|Jim Bass, with Lonesome Dove Resources, speaks to landowners Friday night in Conrad. Sun Times photo by Darryl L. Flowers|
By Darryl L. Flowers
The meetings were held at Norley Hall in Conrad. On Friday night, a crowd of about 75 people listened as Consulting Geologist Jim Bass used Southern charm, a video presentation and years of experience in the oil fields to explain the process of leasing mineral rights to an oil company.
During the presentation, Bass said that he had learned a lot from his first round of meetings in Teton County. He described how forums with landowners in Fairfield had given him new insight into the challenge of meeting the water needs of the drilling rigs in this region of Montana. “We’ve done this before,” said Bass. “There’s not much water in West Texas either, but we still drill there.”
During the question and answer period after Bass’ presentation, someone asked about a “Pugh Clause”. Bass answered that after a lease negotiation with a landowner in Teton County, a Pugh Clause had been added to the leases.
The Pugh Clause provides that, at the end of the primary term the lease will terminate in regards to any acreage outside of a “production unit.” This will allow the landowner to sign a new lease for the property not included in the production unit at the end of the primary term. Any cash bonus paid for signing a new lease provides compensation to the landowner only for the property that is not included in the production unit.
After the meeting Bass was asked how Lonesome Dove was progressing in the acquisition of leases in the region. The Texas Wildcatter reported that the company, as of this Monday, would have approximately 185,000 acres under lease. While the majority of the leases were in Teton County, followed by Pondera County, the company has secured holdings in Glacier and Toole Counties. Bass added that Lonesome Dove had leased small acreages in Cascade and Lewis and Clark Counties. “Lewis and Clark and Cascade Counties are very small leases,” said Bass. “We consider those areas to still be high risk until we do some exploratory drilling in the area. But, if a ‘play’ develops in that area, we do not want to be caught off guard.”