Need advice in buying land with lease income

[NINJABABY]

I am interested in buying a quarter land with some oil lease income.

I need to know few things regarding lease agreement. I have zero idea about it.

I talked to the realtor and she said you will get the answers once you put an offer on the table. I told her that I need to know the answers before I put the offer on the table.

So my questions with fellow members are:

1. Will I be able to drive on the roads that they made to the lease?

2. Will I be able to hunt there? (obviously safely)

3. Will I be allowed to put a hunting cabin there?

4. What else I need to know before I put an offer on the table?


Thanks a lot

[sirmike68]

On our 1/4 the oil company only leases the road access and the site, about 5 acres the rest is open for regular use. Unless they are leasing the whole 1/4, which I doubt, it is business as usuall in reguards to hunting etc.

[NINJABABY]

Originally Posted by sirmike68

On our 1/4 the oil company only leases the road access and the site, about 5 acres the rest is open for regular use. Unless they are leasing the whole 1/4, which I doubt, it is business as usuall in reguards to hunting etc.

That is a relief!!! and thanks for the reply.

Now can you drive on their road access to get your land?

In my case, the only access to the rest of the land is through their road

[1hogfarmer]

Who holds the lease?

[Trochu]

Originally Posted by NINJABABY

So my questions with fellow members are:

1. Will I be able to drive on the roads that they made to the lease?

Some leases have gates that have locks, some don't. Alot are simply a goat trail of a road leading the lease that has no gate and anyone could drive on. I doubt they are changing their business practices once you buy it. If you can just drive in on it now I suspect you'll just be able to drive in once you buy it.

Edit: May have misunderstood, are you talking lease road on your land to get to the lease or a lease road to simply access your quarter?

Originally Posted by NINJABABY

2. Will I be able to hunt there? (obviously safely)

Yes. Typical lease is what, 100 m x 100 m? The rest of the 1/4 you are free to do with as you'd like.

Originally Posted by NINJABABY

3. Will I be allowed to put a hunting cabin there?

Yes. Typical lease is what, 100 m x 100 m? The rest of the 1/4 you are free to do with as you'd like.

Originally Posted by NINJABABY

4. What else I need to know before I put an offer on the table?

Lease income is nice, but I wouldn't rely on it for financing. Lease could get sold tomorrow to a company that goes bankrupt the day following.

[DirtShooter]

Originally Posted by NINJABABY

I am interested in buying a quarter land with some oil lease income.

I need to know few things regarding lease agreement. I have zero idea about it.

I talked to the realtor and she said you will get the answers once you put an offer on the table. I told her that I need to know the answers before I put the offer on the table.

So my questions with fellow members are:

1. Will I be able to drive on the roads that they made to the lease?

2. Will I be able to hunt there? (obviously safely)

3. Will I be allowed to put a hunting cabin there?

4. What else I need to know before I put an offer on the table?


Thanks a lot

1. Yes
2. Yes
3. Probably if it's away from the lease site
4. How much the lease pays per year, when renewal is up, what they will do for reclamation (get them to redo the road once more before they reclaim the site so you can keep a nice road into your property) as well as they should be paying until the area is 100% reclaimed to your liking like if you're running cattle the lease/well area should be reseeded and regrowth needs to be adequate for grazing.

We have a few pieces of land with oil leases and we use the roads and hunt the 1/4s no issue.

Not sure about the cabin but I mean people build houses on land/farms with oil leases on them all the time. Might be up to the specific county you're in.

[Sledhead71]

Originally Posted by NINJABABY

I am interested in buying a quarter land with some oil lease income.

I need to know few things regarding lease agreement. I have zero idea about it.

I talked to the realtor and she said you will get the answers once you put an offer on the table. I told her that I need to know the answers before I put the offer on the table.

So my questions with fellow members are:

1. Will I be able to drive on the roads that they made to the lease?

2. Will I be able to hunt there? (obviously safely)

3. Will I be allowed to put a hunting cabin there?

4. What else I need to know before I put an offer on the table?


Thanks a lot

There will be a pipeline right of way registered against title, this will limit the development of the owner.. Typically it is between 15 and 25 meters depending on what type of line is registered.

As well, just because the company has a access road to the lease, it does not mean it was surveyed properly... Many follow existing trails which could be off pipeline access which can cause issues between owner and company.

You will want to see all utilities and caveats registered against property before making any offer...

Good luck.

[Dean2]

Search the title, the lease for the site and any pipelines will be registered on that title. You can get a full copy from land titles, it is a public document, you don't need the vendors permission. Go over the documents in detail and have your lawyer look them over too. What is the current annual rent, and is it broke down to site, access road, pipeline of just one large lump, etc.

