Halo Land and "Delay Rentals" Payments

A guy from Halo Land approached me and said that they was working for Ascent.  He offered me $700 per acre, each year up to 10 years, and said that they wouldn't pay it up front. I guess they pay me every year the $700 per acre, and they can cancel any time?  He called it a delay rentals.

Is Ascent the only ones out here offering a crazy delay payment.  I wanted to see if anyone else was getting approached with the same nonsense?   This seems like a bad deal because the price could go up and I am stuck with the $700 for 10 years!!  

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Permalink Reply by scott peterson on September 6, 2016 at 5:59am

St Johns Rd  Wayne Township. Between Sycamore Rd & the old church.

Permalink Reply by lance on September 6, 2016 at 6:38am

Hi Scott, Is that in Ohio? What county?

Permalink Reply by scott peterson on September 6, 2016 at 6:40am

Yes Noble county just across the Guernsey line by me.

Permalink Reply by lance on September 6, 2016 at 7:48am

Ok, thanks Scott, not that far from me here in Wills... My original lease was for 5 years, 5k and 20% gross royalty

Permalink Reply by scott peterson on September 6, 2016 at 8:07am

sounds like you leased with Gulfport as I did thru KWG&D ?

Permalink Reply by David Cain on September 6, 2016 at 8:20am

Scott,

When is the primary term for your lease up and do you think Gulfport will renew?  I am in Millwood township and half of my acreage expired with Chesapeake at the end of June.  I am looking to get leased again but the only interest I have had is $1,000 per acre and 15% royalty.  At that offer, I am going to wait and see if there is any new interest at the start of the year when I think a lot of leases are coming due and may be available.

Thanks,

Dave

Permalink Reply by lance on September 6, 2016 at 8:37am

No I leased with Shell in 2011 then now is Ascent. My lease is due to be extended or released by 9/20 this month. 

Permalink Reply by Brett Gobssy on September 8, 2016 at 4:17am

I have an update.  The Halo guy just called me and said that he could give me $1500/acre for the first year, and then $1000/acre for each year, if I agreed to 10 years.  I told him to get back to me when he can do $2000/acre for the first year.  I'll let you guys know when this happens.  Hope my neighbors aren't signing for $700/acre!!!!

Permalink Reply by scott peterson on September 8, 2016 at 4:28am

FYI with a delay rental vs paid upfront lease, if drilling & royalties begin anytime in the lease period. (10 yrs in this case) your yearly bonus ends.

Permalink Reply by Brett Gobssy on September 8, 2016 at 5:13am

Yeah, I am aware of that.  Thanks, Scott.  I'd be happy with the $2000/acre for my first year, and they can drill the next day for all I care.  The rest of it is just icing on the cake.

Permalink Reply by scott peterson on September 8, 2016 at 5:20am

We used to think the bonus was  just icing on the cake and all the $$ was in the royalty but now we see that even with good terms in your lease they are finding ways to whittle the royalty amount down.  Just my personal opinion but I will not sign a delay rental especially a long term one.

Permalink Reply by Soundcraft on September 8, 2016 at 11:15pm

Be aware of the definition for Operation in the renewal lease.  

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