Oil/Gas/Oil & Gas Lease
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Question
An oil & gas company in Harrison County, Texas has approached my family to lease our mineral interest for the purpose of drilling a well on our 44 acres of land. My undivided interest is only 1/1000 or 0.044 net mineral acres of the 44 acre tract. The oil company is offering a 3-year paid-up lease with a 3/16th royalty clause and a $250 signing bonus. The oil company says that the bonus is equivalent of $5,682.82 per net mineral acre.
I had no idea that I had inherited land; all of this came out of the blue. After speaking with others and looking on-line for more information, I'm finding that oil companies pay much much MUCH more than what we have been offered.
I've told the oilman that I will not sign the lease because I not comfortable signing a document I'm not sure represents my best interest. I was also told that the company did not need my nominal interest to proceed with this project since many of the other heirs have already signed leases.
My questions are:
1. Can the oil company proceed with this project without me agreeing and signing?
2. Does this offer sound extremely low? I'm told that this signing bonus and royalty payment is very low.
3. What do you think about this offer.
I have the letters that have been sent and I can forward them under separate cover if you need more information.
I have no knowledge of the oil/gas drilling business so ANY and all information you can provide me will be greatly appreciated.
Thank you.
1. Can the oil company proceed with this project without me agreeing and signing?
ANSWER: Yes, as long as they have the majority leased, they can proceed without you agreeing and signing.
2. Does this offer sound extremely low? I'm told that this signing bonus and royalty payment is very low.
ANSWER: The signing bonus you are being offered is equivalent to $5,682.82 per acre. Since you only own 1/1000 or 0.044 net mineral acres, this is how your amount is calculated:
$5,682.82 x .044 = $250.00.
If you owned 100% of the 44 acres, you would receive $5,682.82.
I do believe that you could get a higher royalty than 3/16ths.
3. What do you think about this offer.
ANSWER: I don't think it's a bad offer to start with - but I would certainly counter and try to get a little bit more.
If you would like for me to do this for you, I would be happy to do so, free of charge.
Please call my office at 318-219-2464 and speak with Holly Lawrence and she will advise you what information we need to do this for you.
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Answers by Expert:
Laura M. FitzGerald, CPL
Expertise
PLEASE READ CAREFULLY BEFORE SUBMITTING A QUESTION. I can answer all questions related to oil and gas ownership, mineral interests and working interests concerning the leasing and selling of your minerals, any questions concerning pipeline ROW's, units with the Louisiana Department of Conservation; pooling provisions, depth limitations, vertical or horizontal pugh clauses; and oil and gas terminology. I can offer assistance in negotiating for leasing your property, assisting in locating owners of suspended funds. I am only able to answer questions regarding oil and gas leases, minerals, royalties, or offers to purchase mineral/royalty interests if I have complete information. Please provide a full legal description for your interest(s). If the question pertains to a lease, please include all terms of any current (or desired) lease offers, including lease bonus amount, royalty and lease term. If the question is regarding a mineral or royalty interest offer to purchase, please provide the offer amount, date of offer, other offer terms, and further details on the mineral/royalty interest, such as lease terms, and if producing, the average monthly income. Since I receive numerous inquiries daily, I am only able to answer your questions efficiently and effectively if I have complete information. I must decline any questions submitted with incomplete information. If your question is non-technical in nature and you simply need assistance understanding an oil and gas matter, please submit your question with as much information and detail as possible. Any background information that has led to your question is also very helpful.
Experience
I have over 26 years experience as an Independent Petroleum Landman. I became a Landman after working as a paralegal for Oil & Gas Attorneys for 8 years. My first 2 years were spent specializing in Well History and Research with the Louisiana Department of Conservation, then moving into clearing title defects and handling title curative for oil and gas properties for the next 6 years. Subsequent thereto, I handled title issues, buying oil and gas leases and settling surface damages. I also acquired acreage for drilling prospects in excess of 10,000 acres. I also became a mineral/royalty owner commencing in 2004 and have found that I can help many people when they have reached the point in their lives they feel converting their minerals or royalties into a cash asset benefits them.
Organizations
American Association for Professional Landmen, ArkLaTex Assoc. of Professional Landmen, and Dallas Association of Professional Landmen (DAPL), Certified by the Women's Business Enterprise National Council (WBENC)- South. This certification is one of the most widely recognized and respected certifications in the nation. This designation is reserved for only those women-led businesses that exemplify the characteristics of integrity and professionalism to which the WBENC adheres to so strictly.
Education/Credentials
Attended LSU, became a Certified Professional Landman in 1994; Notary Public with dual authority in multiple parishes in North Louisiana;
Bilingual in English and Greek
Awards and Honors
Expert Oil & Gas Professional assisting attorneys representing landowners.
Involved in 2 lawsuits and both suits were awarded to the landowner.
Past/Present Clients
Consultant Landman for Texas Oil & Gas (TXO Production Corp.), Anadarko Petroleum, Comstock Resources,Independent Geologists, Pipeline ROW Clients, and Oil & Gas Attorneys. For the past 2 years my practice is limited to advocacy for the landowner. I also assist royalty owners recover suspended payments or incorrect royalty payments.
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