Replies to This Discussion

Permalink Reply by Nate on May 18, 2011 at 4:28pm

You could, however over time leases need to be assigned whether to make a block better for one party or another. Over all I just think this is too big of a burden on a lease. It makes it a pain to deal with in the long term if the lessor always gets a percentage of whatever the well is sold for. Remember pigs get fat and hogs get slaughtered. haha

Permalink Reply by mbc on May 18, 2011 at 4:45pm

Hahahaha...I see.  Thus, the point of the royalty coming into play. 

Permalink Reply by Nate on May 18, 2011 at 4:50pm

Generous royalties being offered I think people are going to get plenty fat of what comes out of the ground. And everyone is making money then!

Permalink Reply by Rich Koehler on May 18, 2011 at 9:56pm

You can try to put anything you want in a lease.  The so called "standard" lease is a document that is extremely favorable to the lessee and typically unfavorable to the lessor (you).  NEVER, EVER, lose sight of the fact that you have what they want.  Your life was fine before they came knocking on your door and it won't go downhill in a handbasket if you tell them to take a hike.  What you have is valuable to them.  YOU are in control.  YOU need to tell them what they need to do for you and your land if they want the right to suck oil from beneath it.  They will tell you all kinds of stuff to make you feel like you're going to be a huge loser if you don't do what they want.  They are skilled and persuasive salesmen, smiling brightly while trying to get you to sign a paper you don't fully understand all the implications of. 

Just figure the typical lease waver is a used car salesman wearing a white patent leather belt, white shoes, a silk shirt open at the neck with a gold chain artfully draped over just the right amount of chest hair showing above a tanning bed tan, and smelling of some cheap cologne or Binaca breath spray.  Then you know who you're talking to and how to act. 

If you're a landman or similar reading this, don't be offended by my comments, please.  There are just too many of your colleagues out there using basically terrible tactics to take advantage of people.  There is no reason one guy should be offered $500 an acre and his neighbor offered $1500 an acre by the same landman on the same afternoon.  (The $500 an acre guy found out about the neighboring offer during a conversation at the mailbox - these are literally next door neighbors) The landman had made a quick judgement call on what he thought the people would go for based on his impression of their home, cars, etc.  Even at $1500 and acre, he was lowballing the offer compared to what the ground eventually was leased for.   It's a shell game you guys are playing, pure and simple.  Do not be offended when those of whom you want to get the minerals from tell one another to be suspicious.  Raise the standards of conduct among your peers and you might get more respect.

Permalink Reply by Utica Shale on May 18, 2011 at 11:28pm

mbc,

 IF you can get a Driller to sign that lease with that verbiage then do it. Do whatever you need to do to sleep good at night. Ask for everything under the sun and then some.  Be prepared to have some "throw away" issues to help during negotiations. If after five years they don't drill, lease it again to a different Driller for another Signing Bonus! Sounds good to me.

Permalink Reply by mbc on May 19, 2011 at 12:36am

Thanks for your thoughts and information gentlemen.  And, thanks Rich, for that of-so-descriptive illustration of the stereotypical salesman!  It reminds me of a long ago Steve Martin skit on SNL...We sale exceptional A-1 used cars - zap!  We sell A-1 cars - zap!  Okay, we sell cars. 

I'm grateful for these types of forums which makes learning from y'all a little easier...and entertaining!

Thanks again.