Update: Sorry, these stories have been taken down from the Star-Telegram site.
Gas deals’ fine print can be costly
- Some area residents who have already signed gas leases are finding out that their mortgage companies want a cut too. Some mortgage companies are charging fees that could amount to several years’ worth of royalties.
Property owners in Crestwood should look into their mortgage company’s requirements regarding subordination agreements before signing a lease, and also read the fine print about how your mortgage deals with rents, royalties and other income. The Lease Committee will recommend language in our lease form that holds the gas companies responsible for the subordination requirements.
Woodhaven neighborhood pools its gas-lease assets
- In Woodhaven, 962 people signed a community lease, meaning that they will split all the royalties from every well on every unit in the lease, based on their lot size. Typical leases pool a homeowner’s property with other properties to form a unit, and royalties are based on the wells in the individual units. The Lease Committee is currently seeking legal counsel on whether a community lease best suits Crestwood residents.
August 29, 2007 | Gas drilling | Comment on this
As things stand at the moment, here are our options:
- Sign the standard lease form offered by one of the leasing companies (Lessee). You will
receive the base offer of $3,000 per acre and 25% royalty. However, you are granting the Lessee the power to pool up to 704 acres into a gas unit, which greatly dilutes your revenue. There are other terms and provisions besides pooling on their form that need to be added/amended, including post-production costs, title warranty, recourse against Lessor, Mother Hubbard clause, depth limitation, shut-in limitation, Lessor indemnity, implied covenants of Lessee, etc.
- Hire an oil and gas attorney to represent you in negotiating a lease. You will more than
likely receive better terms than those previously offered, but your up front attorney fees could be substantial.
- Join a group of Crestwood mineral owners to work with an oil and gas attorney in an
arrangement like the one currently being negotiated by the Crestwood Mineral Leasing
Committee. This arrangement costs you nothing “out of pocket.” By bargaining as a collective
body, we will likely get superior terms, provisions and conditions (i.e., pooling limited to 80 acre
proration units within Crestwood Addition) than those previously offered by Lessees. The
attorney’s fee will be paid from a sharing arrangement of 25% to the attorney and 75% to the
mineral owner of all additional bonus money above the $3,000 per acre and all additional royalty
above the 25% presently being offered.
- Participate your mineral interest in the well as a working interest owner and be subject to all
costs, risks, liabilities, and benefits associated therewith. This would be negotiated between you and the Lessee, who will try to avoid this type of arrangement if at all possible. If not agreed to by the Lessee, this option could leave you out of the gas unit altogether.
- Do nothing, sign nothing, and get nothing.
Questions? Call Tom Roberts at 817-625-4475.
August 14, 2007 | Gas drilling | Comment on this