Oil drilling lease questions

[Swampthing]

Anybody know anything about this sort of deal? I've got a company that's been after me for 2 years to let them drill some wells. I've purposely hee-hawed around about it because I don't know that much about it and didn't want to get suckered. Now the Owner is calling and wants to drill next week. I'm meeting with them Monday and Wednesday.

They are offering a 1/8 share. Is that common or negotitable? I would like more if they would give it but don't know how much is too much to ask.

Natural gas. They make it sound like free natural gas is high on the hog, and I'm sure it would be but after all it's just a by product of the drilling right? I mean, I know I'll have to capture it in the tank and stuff but it being free to me doesn't really amount to anything given on their part, right?

Somebody told me there is a way to get the natural gas at the wellhead and to demand they do this. Whats that called? and can you explain it a little?

Anything else I should know?

[trust me]

I think 1/8 is pretty standard. You'll only get free gas if they hit a good one and send it to production. You can also ask for some up-front money of a few hundred or thousand bucks, to cover your inconvenience and trouble during the drilling process. (Noise, smell, eyesore, etc.)

Find out what kind of oil/gas production is going on around you. If wells have a history of coming in big and then playing out in 3 or 4 years, you might want to avoid it. If wells have been in production for 10 or 20 years, then you are in a good deposit area and it will be well worth your trouble.

Beware the driller/operators. They can be a fly by night bunch. Hope that doesn't offend anyone on here, but it's the truth. They will assure you you're the next Jed Clampett, and they'll drill right in your barn lot, or in your hay bottom,and cut roads and stack up all manner of debris, and when they drill a dry hole, they disappear overnight and leave you with a bunch of scrap and debris to clean up.

The drillers get their investors together before they even talk to you the land owner. Before he even starts up the drilling rig, he's already got his capital in place and his profit made. If it doesn't pan out, he's in the clear, his investors are out a pile of money, and you get the pump jack left on your property for the next however many years. If the well does hit big, then everybody is happy.

[Rem7600]

Follow the advice that Trust Me posted. It is on the money. I have not had any experience with oil wells but my father had two gas wells on his property and one is still producing sixty years after it was drilled. One eighth share is common. If the driller hits natural gas, it can be piped directly to your home with the use of pressure regulators. There usually isn't a lot of money in gas for the owner. The main benefit is the free gas.

[Swampthing]

Thanks guys...the 1/8 share was my main concern but I would like to know about this speical NG head question if someone knows.

[raven_over_easy]

Swamp do you own the mineral rights? If So you can pretty much name your price. With the price of oil and all I would say the 1/8 is negotiable.

[newshooter05]

i would start by asking more than there offer and some upfront money. u don't need a reason why u ask for more. they came to u remember always.u are giving them somthing u have paid for or are paying for. so haggle with em and go slow . if they are legit and upstanding they will be here next week or next month. time is on your side cause i can't see oil getting much cheaper any time soon so drillers and oil gypsies are gonna be looking for land to drill.
david

[yote hunter]

we had a company drill for oil on some of our property this was before i inhierited it.they didnt find any as far as i know but when they drilled hey cleared out a section of woods.about 5 years later i figured it out the ba%$^&erds stole about 15 acres of timber:mad:

[Poorboy]

Check on if you have any say so on placement and road construction. Also lenght of lease if nothing is done. Some yahoos want people to sign a forever lease. Maybe something your grand kid's grand kids maybe be cussing you about in three hundred years. :eek:

[westkybanded]

Also, make sure what their plans are for saltwater... Sometimes it is a byproduct, and it will ruin ground FOREVER if not properly disposed of.

Find out if they are doing test drills first or not... They may have drilled under you from a neighbor's property without you knowing.

That's illegal if you own the mineral rights.

[Swampthing]

Just to be clear I own all the rights to everything on my property. At first we didn't own the oil rights for 18mths but that has long expired and they never did any new drilling, just finish up the older wells, none were on my parcel. There was a well drilled not too far up the road that everybody got excited about and it was producing 100 barrels a day for a while. When I drive by it I see they have added extra tanks and more drilling activity every so often. There are wells on farms near mine that have been suppling NG for those farms for 75 and 80 years. For the past 2 years they have been "courting" me I have gone around with the dude in charge of keeping things going on their operation from time to time. He's needed help from time to time and I'm an electrician and have helped him out with different stuff. I can't believe what they can get away with with regard to the NEC but that's a different story...A lot of the stuff they use seems salvaged but when I look at other operations that seems to be normal.

Don't they pump the water back into the well? To keep the pressure up? Like I said I know just a little about all this and greatly appreciate the responses and pm's ya'll have done.