Looking at leasing, in a new light –

    HUDSON — Guarding their land use and legacy, a group of concerned property owners is after some answers in Weld County concerning gas and oil operators.
    Dozens of landowners gathered Jan. 26 in Hudson for a standing-room-only question and answer session on their rights in the face of widespread oil and gas exploration in South Weld County. Hosting the event, the Platte Valley, Southeast Weld and West Adams Conservation Districts held the session in the conference room of the Hudson Fire Station.
    High on the list of concerns was the issue of how many wellheads a landowner could expect once leasing his land to an oil operator.
    Steve Lindblom, Eastern Colorado Environmental Supervisor for the Colorado Oil and Gas Conservation Commission, noted that with modern drilling techniques and equipment, a single wellhead suffices where many would have been necessary in the past. 
    Neil Ray, president of the National Association of Royalty Owners, followed by saying that fracking techniques in the Niobrara should result in less surface disruption overall and, coupled with restrictions in place by the Colorado Oil and Gas Commission, the overall scenario is less bores over a much larger area.
    “No, you are not going to see a lot of hodge-podge everywhere because of the way the commission manages the rules,” Ray said.
    What may come in the future, as larger deposits taper off, is the possibility of more wellheads as companies try to tap remaining pockets of oil.
    “You can start out thinking you are going to drain everything at a certain level, and then as you grow more wells, you find out more information,” Ray said.
    Another item high on the list of concerns among landowners is the contract phase of negotiations, where a misstep could cost the original owner and heirs for years to come. Ray offered the services of his organization, the National Association of Royalty Owners, which is by membership, and a pair of books; Money in the Ground, Insiders Guide to Oil and Gas Deals, by John Orban, and Oil and Gas Law in a Nutshell, by John S. Lowe.
    “Otherwise, hire a lawyer, and I am serious about that,” Ray said. “A petroleum lawyer. Not your family lawyer, not your estate planner, someone who knows private royalty interest law. The reason being is that they are going to know who they just got done negotiating a lease for in your area. They are going to know what the land bonus was, what the terms were. They are going to know what the company was willing to bend over on.”
    Ray’s advice rings true especially now, when the frenzy for leases is at an all-time high in the county, and likely to continue to boom for the foreseeable future.
    Some landowners have received unsolicited official-looking certified letters from brokers looking to acquire their mineral or land-use rights to resell to oil companies working the region. The best advice is buyer beware, according to Ray, who said that the first letters from any negotiation should be tossed in ‘the circular file’ without a second thought. Legitimate oil operators will follow the initial offer letter with contact by phone, and the savvy landowner will continue to wait it out, until a representative from the company comes in person, to begin legitimate negotiations.
    “The longer you wait, the better deal you likely will get,” Ray said.

Photo by Gene Sears

Neil Ray, President of the National Association of Royalty Owners, holds up a pair of books of particular interest to landowners looking to embark on oil and gas leasing; Money in the Ground, Insiders Guide to Oil and Gas Deals, by John Orban, and Oil and Gas Law in a Nutshell, by John S. Lowe. Ray visited the Hudson fire station as a featured speaker for area conservation districts looking to help landowners with an informational give and take Jan 26.

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Contact Metrowest Staff Writer Gene Sears at gsears@metrowestnewspapers.com.