Mineral Leases

Barnett Shale Information For Homeowners Near West Glade Road and Precinct Line Road:  Below you will find some prior updates and announcments to show you how we got here. You will find lots of information about how this process works in the FAQ's section and where you can go to get even more information.

Informational Articles

Please do some reasearch of your own, start with some top Articles here.

Recent News

Please see the News page for the most recent updates.

April 2008 Proceedings

Mineral Rights Lease Negotiations, 4/29/2008

The Facts:

• The Morrow Stevens drill site located just west of Precinct Line Rd. on Kirk Ln. is the only drill site in this area close enough to reach us.
• All drill sites in this immediate area are leased to the same company.
• We have a current offer of $10,000/acre signing bonus and 23% royalties which we have decided, as a group, to decline.
• There is good potential for more gas companies to move into this area and for more drill sites to become available
• Lonesome Dove is organizing as a part of our alliance and we are trying to contact Clairmont and Remington Park
• The current fair market price for a mineral lease is $15K-$18K/acre and no less than 25% royalties.
• We will be scheduling an Alliance meeting within the next 3-4 weeks
• We still need volunteers to help with phone and email work, as well as lease details, when we get to that point
  

We have attracted a natural gas company to our area!  Fidelus Land Company, representing several oil & gas companies, has begun proceedings on a project with our Glade Road Neighborhood Alliance.  Please review the following summary of a meeting held Nov. 4, 2007:  (Although Fidelus did a lot of work on our behalf, we are unable to negotiate with them at this time because they cannot locate a drill site close to us.)

November 2007 Proceedings

Mineral Rights & Urban Drilling Meeting, Nov. 4, 2007

Below please find notes from the meeting held yesterday between members of the Glade Road Neighborhood Alliance and Fidelus Land.   Currently, Fidelus is running title search on several tracts (homes) in each abstract (neighborhood) to confirm mineral ownership.  So far, no prior reservations have been found and it’s likely that each property owner also owns their mineral rights:

Next steps:

Fidelus…complete statistic confirmation of mineral ownership

                    Search for contiguous drill site(s)

                    Create and propose initial offer lease terms

                    Time frame = 3-4 weeks from today, Nov. 5, 2007

                    Glade Road Neighborhood Alliance…confirm each neighborhood’s participation

                    Form Urban Gas Drilling committee with representatives from each neighborhood

                    Prospect potential drill site(s)

                    Discover current infrastructure running along railroad tracks

                    Prepare for initial offer Fidelus Land Co. so negotiations can begin

Urban Drilling Agenda Summary

1. The Barnett Shale
   1. 17+ Counties with Tarrant being in the “Core”
   2. 3,200,000 acres
   3. 28 trillion cubic feet of gas in reserve
   4. 45 billion cubic feet of gas produced daily now

Because of strong gas prices “Urban Drilling” is now economical

2. Urban Business Model
   1. Service company Fidelus Land (www.fidelusland.com)
   2. Title research completed ASAP to confirm mineral ownership.
   3. Leasing using non-drilling leases begins when we are statistically confident that all minerals are still owned by current surface owners
   4. Draft process – payments made when all title research is complete
   5. Concurrent drill site search has begun

Drafts paid and drilling begins ASAP

3. Drilling
   1. Out of sight, out of mind (as much as possible)
   2. Contiguous acreage needed for drill site

Well will take several weeks to drill, once well produces royalty checks to follow in 60 days or less

4. Royalty Payment
   1. Gas $ (over 8$) X Production (in MCF) = Gross Profit
   2. Gross Profit – Expenses (gathering, conditioning, transportation, etc.) = Net Profit
   3. Royalty Payment = Net Profit ($) X Royalty (%) X Your portion of the acreage
   4. Of course small acreage leases yield smaller royalty payments, but bonuses are higher

Tract affected must be drilled “under” or within 300’ radius of drill/terminus

FAQ's

Below you will find information that is as accurate as we can determine at this time.  If you see an inaccuracy that you can confirm, you can send an email Contact Us.

Barnett Shale

General Information for Homeowners

Published October 3, 2007

1.    How does the Barnett Shale drilling project affect me?

The Barnett Shale is an underground reserve of natural gas trapped inside rock-hard shale.  Its boundaries are still undetermined, but its “sweet spots” are located mostly beneath Johnson and Tarrant Counties.  Oil & Gas companies are currently exploring Northeast Tarrant County and signing leases with homeowners under whose property they need to drill and possibly mine the natural gas.

