Investment Groups versus Producers

Started April 13, 2017 at 11:23 am by @JHH in GoHaynesvilleShale

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04/13/17 11:23:26AM

How should mineral owners negotiate with investment groups seeking to lease minerals versus actual oil/gas producers.  Would rather negotiate with known/proven producers but we've been seeing a lot of investment groups seeking to "tie-up" leases... only to sell or assign them before the term runs out.  I know assignment clauses can offer some protection... but not a lot.  Thanks for any help.

Skip Peel - Independent Landman
04/14/17 09:08:10AM @skip-peel-independent-landman:

If the desire is for upfront money, investors are often willing to pay more per acre on the bonus.  They will offer a lower royalty because that is their potential return on investment.  Investors hope to recover some significant portion of their bonus costs upon assignment.  For example they might offer a $2000/acre bonus and expect $1500 to $2000/acre for assigning their lease rights to an operating company.  Many investors also seek to cover their front end costs by selling interests in their leases to other investors.  Most investors are acquiring rights from those with small to modest acreage ownership.  They will not accept any lease clause that inhibits their rights to assign.  They might go for an obligation to provide you notice when they do assign but the mineral owner will never have a say in any assignment.

04/14/17 10:41:47AM @jhh:

Very good information.  Thanks.

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