- Many residents of Lake Country have received letters from Palo Petroleum, Inc.
offering to buy your royalties to the lease with XTO for the “TRWD/Marine
Quest Unit 1H”.
is Palo Petroleum
best we can understand, they wish to buy your ROYALTY rights, which you have
via the lease agreement with XTO. Palo Petroleum is apparently gambling
the well will be a big producer. If you agree to their proposal, you are
accepting their amount in lieu of any further (perhaps larger) royalties over
the life of the lease.
the amount offered in the letter is for 100% of the royalties of which Amon
Carter Foundation owns 50% and you own the other 50%. In other words divide
the amount offered in half. So if the offer is for $1,600 then you would
receive $800 payment for your royalties. This was overlooked in the letter
and may have been corrected in future letters, so pay close attention to the language
used in any contracts you are considering.
consider the offer a very low price for our lease which could produce for
over 20 years.
we are now with XTO?
lease with XTO will remain in force and effect for as long as there is
production, which means if anyone drills a well to a different formation and
establishes production, the royalty from the new formation would be theirs
also since they are buying all of the royalty on that specific lease.
lease agreement with XTO states that the primary term of the lease is for 3
years from the date of agreement which is from whenever you signed your lease
(most were signed late 2008, early 2009 timeframe) to drill the first well
which XTO has done. Thereafter the lease will be in force for as long as the
lease produces (other caveats apply, read you lease).
1) The first TRWD/Marine
Quest Unit 1H
well began operating 2/8/2010.
2) XTO has
120 days from that date to verify accurate information as to who owns the
leases. (Some properties might have exchanged hands).
ownership is verified, they will send each lease owner a DIVISION ORDER to
sign & return.
4) When XTO
receives the signed form, they will calculate our royalties retroactive to
2/8/10, (plus interest if applicable) and we will receive our first check.
payments may take MORE than 120 days.
checks will be sent on the 20th or 25th of each month in which the royalties
are $100 or more. If less than $100, the money will carry over to the
7) March 2010
production averaged approximately 2.8 MCFPD (million cubic feet per day)
which appears to be a relatively average output for a new Barnett
Shale gas well.
personal items to consider whether to accept the offer:
1) Do I need
the money offered now?
2) Do I have
any heirs that I wish to bequeath my lease to?
3) Will I pass
away before I receive the amount offered by Palo Petroleum?
4) How will
the royalties impact my personal tax situation?
you decide to accept their offer, look very closely at the contract to insure
the royalties are only from the Barnett Shale “TRWD/Marine Quest Unit 1H”.
the final analysis it’s what’s best for you.
decision will not affect anybody else to a significant degree in the leased
area if you should decide to accept their offer.
LCPOA wishes to thank CrestPoint Home Owners Association and Bill Kunter, an Oil
and Gas Landman, for their contributions to the article.)
to view the Gas Lease the Greater Lake Country Gas Leasing Task Force accepted.
Your lease may differ from the one accepted by the Task Force as each mineral
rights owner was free to negotiate their own best deal.