2.    How do I know if I own the mineral rights under my property?

You will not know definitively until the “landman” contacts you regarding a possible lease.  If no one in the history of the property’s ownership has reserved the rights, then you own them.  The “landman” is someone outsourced by the Oil & Gas companies to research property and obtain mineral rights leases with property owners.  The only way to discover whether you own the mineral rights or not is to pull all the titles on your property dating back to 1915 (when record-keeping started) and see if anyone has reserved the rights.  Most homeowners will opt to wait for the landman to do that work for them.

Some general rules of thumb (not legal advice!):

• If you have owned your property more than 5 to 7 years, you probably own the mineral rights.
• If other property owners in your neighborhood own their mineral rights, you probably do, too.

*If you have the Title Commitment or Title Policy from when you bought the property, look at Schedule B. If it says you don't, then you don't (if mineral rights are listed on Schedule B that means you don't own them, since Schedule B is a list of "exceptions" to your full ownership and control). Otherwise, maybe you do (probably), but maybe not. For normal title work they check back 50 years. For mineral rights, the process is slightly different and they have to check back to the original property ownership (usually to about 1915). So you have to hire a land man or an oil and gas attorney if you want to know NOW. But no need to do that, just wait. The oil and gas companies may contact the property owner without checking the mineral rights, but they will not sign a lease with you until they have done the title search. [NOT TRUE, SEE BELOW].  So if they sign a lease, you can be quite sure you own them. If they find you don't they will not sign a lease, and they will probably be courteous enough to let you know.  Conventional wisdom says in this area of the USA most people do NOT own their mineral rights, but I am hearing from oil and gas people that they are finding that in most of the NE Tarrant area they have been finding that almost everyone owns either all or 50% of their mineral rights.  Our combined group of several HOAs may try to hire someone to check the title for one lot in the center of each subdivision, since the odds are good that all the lots in a given subdivision either had or did not have their mineral rights at the time the subdivision was created.  That way the HOA knows whether to continue participating, and if someone else owns the mineral rights then the other HOAs will know who to contact to join the negotiating group.

**Landmen do a few random title searches in the area, then make an assumption that most people own their mineral rights or they don't.  They will then sign leases with property owners if they are assuming they own their mineral rights, and they give you a 90-day draft of some sort.  They then have 90 days to do the title search and find out if you really own the mineral rights.  Odds are that you do if they signed a lease with you, but it is possible you will get nothing if they discover you do not own your mineral rights within 90 days.

3.    What’s involved in urban drilling?

    a)    The Oil & Gas company requests a drilling permit from the city, with approval taking anywhere from 6 months to a year, requiring a public hearing, adherence to all city ordinances, and city council approval.

    b)    The drilling site is prepared and the rig is erected.  The initial drilling takes 3-4 weeks and is vertical only.  The area underground (about 1.5 miles deep) is tested to see if it’s a viable area.  (Over 90% success rate in the Barnett Shale)  Then the permanent well is put into place and a small topper called a “Christmas tree” is place at this site.  The rig is taken down.  I think the horizontal drilling is done after the viability test but before the rig is taken down and the Christmas tree is installed.  Can you check on this?

    c)    Due to new innovations, lateral drilling is now possible and this is how the Oil & Gas companies can drill under your property using a well located up to 9,000 feet away.  The lateral drilling line will be located about 1.5 miles underground.

    d)    The shale around the actual drilling line (about a 300-foot radius) is then fractured by pushing water and sand down the pipe at high pressure.  The water is then pumped back out, but the sand remains to keep the fractures open.  This releases the gas and hydrocarbons to flow up the pipe and into a reservoir tank, which are usually built at or near the well site.
    e)    The producing well will be in production for 20 to 30 years.

    f)    A pipeline must be built to export the gas.  The most desirable areas for pipelines are along railroad tracks, high-tension wires, or tributaries and rivers.

4.    What negative impact does urban drilling incur?

    a)    During drilling (about 3-4 weeks), as well as right before and right after, lots of activity takes place requiring trucks, workers, lights, and noise.

    b)    The actual rig is unsightly while it is erected (3-4 weeks).

    c)    The drilling requires a lot of water.  Currently, all oil & gas companies combined are using about 1% of the water supply in our area.  Potential conflict in times of drought.

    d)    While most oil & gas companies have strict safety and security standards, the potential for accidents is always present.  Possible safety hazards include accidents during construction phase, possible leaking of hydrocarbons and fluids, leeching of hazardous materials into public water supply, and the threat of fire or explosions.

5.    What positive impact does urban drilling have on the area?

    a)    The most tangible positive result of urban drilling is the ability to lease the mineral rights you own under your property and receive a bonus payment as well as royalties for any gas produced and sold.

    b)    24% of US energy consumption is natural gas and further exploration and mining make us less dependent on foreign oil.

    c)    Over 100,000 jobs were created in the North Texas area [during what period -- the last 12 months?] as a direct result of Barnett Shale drilling and that trend is projected to continue for 20 – 30 years.

    d)    Municipalities, school districts, and commercial property owners can also lease the mineral right under their property, raising revenue and decreasing tax money needs.

