Royalties and Vigilance

Royalties. Such a wonderful word. One thinks of wealth. Bonus is a great word, too. A welcome something extra.

And when those two words appear together, as in somebody wanting to pay you royalties and a bonus? Well, that’s nearly irresistible.

Such were my thoughts last May as I read a letter from a natural gas leasing company. The letter said my home in southern Denton County was situated over the eastern edge of the Barnett Shale.

The company wanted me to sign a lease giving them rights to natural gas under my property. They’d even pay me a bonus for the signing with them, which would lead to monthly royalty payments when mining began.
The aforementioned visions of wealth danced in my head, and I thought of ways to spend the bonus.

Over the next few weeks I got urgent follow-up letters from the leasing company stating time was running out and their offer was final. The old hard sell.

Found money is hard to resist, but something nagged and kept me from signing right away. I talked with work colleagues from cities further west who had already been through the lease-solicitation and -signing process. Then I talked with a couple of neighbors who’d done the same thing.

Another word, not so wonderful, came to mind: lowball.

The lease terms and signing bonus our friendly leasing company proposed for our neighborhood were, well, cheap. We recognized we were on the edge of the Barnett Shale, but we weren’t far enough on the edge to warrant the low offer.

A couple of the most motivated and knowledgeable neighbors sent fliers and organized meetings in the pavilion at our local park.

We learned that the leasing company had gotten signatures for only about half of our neighborhood; they needed 80% to proceed. We banded together, hired an attorney to negotiate on our behalf with the leasing company, and put up yard signs proclaiming our rallying cry: No market value, no signature!

But the leasing company wouldn’t negotiate with our attorney. By late summer some began to wonder if we’d done the right thing or even still had the opportunity to sign – the letters from the leasing company had stopped. Still, we persisted, meeting with other neighborhood groups who had more recently been contacted by the same leasing company.

Not in my back yard. That’s a great cliché that came to mind in August when I read in a neighborhood blog that one of the drilling sites proposed for our area was the same local park where our group met. It’s a pristine area with woods and a creek and is the reason many of us live there. The blog indicated many as 100 trees could be removed.

The stakes were suddenly much higher than a dispute over royalties and bonuses. This could affect our quality of life.

Fortunately, at a meeting we learned that the park is in a flood plain, which would likely prevent gas drills from being located there. We also learned that our city has regulations that would minimize the community impact of any gas well drilled.

As oil prices fell through the fall, it seemed natural gas exploration became less attractive, and the hoopla over the Barnett Shale diminished. Some in my neighborhood who signed leases and got bonuses took down yard signs proclaiming fealty to the leasing company. Some of the holdouts, including me, took down our market-value-or-bust signs.

But I’ll still monitor the news and local blogs and attend neighborhood meetings and city council meetings. It’s the only way to ensure that we don’t get cheated out of market value for our mineral rights, and to ensure that natural gas companies don’t drill where we don’t want them to drill.

Vigilance. That’s another great word. It’s probably something all homeowners and communities who could benefit from the Barnett Shale should practice.

[originally published in the Fort Worth Star-Telegram]

Jim Chambless of Lewisville, Texas is a freelance writer and voiceover talent, and a member of the 2006 and 2008 Star-Telegram Community Columnist Panel.

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