How Will We Know a FAIR Oil and Gas Lease When We See It/Them?
PART 1 - Intro and definitions.
In Crawford, landowners are being told to wait for the Utica boom to come here, then good leases will flow freely, or similar "wait for better" advice. While we're waiting, let's discuss how we'll be able to tell if the much-discussed good lease is FAIR.
The USA is one of only a relatively few places where fairness to the landowner is supported as a cultural, political, and legal concept. In many less fortunate and free countries, the government owns all mineral rights, and a discussion of a fair lease is not applicable, so let's enjoy the rare privilege of discussing the details of this special freedom of ours!
To start it off, I offer the following definition of Fairness - All participants have equal access to all essential resources and information and have equal opportunity to share in the risks and benefits. All contracts and negotiations are free of fraud. For longer term deals, both parties bring a record that predicts they'll behave honorably for the life of the deal.
I also offer the one example I've found discussed in the public domain that appears to be a fair oil/gas lease - The original King Ranch lease, believe it was in 1929. It met the definition of fairness as follows:
Both parties to the lease had equal access to all required resources - Drilling required space, timber, a few specialized tools, and lots of labor - both parties had similar access to those. The risks were shared fairly - the driller had a significant risk of dry holes, but had to risk relatively little capital and labor expense. Over time, the benefits flowed to both parties, the community, and the nation, significantly enriching all, so the level of fraud must have been very low on both sides - (teapot dome came later:-)
So, all you patient fellow landowners, lawyers and reps, E&P folks, etc (yes, even adamant environmentalists), let's discuss the following questions, or any other you may add:
Is there a better definition of Fair, or any details that need to be added?
Which "normal" lease terms are most nearly Fair and which are most one-sided?
Are there any other more recent public domain leases out there that meet the above definition?
How can we re-insert more Fairness into our eagerly-awaited leases?
Why is it so rare to see lease fairness as a discussion topic?
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Replies to This Discussion
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Permalink Reply by 2z248p19vqnh9 on
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Jesse - hate to say it, but you are 'one of them'. I HAVE read some good insights that you have inferred...but WHY couldn't YOU give this fella a 'link' like this to check out?
Negotiating Oil and Gas Leases: A Book for Land Owners: Mike May P....
NOW, Jesse...which ones would YOU suggest (since YOU are 'in the game')? Bob would appreciate your incite here. Right, Bob?
***How about any of your G/O cronies, Jesse (while we're at it?)?
***Sam Orr? - I would really like to hear what HIS thoughts are, SINCERELY...because his thoughts ARE worth entertaining.
Sam - would any of these books be good to help out? - even for ORIENTING oneself to the G/O Lease wording? THAT would sincerely help. Much Thanks.
As one light lights another, nor grows less - so nobleness enkindles nobleness.
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How about THIS? Petroleum Exploration and Production Rights: Allocation Strategies ... ...VERY interesting (quick glance/read)
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The Acquisition & Divestiture of Petroleum Property: A Guide to...
Jesse - what are your thoughts on THIS for Bob? ...waiting for your reply, don't drag it out...
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VERY INTERESTING indeed, JDrag...is the 'suggested post' something that you are giving personal reference from, perchance?
Did it help YOU out?
***Let's get Back to the G/O endeavors (concentrate, m'friend - try to...). LOOK at the choices that I found - which would be best? all are 'good reads' concerning being 'knowledgable, eh?...I await your reply.
As one light lights another, nor grows less - so nobleness enkindles nobleness. *Did you guys ever get sorted out just WHO 'DUX' is? - just curious.
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SO 'HOT!' - SHELL game SUCKER-PUNCHED? - Go Marcellus & Utica S......and IF you take the time to read through this, Bob...you'll get an idea of the mental 'SHELL games' these people 'play'. That is all that needs said. Interesting, inDEED.
As one light lights another, nor grows less - so nobleness enkindles nobleness. Be hard as steel, for there is much to be gain (both monetarily as WELL as knowledge). Seek & you shall find. ENDEAVOR.