6.    Do I have to lease my mineral rights, or can I say NO?

You are not required to lease your mineral rights.  But each drill line will mine minerals within a 300-foot radius (potentially more).  So if enough property owners in your immediate area lease their mineral rights, the well will be drilled and in all likelihood, your minerals will [may] be mined, too.  You just won’t receive a signing bonus or any royalties for them.  Even if they don't actually get your minerals, nobody else is likely to drill another mine in the immediate area, so you still end up with nothing.

 
7. What about the neighborhood lease negotiations I have read about in the paper?

When possible, residential neighborhoods should work together to negotiate a lease.  The larger the area, the larger the leverage.  A neighborhood alliance in Fort Worth was recently able to negotiate a bonus sum of $26,500 per acre to sign the lease and royalties of 25% if a producing well is established.  Many factors affect lease negotiations.  But working together is a good idea.  We recommend that you do NOT sign a lease until we have negotiated the best possible terms for you and your neighbors.

8.    Who are the key players in this area?

The Harding Company and Exxon Mobile (through a joint venture known as DDJET), Chesapeake Energy (represented by Dale Resources), XTO, and Four Sevens (recently acquired by Chesapeake) are a few of the players in N.E. Tarrant Co.  There are also several medium-to-large sized companies with plenty of capital behind them who are interested in becoming part of the action in the Barnett Shale.

9.    What are the ordinances for the City of Hurst?

The most important ordinances for the City of Hurst are the 600-foot set-back from parks and residences for any drilling site and the noise ordinance specifying a maximum of 85 decibels at a distance of 300 feet.  You can learn more at www.ci.hurst.tx.us or contact Jeff Jones, Asst. City Manager.

10.   Where else can I go for more information?

You can visit any of these sites for more information:

a)    www.forthworthgov.org

b)    www.barnettshalenews.com

c)    www.barnettshaleexpo.com

d)    www.neighborhoodnews.tcu.edu

e)    www.worlenergysource.com

f )    www.energybulletin.net

g)    www.askchesapeake.com

You can also watch a Gas Drilling video, produced by the City of Fort Worth, on cable channel 27 or attend a Public Educational meeting hosted by the City of Fort Worth on the last Thursday evening of each month.  Check the City of Fort Worth’s website for details.

11.  If I sign a lease and get my signing bonus, am I sure to get royalty checks for the next 20-40 years?

NOT AT ALL.  Ignoring the possibility of a dry well or one not worth converting to production (since there is over a 90% success rate locally), most people in the lease area WILL NOT end up as part of the "unit" even if the well produces and thus they will never get another payment after thier signing bonus.  See next two questions to understand why.

12.  How is the well laid out?

A.  Picture a wagon wheel with 6 to 9 spokes.  They drill down about 1.5 miles at the center, then they go out horizontally underground for about 6,000 feet (a mile is 5,280 feet) for each spoke.  Thus the circle that makes up the wagon wheel is over 2 miles across.  The spokes can meander, they don't have to be straight.  If your property is directly over a spoke, or if it is within 330 feet of the line directly above the spoke, you are in the "unit" and will get royalties for any gas produced.  Although now, many coalitions are signing communitized leases and everyone in the coalition who signs shares in the royalty payments.   NOTE:  XTO and most of the big players in our area other than Petrocasa/DDJET seem to be using a different method of determining the unit, which includes everyone in the leased area in royalties.  In most leases if you get a signing bonus you will also get a share of any royalties.

13.  What if I don't sign?

A.  As long as they get a certain percentage of the land within the "wagon wheel" circle leased (I keep hearing 50%) then they can drill the well.  They can either meander the spokes to avoid being under or within 330 feet of a non-leased property, or they can go within 330 feet (but not under) an unleased property and simply not "frac" a short length of the spoke in the area of that unleased property to attempt to not frac under your property.  Either way, you get no royalties, no signing bonus, and because they've taken the gas out around you it is unlikely another company will be drilling a well in that location in the near future, so you get nothing.  You can abstain on principle if you are totally opposed to urban drilling or something else such as the drill site, but they are almost certain to get over 50% of the land leased and continue without you.  Working together as a group gives us better negotiating leverage, since it is easier for them to skip a few property owners here and there than to have to skip multiple neighborhoods, but we can only try to get a good deal for everyone, we can't be unreasonable or we would make it unprofitable for them to even do the well