There are many considerations, is the well still active, is it gas or oil, sweet or sour, if it is oil is there in fact a pipeline or is it tank stored and trucked. If gas there will be a pipeline and that affects building, development, subdivision etc. Who actually holds the lease now, if it is Longshore Resources, you should pm me BEFORE you buy. Is the company still in operation, if so who is it, and what is their track record like with the ERCB.

Everybody likes the idea of earning revenue, and I do too. I have land where the oil revenue and pasture lease has now paid the purchase price in full over the period I have held it. However, most fail to realise the large potential problems that go with having oil, gas, and pipelines going through their property.

[amosfella]

Originally Posted by Trochu

Lease income is nice, but I wouldn't rely on it for financing. Lease could get sold tomorrow to a company that goes bankrupt the day following.

It's important to note this. It's very common for an oil company sell the lease to a company that they 'control' then bankrupt later in order to avoid paying for reclamation and continuing leases. Then the well goes into the orphan well program and the government pays for the lease at a reduced rate and for the reclamation.

As far as government contract site reclamation companies go, unless you happen to run into one of the good ones that believe in doing a good job the first time, you'll get roostered around with poor jobs so that the companies can get paid multiple times for doing the same site. Its government work after all. Never do the job right the first time. It's been 7 years with one site on dad's land, and it's still not done right. They show up once a year, and do something that doesn't really help, and put in their day or two staring at it, and show up again the next year.

[oilngas]

If you are counting on the Lease Payment I would also have someone (P. Eng.) look at the well records / production for issues as well as the reserves associated with the well / wells. Also check the ERCB (me old) for the DSU's that are applicable for oil and gas, as there may be additional drilling potential and therefore those issues.

[j335]

shoot me a pm with the UWI or well license on that one, along with the company name and I'll take a peak at it

[ditch donkey]

Are you planning to finance?

I’m just signing papers on a quarter of hay, pasture, and bush. I’ve got stellar credit, had to put 30% down, interest is 7.75% fixed, or 5.2% variable. I was expecting a rate similar to a mortgage, but apparently banks lend at personal loan rates on bare land.

[huntinstuff]

We have several oil gas leases on our property

The little area they take up gives you revenue. Taxable income.

As for using the land as you wish, you own it. Be responsible as it pertains to their set up and no issues.

[huntinstuff]

Originally Posted by Dean2

Search the title, the lease for the site and any pipelines will be registered on that title. You can get a full copy from land titles, it is a public document, you don't need the vendors permission. Go over the documents in detail and have your lawyer look them over too. What is the current annual rent, and is it broke down to site, access road, pipeline of just one large lump, etc.

There are many considerations, is the well still active, is it gas or oil, sweet or sour, if it is oil is there in fact a pipeline or is it tank stored and trucked. If gas there will be a pipeline and that affects building, development, subdivision etc. Who actually holds the lease now, if it is Longshore Resources, you should pm me BEFORE you buy. Is the company still in operation, if so who is it, and what is their track record like with the ERCB.

Everybody likes the idea of earning revenue, and I do too. I have land where the oil revenue and pasture lease has now paid the purchase price in full over the period I have held it. However, most fail to realise the large potential problems that go with having oil, gas, and pipelines going through their property.

And if its Longrun Exploration out of Calgary, but owned by the Chinese, pm me......

[Big Grey Wolf]

A oil lease is almost the same as selling that portion of your 1/4 section. You may be stuck with cleaning up the environmently damage left by Oil company. They are famous for passing damage down to fly by night oil companies. Imperial Oil/Exxon pulled this on the Leduc oil field.

[hillbillyreefer]

Originally Posted by Big Grey Wolf

A oil lease is almost the same as selling that portion of your 1/4 section. You may be stuck with cleaning up the environmently damage left by Oil company. They are famous for passing damage down to fly by night oil companies. Imperial Oil/Exxon pulled this on the Leduc oil field.

No, no you won’t be responsible personally for cleanup. At least not for the last few decades. If landowners were no bank in the country would make a loan for the purchase without huge amounts of environmental tests being done.

The Orphan Well fund will take it over and do it. That’s not even close to an ideal situation but you won’t be required to do it.

You can travel on the roads and safely hunt on the land no one will say anything, operators are at the wells generally only for a few minutes a day., or sporadically if it’s a gas well. If they’re doing a workover and lots of equipment and people are around, I tend to avoid the area out of courtesy.