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No, don't be an idiot, Jes. I NEVER claimed to 'read' any of them....
Originally, I only said it would be good IF there WAS a 'G/O Lease' book to help individuals TRY to make heads or tails 'best sense' of the G/O 'lease lingo'....and then I looked into AMZN & thought I's pass on this (since YOU didn't 'bring anything to the table'...not even Chinese!). Touche'
Again, Jesse, don't be a DRAnG (drag...).
***SEE, Bob, THIS is 'how they operate'...it would the SiMPLEST THING for Jesse to share DIRECTlY with YOU him/herself good G/O Lease info. BOOK/REFERENCE to benefit you - or simply try to HELP you find answers to your questions. EVEN here...he 'dodges' & HE KNOWS way more than I could ever share with you...yet - NOTHING (just this 'clap-trap' - go figure). Simple 'jabs' & one liners - go figure, and all from supposedly SMART people. I wish!
WHATEVER trips your trigger, Dragnet...in the meantime, IF you CAN say one or the other of these books would be better to help Bob out - *SIMPLY SAY it. I only ASKED YOU (since YOU would 'know better'?...) which YOU would suggest ONLY because I know from reading you that you ARE smart...where's Pooh when you need him?
In the meantime, enjoy this James Burke Connections #10 - Yesterday, Tomorrow and You - YouTube sometime....enlightening.
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Rocket Science at best? Any ideas - Go Marcellus & Utica Shale: Leasing, Drilling &... Any Ideas?
Read through this one, Bob...crazy.
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So, for the benefit of anybody who's trying to make sense of the recent flurry of posts, let me try to net out a couple keepers...
A fair lease must have landowner control (sign off, agreement, whatever) of any and all assignments.
A fair lease must have layer severance.
Now, wouild anybody care to advise how I can get a lease with these terms from any of the Crawford Cartel members, even if I'm willing to wait til they finally decide they "need" us?
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Bob, it's easy - easy as pie. It's YOUR pie...I'm tellin' you - best way to GAIN for knowledge yourself is to 'be your OWN ball'.
Never forget the simplistic 'what has changed, what has stayed the same' principle AND the 'KISS' principle. IF your intent IS to endeavor to gain knowledge concerning G/O leases - then what you seek & how/when/where you FIND is in your control.
There IS information out there to enable your search in the best ways. It IS worth the trouble. There are things that you'll find that are great & SHOULD be 'sticklers' to justify the 'ends to YOUR means. Get what I am hoping to impart to you here?
You may address concerns in a more DIRECT MANNER - people can't just 'read you mind' & what your thoughts are. They need to have a straightforward question to be able to HELP you in YOUR quest - they may NOT be able to give the 'direct information', but MAY be able to direct/guide/suggest various possibilities for YOU to address yourself. THAT actually has its advantages.
First off - YOU"LL 'know what you know what you KNOW. THAT in & of itself - no one can 'take from you'. KNOWLEDGE IS POWER. Research enriches the soul. I'm not being hard here...this is YOUR (and whomever decides to JOIN IN...) 'personal quest'...and you'll be further ahead for yourself, personally - as WELL as a 'organized group'.
Are you getting me here? I'm NOT 'Hard-S'assing' you here, just sincerely trying to HELP you out. It really is the most perplexing, mind-troubling check board - I've been there - I know...it's a perpetual state IF you give any wort of darn in the world about what you've done thus far...THAT is a bugger.
I DID forward one good book idea - if you so choose to address that, again - up to you. You can get that, read through it, highlight & make notes - for yourself - for your group...ENDEAVOR.
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It would be best if you could bring KEY poignant points..hope that the thoughts given help you to 'prepare yourself' for 'impending battle'. You really will be fine (because you ENDEAVOR to do so...). March on, soldier.
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And one more hot potato to keep the intensity up...
