Sellers and Buyers Compromise to get the Most Out of the Haynesville Shale

From KTAL News. July 8, 2008

Local real estate experts say sellers and buyers want the same thing when it comes to the Haynesville Shale and are being forced to compromise. Ben Dowis, NWLA Association of Realtors, says “A seller wants to retain the minerals to benefit from the royalties and the buyers want to gain them so they can benefit down the road."


Dowis tells KTAL because of this, sellers and buyers are looking to negotiate. He says, "What we're seeing now is most buyers and sellers are compromising. In some cases a seller is taking the bonus or the upfront money on the lease and conveying the benefits to the buyer so they may benefit from the royalties at a later date."

Jennifer Houghton with Remax Executive Realty assisted a person in selling his home but tells KTAL because of the Haynesville Shale, it was not easy. Houghton says, "We had a buyer that wanted the mineral rights. We had a seller that wanted to reserve the mineral rights." So, both parties decided to compromise. Houghton says, "The seller is reserving the mineral rights for five years and the buyer will receive them after that."

Both Houghton and Dowis say if a compromise is not reached the seller and the buyer could feel some negative side effects. Dowis says, "If the sellers want to retain them it may impact the value he's going to receive on the property. If the buyer wants to acquire them it may impact the property value he'll have to pay.”

If in the end the seller decides not to negotiate and desires to keep his or her mineral rights, the seller cannot drill directly on the property unless the buyer grants surface use. However, the seller can do what's called diagonal drilling. That's an option to drill from a different location.