Show me the MONEY !!!!!!!!!!

Real Estate Agent with Keller Williams

Well, the leasing goes on. 

While people who already have leases and active wells are having trouble getting their checks (see past postings), the feeding frenzy for acquiring leases is getting stronger and stronger. 

I have been giving free talks to homeowner associations about the Barnett Shale.  Obviously, I am trying to get my name out there as a knowledgeable realtor, but I am also trying to educate the public about the O & G industry and how things work.  And it has obviously been working.

When the leasing began most people with a normal house lot were getting about $250-$350 per lot, or about $1500 to $2000 per acre and as low as a 12.5% royalty interest.  Well, a free upfront check for $250 or so isn't bad, especially if you don't even own the minerals.  You see, the leasing companies were out there trying to tie-up as much acreage as they could so they could then go a sell their acreage to the real companies that drill and produce the wells.  Only they were getting $5000 to $10000 per acre and a 25% royalty interest.  So they go out and spend several weeks or months gathering up the subdivision of maybe 200-500 acres and then selling their lease inventory.  Not a bad way to make a quick 2 to 5 million dollars upfront and an interest in the well.

In the O&G industry, more is definitely better.  An individual tract owner doesn't stand a chance negotiating a better deal because he just isn't that important.  Even if he diesn't sign the lease the drilling company will just pool his acreage to make a drilling unit and move forward.  His money is always his, for the most part, and just stays in suspense until he finally signs the lease.  It is just a little paperwork trouble for the company.

I would advise any group of landowners or homeowners to ban together to give them bargaining power when they coma a leasing.  If you are alone and don't have a group, take the money and be happy.  You may not even own the minerals so the bonus money is just a gift.  And everyone knows you don't look a GIFT HORSE in the mouth.

See ya next time.!!!!!!!!!

Comments (0)