Oil & Gas Leases: Why might they never drill?
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- Опубліковано 22 січ 2025
- So they just spent thousand, possibly millions, to lease all the acreage to drill.....but then they just let the lease expire and never drill. Why on EARTH would a company ever do this?
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PECAN TREE OIL & GAS: Pecan Tree was founded by Tracy Lenz as a Limited Liability Company in January 2020 (registered Texas Engineering Firm F-21124) to bridge the gap between mineral owners and the confusing, high-dollar world that is oil and gas. After being on the operator side for over a decade, Tracy witnessed firsthand how mineral owners rarely can afford the same data, experts, or software to be on a level playing field with the operators and buyers, yet have MORE at stake when deciding what to do with their minerals. Pecan Tree’s focus and efficiency make these resources available without a hidden agenda. We don’t buy minerals, we don’t work with billion-dollar companies, and we aren't private-equity-backed. This flexibility lets us innovate with technology, maintain the highest standards (work quality, customer service, and ethics), and tailor pricing and scope to each client’s specific needs.
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ABOUT TRACY:
Licensed Professional Engineer in the State of Texas, PE# 132654
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Master of Science in Petroleum Engineering from the University of Southern California
Bachelor of Science in Petroleum Engineering from the University of Texas at Austin
Experience with oil & gas minerals in Texas, Oklahoma, New Mexico, Louisiana, North Dakota, Montana, Utah, Colorado, and Kansas.
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Took a while to find you, but you are the answer to our prayers when it comes to this topic. We hope to be among your first clients in California in the Monterey Sale formation. Thank you so much!
Thank you. Very informative and very helpful.
Thanks again Tracy! simple and straightforward. keep the awesome videos coming!
Dude thanks for uploading these videos. I had no clue about this stuff but saw an ad for oil lease for 15000
You’re welcome! What kind of add was that?
Great videos! I love the details in your explanations. I was curious if you could do a video on why a company would Top Lease? Or if you already have a video like this please share the link with me.
That’s a good idea! I’m familiar with the basic reasons why a company would top lease (and why it’s not a good idea usually) but I’d love to have some of my land contacts as a guest on the show to discuss the more intricate parts of it. We’re focusing getting the Pecan Estimate platform fully launched (and getting over the flu 🤒) but will resume educational videos shortly after!
Great video and I do appreciate it. Please keep it up! My favorite part of this video is sharing your story from drilling HBP wells and surprise you had😂
Haha, thank you!!
Hi. We have mineral rights and have questions about oil and gas leases and drilling, etc. Are you able to contact me to further discuss our questions?
Awesome
Hi I have a very specific question. So we have land in Louisiana my dad was the owner of the mineral rights and they’ve been leased. There were wells drilled all around our land but never on ours. The gas companies were trying to buy the mineral rights from my dad for 30+ years. He could never figure out why they wanted the rights but wouldn’t drill on the land but they would drill on all the land around. Literally you can see on google maps all the wells surrounding ours. He passed recently and within weeks the oil company contacted my mom and offered 30000$ for the mineral rights. She said no. Now they keep contacting her and have increased their offer 5x. Do you have any idea why they’d want to buy the mineral rights but have been putting off drilling when it’s leased?
We just don’t really know where to start on this situation so any advice would be great 😂
If they buy the mineral rights they can do as they please on how many wells they want to drill. Talk to your neighbors that have leases and see how much their signing bonus was and how much royalty they are getting. Ask an oil and gas attorney that lives in the area. They know these companies and where they are drilling. If you sign a contract be sure to go through an oil and gas attorney so they won't put a well next to your house or ruin your water well. The contract is written for the oil company. If you get an attorney to look over it and make any changes you will have a contract that is good for the Both of you.
Thank great talk !!
Thanks!!
Thanks for the video. I’ve been thinking about investing in oil and . I was reached by one of the companies in around San Antonio area and they said that they have been in business for more than 50 years. They’re digging 10 more wells which they invited me to go and check them out in the field. Minimum investment 50k and ROI 18-24 months. They said they should be done with digging by the end of the month and starting pumping by April. Am thinking about it but skeptical since I never invested in this!
@ahmaddamra5847 start small and research thoroughly! The best investments are the ones you understand how they work. Oil and gas is risky on a well-by-well basis, but if the $50k is spread across all 10 wells that's a better risk profile. Run all the names of those involved through LinkedIn, BBB, SEC complaints, "[insert name] lawsuit" google searches, and verify any facts provided that you can. What does "in business" mean for this company? Has it been the same people? Are they adding up all 25 people's 2-years of experience to get to that number?
Side note, if they specifically used the term "digging a well" I would strongly question things. If that's your term, that's fine, but might want to start getting used to calling it "drilling a well" if you're going to invest :). Best of luck!
Can you make a contract that says that you have to do it right away
As in that they have to drill right away? You can add whatever you want to into the lease; they’re very customizable. But certain terms are unlikely to be accepted by the drilling company if would make it too difficult to stick to. Usually a two- to three- year primary term is the shortest I see, and layered on top of that are other terms like continuous development and such. The more sought after your acreage, the more leverage you have.
It's all called speculation. Right now in Central Texas there is a company that is asking land owners to lease their land for development of oil and gas. You will get a call from a "Landman" asking to lease your property for 3 years with an option of 2 more years. They will offer a percentage of the royalty, usually 20-25% and a signing bonus. The signing bonus can range anywhere from $150 to $5,000 per acre.
You need to check with a local oil and gas attorney or your bank who know who these companies are and what is their intent.
Some leasing companies will lease XX amount of land and "FLIP" the leases. Which means sell them to another investor.
I have seen leases bought and "Flipped" 3-6 times and no drilling was performed.
Right now the administration we have had shut down drilling permits. In the 2024 upcoming election if the right party get elected they will open up pipe lines and start the drilling permits. This is why Landmen are trying to buy up leases in hopes either to drill on the land or just "Flip" the leases.
Doing research on the company these landmen represent is a must. Find out how big the oil company is, their history and how many producing wells they have. Just don't jump at the first landman's offer. They will offer as little as they think you will take, you just need to negotiate with them so you and the leasing company will both be happy.
I expected all of this, but when you look at their actual numbers these answerz just do not cover all of it .. either oil and gas experts are complete idiots or there is more going on than you've coveeed here. There is so much unused leases there HAS to be more answers.
There’s a lot to it and this video does just cover the main points. It’s best to think of leases as inventory and a company’s runway. Companies who drill and operate wells need to keep drilling wells to grow since production from the new wells immediately starts to decline once they start producing. A company without inventory is a dying company in this industry.
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