Oil Guys

[zerocool]

Pretty much its a 2 year lease on my minerals. My cut will be 5/32, they were saying that's high and usually only 1/8. I have a well about 200 yards from me in two different directions. He said that there have been a dozen wells installed and that production should start mid January. He did say that there will be horizontal drilling and I'm assuming that's why they want the rights to my minerals.



Yea thats what I did, although I think that I would have felt comfortable signing last night. I don't think I have much too loose.



I hope this is the case, I'll take a $1,000 a month!! Honestly I don't know how much to expect. A couple hundred a month is still better than nothing.

5/32 is pretty damned good. My company usually pays 1/8. How were damages?

 

[01GTB]

If you don't sign, a guy with a bowling pin will show up at your door and drink your milkshake.

 

[SID297]

5/32 is a good offer. Would you have surface equipment on your land? Don't be afraid to ask for a signing bonus.

 

[COBRA97SVT]

5/32 is pretty damned good. My company usually pays 1/8. How were damages?

They haven't started yet, but I did ask the question. He said the company is bonded through Michigan.

5/32 is a good offer. Would you have surface equipment on your land? Don't be afraid to ask for a signing bonus.

Nothing will be on my property. LOL my signing bonus is $10....

 

[Torch10th]

Pretty much its a 2 year lease on my minerals. My cut will be 5/32, they were saying that's high and usually only 1/8. I have a well about 200 yards from me in two different directions. He said that there have been a dozen wells installed and that production should start mid January. He did say that there will be horizontal drilling and I'm assuming that's why they want the rights to my minerals.



Yea thats what I did, although I think that I would have felt comfortable signing last night. I don't think I have much too loose.



I hope this is the case, I'll take a $1,000 a month!! Honestly I don't know how much to expect. A couple hundred a month is still better than nothing.

If they are offering 5/32 that's a fairly good deal. I don't own mineral rights myself, but my grandparents have quite a few and they only receive about an 1/8. My only concern is the two year lease. New wells will produce product for quite a bit longer than just two years. It looks like they may be trying to bribe you with a higher initial stake then you lose the rights. If that was the case I'd argue for a lower stake with rights for as long as the well/s produce.

 

[CompOrange04GT]

New wells will produce product for quite a bit longer than just two years. .

Correct

 

[SID297]

If they are offering 5/32 that's a fairly good deal. I don't own mineral rights myself, but my grandparents have quite a few and they only receive about an 1/8. My only concern is the two year lease. New wells will produce product for quite a bit longer than just two years. It looks like they may be trying to bribe you with a higher initial stake then you lose the rights. If that was the case I'd argue for a lower stake with rights for as long as the well/s produce.

That's not how those leases work. The two year period is for the company to start production. If they do not start production in that period the lease ends and the property owner is free to contract with another company. The OP would get his 5/32 cut for the life of the well, not just two years.

 

[low03tb]

Correct. That's just for them to start. Once it's producing, if it does, then your acreage is HBP (Held-By-Production; laws vary here with the amount needed to be held, etc). It wouldn't surprise me if they worked in an option too (2-yr w/ 2-yr option, etc)

You also didn't get a signing bonus b/c you got a higher royalty. Unless your land is very sought after, you're not likely to get both at decent/good rates.

The amount you get back is going to depend on soooo many factors it's hard to say. Unless the area is well tied down and has good well control with whatever this company is going after..there's no telling what the decline curve looks like.


How much did they offer you per acre? Have you asked your neighboring land owners what they received? If anything, how much? I'm giving you solid advice here....advice that can hurt what we do and benefit you haha. What's the company? They say what they're going after? Not likely, but figured I'd ask

 

[WireEater]

Careful. They're coming to drink your milkshake.

 

[zerocool]

That's not how those leases work. The two year period is for the company to start production. If they do not start production in that period the lease ends and the property owner is free to contract with another company. The OP would get his 5/32 cut for the life of the well, not just two years.

Bingo. You never lose your share of the underground minerals if you own them, but if they don't drill in 2 years OP can start shopping his ground again or possibly get delay payments depending on the wording of said lease.