Comment

Comment by Philip Brutz on August 26, 2011 at 4:41pm

 typo

17% net

Comment by Philip Brutz on August 26, 2011 at 4:21pm

I was able to push Eclipse to $2800 and 17$ NET  but I still signed with KWGD

Comment by Private KeepOut on August 26, 2011 at 4:08pm

Nelson, I have the lease in front of  me and I believe that to be a typo...the lease I have says "Lessor hereby grants unto Lessee"

Comment by Private KeepOut on August 26, 2011 at 4:00pm

Ken & Jill, 

The last offer I got from Eclipse was for 2600 and 16% net royalty.....after all post production cost. The lease I have from them is a very producer friendly lease that imo lacks anything that would be beneficial to the landowner.

Comment by Nelson Roe on August 26, 2011 at 3:47pm

Phillip, you are right.  A well constructed lease should have a limit to the number of months that a well can be shut in & still hold the lease in effect.

Comment by Philip Brutz on August 26, 2011 at 3:21pm

This could delay the first term for the rest of your life.

 

(C) SHUT-IN ROYALTY: In the event that production of oil, gas, or their constituents is interrupted and not marketed for a period of more than twelve months, or should Lessee elect to shut in a producing well for a period of more than twelve (12) months, and there is no producing well on the Leasehold or lands pooled or unitized therewith, Lessee shall thereafter, as royalty for constructive production, pay to Lessor an annual shut-in royalty equal to Ten Dollars ($10.00) per net mineral acre of the Leasehold (proportionally reduced to Lessor’s percentage of ownership in the Leasehold) until such time as production is re-established or Lessee surrenders the Lease (a “Shut-In Royalty”) and this Lease shall thereafter remain in full force and effect. During such shut-in, Lessee shall have the right to rework, stimulate, or deepen any well on the Leasehold or to drill a new well on the Leasehold in an effort to re-establish production, whether from an original producing formation or from a different formation. In the event that the production from the only producing well on the Leasehold is interrupted for a period of less than twelve months or Lessor elects to shut in a producing well for a period of less than twelve months, this Lease shall remain in full force and effect without payment of delay rental, Royalty or Shut-in Royalty.

Comment by Philip Brutz on August 26, 2011 at 3:14pm

This could also delay the first term:

24. FORCE MAJEURE: When drilling, reworking, fracturing, stimulating, or other operations hereunder, or Lessee’s fulfillment of its obligations hereunder are prevented or delayed by such laws, rules, regulations or orders, or by inability to obtain or delay in obtaining for any reason any and all necessary permits (including, without limitation, an inability to obtain well permits as a result of objections of owners of coal rights), equipment, services, material, water, electricity, fuel, access or easements, or by fire, flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot, strike or labor disputes, or by inability to obtain a satisfactory market for production or failure of purchases or carriers to take or transport such production, or by any other cause not reasonably within Lessee’s control, including any periods of depressed natural gas pricing, this Lease shall not terminate because of such prevention or delay, and, at Lessee’s option, the period of such prevention or delay shall be added to the term hereof. Lessee shall not be liable for breach of any provisions or covenants of this Lease when drilling, production, or other operations are so prevented or delay.

Comment by Jon Henderson on August 26, 2011 at 2:39pm

Exactly. Ken and Jill, this does not mean you have a bad lease. If you are happy with the terms then that is great. My hope is that you and many others on this site get a producing well in the near future.

Comment by Nelson Roe on August 26, 2011 at 2:15pm

Philip,

That sounds a little bit better.  However with this wording(which seems to be more in line with the standard), it gives the drilling company the option to extend.  I don't believe that there is any company out there that is going to exercise the option to renew if they have already drilled a well & have your land held by production with that well.  Unfortunately, I would have to say that this was an instance of landmen or company reps telling people what they wanted to hear just to get them to sign on that dotted line.

Comment by Philip Brutz on August 26, 2011 at 2:06pm

Here is the lease that Eclipse sent me:

 

18. EXTENSION OF TERM: Lessor hereby grants unto Lessee, its successors and assigns, the exclusive option and right to extend this Lease beyond the Primary Term for one additional term of five (5) years by paying to Lessor at any time before the expiration of the Primary Term, or within one hundred at 120 days following the expiration of the Primary Term, a payment in an amount equal to the Advanced Delay Rental Payment.

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