This page is meant to answer as many questions, myths etc and presents facts and information.
1. “Who” and “What” is NEEPO? NEEPO is the North East Euless Property Owners. It is an ALL volunteer coalition of approximately 25 subdivision plus commercial property. Our approximate boundaries are from Hwy 360 west to FM 157;
2. Who are the coalition leaders and what are their qualifications? The leaders of this coalition are resident members of NEEPO from each neighborhood. They are bringing you the information to stay united and are helping to make sure that all of their neighbors are active and involved with the coalition. Their qualifications are being interested in their community and wanting the best terms that can be reached for all of us. Gas drilling is here; it is going to be a part of our lives for a long time and we need to insure each family will share in this new found wealth!
3. What does it REALLY cost to belong? NEEPO will operate at no cost to owners. While donations to cover costs of this meeting are appreciated, none are required. It is anticipated that the attorney’s fee will be reimbursed by the gas company.
4. Why should I wait to sign a lease negotiated by NEEPO? You are free to sign any lease you want at any time. We believe you will ultimately do better by waiting to sign on terms and conditions that apply to a larger, more attractive group. (¼ acre lot @ $18,500 = $4625 signing bonus; @ $23,500 = $5875 +$1250, 27% more)
5. What are the economic terms we are likely to get? We cannot guarantee any particular terms, although it is our belief that many current offers out there are below the true market value. Further details will be provided as discussions continue.
6. How long is this negotiation process going to take? NEEPO started negotiations approximately 3 weeks ago. Most coalition lease agreements take 3-6 months to complete. NEEPO was formed around April 15. We are very hopeful that our negotiations can be completed quickly, but we won’t try to speculate about timing at this point. NEEPO cannot “force” a deal with a driller!
7. How do I know if I own mineral rights? Standard real estate purchase forms generally do not exclude mineral rights, so chances are you own your rights. Reviewing your purchase agreement and title policy will generally note if mineral rights are excluded. We expect our lease to be a “no warrant of title by property owners” which prevents home owners being required to returns funds already received IF mineral rights are subsequently determined to belong to someone else, therefore, it is really up to the gas company to determine who owns the mineral rights.
8. How can I determine my acreage or lot size? We have an excellent link to the Euless Maps web page from this web site: http://neepo.webs.com , which can help you determine your property “foot print.” But before signing a lease agreement, you should review the plat record received at time of closing. It will show you the dimensions of your property. Remember, we will negotiate inclusion of the public right of way(s) that border your property. Add that number to your calculations. The energy company will figure your property size, but since this is a legally binding lease you'll be signing, it is in your best interest to know the size of your property before the signing take place.
9. What happens if I have a mortgage or decide to refinance or sell my house? Mortgage documents typically prohibit mineral leasing, but mortgage companies have been willing to subordinate their interest to the lease upon request. We expect our lease to require the gas company to pay for any subordination fees. Another important detail is whether or not your mortgage company will require a subordination agreement before you receive royalty payments from our energy partner. While we negotiate any fee payments for this agreement, it is in your best interest to contact your mortgage company now and ask them what they will require. We would recommend obtaining the forms they will want, but not executing them until we get to the signings.
10. Do we know of any drill sites gas companies have identified? Drill site locations are among the most closely guarded secrets in the oil and gas business. We have been told by representatives of several companies that they will have sites capable of reaching most of our footprint. Also, we will be attempting to identify sites on our own, and possibly bring in other areas with identified or likely sites. Ultimately, all drilling sites must obtain permits from governmental entities before commencement of operations.
11. What is the surface impact of oil and gas operations? The coalition lease will provide for no surface use, except for drill sites (5-10 acres). Generally, horizontal drilling technology allows companies to establish a central “pad” location which will tap up to 640 acres (1 square mile). Drilling and operations activity is regulated by federal, state and local regulations, and our lease agreement will provide as many specific restrictions above and beyond those as we are able to negotiate. Environmental issues like water, air and noise covenants will be particularly important, and it is important to remember that this lease could be in force well beyond many of our lifetimes; as much as 80 years by some estimates.
12. How long does it take for the drilling phase? Although drilling and completion efforts can take 3-6 months for a single well, the vertical drill rig can complete its job in less than three weeks. The central pad locations may be used for multiple wells and therefore will probably be “active” for several years, but NOT on a continuous basis; i.e., the drill rig will “come-and-go” over a period of several months of even years! In addition, re-fracturing of existing wells may occur every couple of years. Again, items such as noise, traffic, etc. must be fully addressed in the lease to protect all owners, and particularly those in close proximity to pad locations.
13. What are my royalty payments likely to be? We don’t want to speculate too heavily on monthly royalty payment amounts until we get closer to striking a deal. Other coalitions have estimated that royalty payments over time will be at least as great as up-front bonus payments, but that depends on many factors, including drilling success, future natural gas prices, etc.
14. What happens if I don’t sign a lease? In our opinion it is highly unlikely that individual unleased tracts will delay or prevent a company from drilling if they decide to do so, and they may form a drilling unit which excludes both the area and the oil and gas from those tracts. If a company so elects, it can seek to obtain an order establishing a drilling unit which includes all tracts within a particular area, and in that event unleased owners may receive payments based on terms approved by the Texas Railroad Commission, often without any bonus payments. You cannot prevent drilling by not signing a lease!
15. What are the tax implications of oil and gas leases? It will be best to consult tax professionals to confirm details, but in general royalty income is taxable, subject to a deduction for depletion. The value of mineral interests will also be used in determining the assessed valuation of properties for property tax purposes.
16. How can I join?
Complete a Memorandum Of Intent (MOI) and send to your area leader.
More good information can be found at Star-Telegram in this document http://startelegram.typepad.com/barnett_shale/files/neighborhoods_organize.doc.
FACT: "There is no practical way to stop the gas well drilling in our area. Whatever we do, eventually it will probably happen."
MYTH: "Your bonus amount is based on the value of your property. Those 'other folks' are getting bigger bonuses because their real estate is worth more. "
The signing bonus you receive is paid per acre and depends only on the size of your lot and the percentage of mineral rights you already own. If you have a mobile home on a quarter-acre you get more than someone with a $250,000 home on a one-sixth acre lot. The higher the signing bonus per acre negotiated for the whole neighborhood, the more everyone in the neighborhood gets. This includes people with only 50% mineral rights or partial mineral rights. That's why we need to negotiate as a group
The bottom line: $48.73 per month for 20 years. Royalty payments would start at $142 per month in the first year, $89 per month the second year, $70 the third year, bottoming out at $23.50 the 20th year.
The Barnett Shale Newsletter (http://www.barnettshalenews.com/) recently published an estimate with different assumptions. They assumed a bigger well in Tarrant or Johnson County (the most productive part of the field) that produces more than 1.3 million cubic feet per day the first year but with a faster decline rate, a lower selling price ($6), a smaller lot (9,600 square feet) and a larger well unit (65 acres). That estimate arrived at a first-year royalty of $193 per month at 25 percent royalty, or $174 per month at a 23 percent royalty.