I'm trying to get a sense for where the mineral owning community is today in terms of what are their frustrations and what are their needs?

Are these evolving or have they stayed essentially the same? I know there are the issues that remain the same, i.e. Royalty deductions etc, but what else is on your radar and what would you change? Either post below or email me at keith@shaleforum.com.

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I am sure most frustrations revolve around the price of natural gas (since this is GHS, I won't address oil).  As prices have stayed low producers are looking for any up stream deduction they think they can get away with since most of them don't own the mid stream anymore as they had to sell it to raise capital.  Every operator is cash strapped so the locations are not receiving the attention they once had and the wells are only being worked over if lease holding is an issue.  My recent check from Goodrich was higher because with their Chapter 11 filing they were able to void their mid stream contracts!  Very tough times in the business for both producers and royalty owners.  This is starting to make the late 80's look good.



Where do I start?  I will start with the lack of laws that protect the mineral/royalty owner.  For instance in Texas, the basic Texas Natural Resources Code that allows a royalty owner to request the minimum royalty pay level at $25.00 gets overridden by (some, not the majority) of Operator/Gatherers because they say their "office policy" only allow them to set the minimum at $100.  Others say the "software program" will not allow it to be set below $100.00.   The employees are not educated on the law.   Like I said, where do I start?  

For various reasons some mineral owners remained unleased through the first round of leasing in the early days of the Haynesville.  Now that operators are coming back and drilling CUL's, I feel a second leasing opportunity should be offered.  I have approached operators with a lease request, (even leases that contain zero signing bonus, a less than desirable royalty %, and no mineral owner protection clauses,) only to be told "not interested."  I know Skip lobbied for some mineral code language regarding issue, but was unsuccessful.  This is frustrating to me.

Im not familiar with that TX law. Are you saying they don't have to send a royalty check until payout hits $25?

If Texas has a law regarding a minimum amount for a royalty check, I've never heard of it.  There is no such law in Louisiana. It is the operating companies that make the policy regarding the minimum amount for cutting a check.  They all have a minimum although the amount may vary and most will only send a check based a full quarter year of production.  So once every three, six, nine or twelve months.

Of course, I do not know what the legal aspect is, but I do know that once a year, usually October or November, we will get very small checks for a years worth of production on old units dating back to the 1960's-70's.  These are units where each of the family members only own a very small amount and we have gotten checks that were not much more than the amount of the stamp:). Kathy

I still get a monthly check from one company for less than $4... a very old lease.  A few other companies wait until the total reaches $100.  All Texas leases.  

Texas Natural Resources Code 91.402

(f) Payment may be remitted to a payee annually for the aggregate of up to 12 months' accumulation of proceeds if the payor owes the payee a total amount of $100 or less for production from all oil or gas wells for which the payor must pay the payee.  However, the payor may hold accumulated proceeds of less than $10 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first.  On the written request of the payee, the payor shall remit payment of accumulated proceeds to the payee annually if the payor owes the payee less than $10.  On the written request of the payee, the payor shall remit payment of proceeds to the payee monthly if the payor owes the payee more than $25 but less than $100.

My frustrations started when I tried to get a lease with the language mentioned in this forum. I joined GHS when there were only 25 or so members. I should have signed a lease back in 2008-2009. The well on my section has been up and running since 2010. I've been told the well has not paid for itself and have not seen a penny. The quarterly reports list many line items I have no way of knowing if they can be legally deducted. I have not located one site that lists what can and cannot be deducted. I have even asked for a lease without bonus but they are not interested. Why would they? I am sure BHPB will continue to tell me no money is payable even though they continue to pay their leasors out of the profit they report. Would love for you to look at a quarterly report and give me your thoughts. Seems I've missed out, should have signed early, and now have no recourse. The land is 5+ acres, and rides the mean waterline of the Red River in Caddo Parish. The section is in both Caddo and Bossier Parishes.
There was a lot of "don't lease unless you are with a group" lingo early on in GHS. I told those that would listen that was a bad idea. Pigs get fat and hogs get slaughtered. I am sorry you got caught up in the small landowner UMI situation.

Keith, I think so many of the small interest mineral owners are to the point that our attitude is "it is what it is".  If the operators did not drill the wells, we would not be getting the "mail box money".  On the other hand, with the questionable expenses some operators now charge, our royalties are not based on the 20% or 25%, etc. lease we agreed upon, but more like a 12% royalty.

I have never understood why we sometimes cannot get a straight answer to a question without getting an attorney involved. It is not like we were correct in our assumption on our rights every time. Several times we have been wrong, but it seems like if it is a question we have where the operator is afraid we will not "like" the answer, it gets shuffled around and stalled until we get our attorney involved instead of just telling us what the operators position is on our question.

Also, you did not ask about surface owners, but as surface owners on some tracts where we own no minerals, I wish some operators and their employees would realize that yes, they have the right to extract minerals, but they are impacting more than just the well site and pipeline on your property when it is all said and done. Some people see a lease road and think it is open to the public and there is very little you can do with acreage within the vicinity of a well site outside of agricultural or hunting use so in our opinion they are damaging more acreage than they are willing to pay damages for. I think most surface landowners who have had experience with well sites agree the well devalued the property more than whatever the damages were that they received. Kathy


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