Let's say I've developed an abiding interest in the art and science of Blackjack. I study all the details and practice on a simulator until I can consistently make money in a single deck game, then I fill my pockets with some cash, buy an air ticket, and fly to Vegas. When I get there, I find 3 casinos - one plays dollar single deck blackjack, one has $5 minimums and deals from a 5-card shoe, and one shows evidence of using their video security system to coach dealers on which players to try to distract from full concentration.
(yeah, I know it's been a long time since I've actually been to Vegas:-)
Would you play in the nearest casino to the airport, or would you refuse to do business with number 3 and walk however far you had to to join the affordable single deck game?
Similarly, are there some lessees we should refuse to do business with based on their known or statistically suspected business behaviors, and are there some we should seek out and try to bring them to our little corner of the gas patch?
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Hot potato, Hot potato, better yet 'Hot seat, Hot seat'...
...PROBABLY best toy allow their 'approach' to you (always keep an 'open mind', my friend - the art of war)...LISTEN to them...don't say much. Remember - THEY are approaching you.
In a 'WAY' - it IS possibly like being at a the casino. It IS, I presume, 'your choice' of what table to pay, how much to waste I tend not to 'gamble' in things that aren't 'sure bets'.If you can't tell - you keep your $$$ in your 'hot little hands' much better that way...just not 'my game' - but you never know...
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*MAYBE a better analogy would be in choosing a 'lifemate'. THAT would be much more logical & relative to THIS potential scenario. Kinda' up the alley of 'it's up to the man to try, the lady to deny'. - Think 'COURTSHIP'.
THAT is much better - since the G/O are a more 'tight knit group' - like you narrow it down to only so many 'potential mates'...and in THIS respect, it is even closer to the 'every date is a potential mate' - basically 'you & the one/many???' (G/O Co. 1+) are in a 'mating dance' together. THAT is a much, MUCH better 'comparison' to what YOU are thinking of.
...basically YOU are 'preparing yourself' for a courtship dance before a 'consummation'...does THAT have any lick of sense?...you 'haven't been approached yet'?, correct?...but you are 'primping * preening' so that in CASE 'prince charmin' (or a NUMBER of 'pc's') swings by - you'll be able to size him up & nail 'em down. THAT is what you are mentally trying to prepare yourself for, correct? You want to 'know a good deal' when you see one - THAT is smart...
...BUT James Burke Connections III #8 - Fire from the Sky - YouTube you DO want to keep your finger 'on the trigger', ***Be READY, just don't 'pull' too quick - if you know what I mean.
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I'd probably 1st suggest for you to...Just get that one book on leases, for one thing - then try to look over stuff up at the courthouse. Guarantee you'll read things that you'll recognize & say, "I DON'T want THAT - or- I DO want that." Don't worry, again - just like in dating, you won't have to 'chase them', THEY will be doing 'the chasing' (remember dating?) - YOU just need to be prepared FOR the invitation to the dance...
As one light lights another, nor grows less - so nobleness enkindles nobleness.
One more thing, just because you go 'out on a date' didn't mean that you IMMEDIATELY 'slipped a ring on her finger', did you? Remember that...and DON'T go getting yourself all worked up & 'hot n' bothered' over anything - NOR- getting all 'bent outta' shape'. Just like getting married - when it's right, you'll know it. Take THAT ONE to the bank. You'll do fine....keep asking questions.
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I plead ignorance as to blackjack but I have heard that the odds at the Casino are stacked against the folks that walk in the door.
And oil and gas lease negotiations start with the odds stacked against the landowner with a lease prepared by and for the producer. The landowner has to be satisfied with a few "generous" concessions offered by the Lessee - not realizing that the producer has just leased the land forever on terms giving nearly all advantages to the lessee.
A highly trained and skilled landman negotiates for the best terms s/he can get from the landowner who knows little about the subject.
The landowner's insecurity may send the landowner to one who purports to know more but needs to seed the deal close in order to get paid. -
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