to decide based on an internet discussion board.

 

[Lammie]

You might as well take the money because you are going to have the misery whether or not you do. See an attorney and work out a good deal. The extra cash is a good thing, but there will be increased noise, potholes, dust, and dust and noise and dust and noise. I have it all around me, and they are digging pipeline down the road that will shut us down for a bit. I have gotten used to the tanker trucks barreling down the road but the dust and the noise all night long are harder.

Take the money and just wait for the inevitable.

 

[TexasBred]

Help! We own property (less than 100 acres) in south central Texas. We have lived here for less than a year so are not familiar with mineral rights issues. The energy people are all over our area trying to sign up oil and gas leases. We own 50% of the royalty rights to our minerals. The neighbors on all four sides have signed leases for 3 years with an option for 2 additional years. I just received the contract and although the signing bonus check sounds good we am wondering if we could be signing ourselves up for misery for the rest of our lives. This is our home and not a huge acreage. Any advice or experiences that might help us decide whether to do this or drop the idea like a hot potato?
Thanks!

Since all the land surrounding you is leased you are limited in what you can do. BUT, I'd hire a good oil and gas attorney to negotiate ANY lease with the O&G company. Leases dont' always say what you think they say even in black and white and you can never assume anything. Bonus money and royalties even on half the minerals could be sizeable over the years especially if you are located in a proven area.

 

[Oldtimer]

Help! We own property (less than 100 acres) in south central Texas. We have lived here for less than a year so are not familiar with mineral rights issues. The energy people are all over our area trying to sign up oil and gas leases. We own 50% of the royalty rights to our minerals. The neighbors on all four sides have signed leases for 3 years with an option for 2 additional years. I just received the contract and although the signing bonus check sounds good we am wondering if we could be signing ourselves up for misery for the rest of our lives. This is our home and not a huge acreage. Any advice or experiences that might help us decide whether to do this or drop the idea like a hot potato?
Thanks!

Since all the land surrounding you is leased you are limited in what you can do. BUT, I'd hire a good oil and gas attorney to negotiate ANY lease with the O&G company. Leases dont' always say what you think they say even in black and white and you can never assume anything. Bonus money and royalties even on half the minerals could be sizeable over the years especially if you are located in a proven area.

Yep- I've got land that the oil companies have had leases on since the 1950's- and all its been for me has been a positive thing- they pay me so much for a certain term lease... And as more oil closer keeps being found- the amount they are willing to pay keeps going up
Now if they'd just drill and the royalties would roll in- that would even be greater.. :banana:

 

[backhoeboogie]

Get an attorney you can trust. Make sure it is one who knows the petro business.

The landmen can be like used car salesmen, stroke your ego, do everything under the sun to pressure you. Take your time. Believe me, you'll do good to get the well in within the 3 year limit as is. The time pressure is simply aimed at getting you to sign.

Things will be negotiated. Get all you can. They want you to take the least possible. You probably know more than your neighbors did who already signed.

Most of us who have been down the road simply know enough to know we don't know enough.

I have told more than one landman to pound sand. If one tries to play me as a fool, we're done - forever.

As far as the land goes, print satellite pics of it now. Some companies are great. Some aren't. I've been called a liar when it came to pre-existing fencing. A satellite photo shows who's telling the truth. Some companies leave it in better condition that it was.

 

[back40]

All good advice! I spoke with an attorney and he is going to review the contract. I too believe it is inevitable. We already have the trucks going by heading for sites 15 and 30 miles away. They discovered our little short cut road so we are well traveled. We have a very small cabin and may just put off building a house until we see what happens. For now I guess I will just go have a brew and watch the cattle and horses graze while I can.

 

[Texas PaPaw]

Get an attorney you can trust. Make sure it is one who knows the petro business.

The landmen can be like used car salesmen, stroke your ego, do everything under the sun to pressure you. Take your time. Believe me, you'll do good to get the well in within the 3 year limit as is. The time pressure is simply aimed at getting you to sign.

Things will be negotiated. Get all you can. They want you to take the least possible. You probably know more than your neighbors did who already signed.

Most of us who have been down the road simply know enough to know we don't know enough.

I have told more than one landman to pound sand. If one tries to play me as a fool, we're done - forever.

As far as the land goes, print satellite pics of it now. Some companies are great. Some aren't. I've been called a liar when it came to pre-existing fencing. A satellite photo shows who's telling the truth. Some companies leave it in better condition that it was.

As usual good advice from bhb. For a small acreage you may want to get a "no surface operations" clause in your lease. Basically this allows them to drill under your land horizontally without coming onto your surface. You need to work closely with the other mineral owners under your land as they can lease their part of the minerals without you leasing yours and their minerals have superior rights to the surface in Texas. You definitely need to hire an experienced oil & gas attorney. Just my 2 cents worth.

 

[newrancher]

All good advice, and remember YOU can specify what you want as well. My grandfather did this and when they wanted to cap the well because it wasnt cost efficient for them, he and his heirs still had all the natural gas they could use,and I would definitely have a clause like that in there somewhere.

 

[Running Arrow Bill]

Contact a good attorney experienced in mineral leases. It was to "our" advantage to do so and it has been very profitable for us.

That aside...think of O & G leases (and mineral rights from drilling) as FREE CASH (less income taxes). Forget the damage to your "home view"...think $$$$

Reminds me of an item a number of years ago when I lived in SW Kansas. A newbie was complaining to a cattleman who supplied feeders to one of the several area feedlots there..."How can you stand the SMELL??" The cattleman replied..."All I can smell is MONEY!"

I rest my case...