Replies to This Discussion

Permalink Reply by Wish You Knew on May 12, 2010 at 9:06

One thing you have to remember. The bonus money looks great... But the real money is underground. You don't get leased... You don't get in a unit... You don't get any money for your minerals that they can "legally" steal from under neath you.



...See "There Will Be Blood" "Milkshake" :)

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Permalink Reply by Benedumtreesoilwell on May 12, 2010 at 16:14

Not sure about that. I do know that the company who has the unit has to give some sort of effort to find who has the unleased land in the unit and attempt to lease. If they don't find the heirs the royalty for the acres in question goes into escrow until the heirs come foreward.

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Permalink Reply by Benedumtreesoilwell on May 12, 2010 at 16:36

Or if they are being real jerks... you can move the lateral depending on where their tract is and how big their tract is... aka if you have 5 acres and you are trying to be a a$$ hole about leasing... You will get cut out lol. it takes an entire 2 minutes to cut you out. Did it today matter of fact...

Permalink Reply by reallyoldguy on May 12, 2010 at 17:00

"As a quick example, let's imagine we have a proposed 700 acre unit. Let's also assume that my company has the entire 700 acres leased, except for a 20% undivided interest in a 50 acre tract within the unit, so 10 net acres. We will assume this imaginary tract within the imaginary unit is located along the west boundary line of the proposed unit, and the unleased acreage belongs to none other than Cheerleader himself. I have tried my best to lease Cheerleader on his outstanding 10 acres, but Cheerleader thinks his acreage is worth 100k/NMA, plus he wants that elusive 37.5% royalty he heard about "through the grapevine". Either way, I cannot ever get approval from my management to buy a lease on his terms.

So, as Plan B, we decide to drill the well anyway. We plan to drill it in a north to south direction, and we also plan to drill the well on the eastern side of the unit, easily 330' feet away from Cheerleader’s tract, and the only unleased interest I have within the unit. Being 330’ away from my trouble tract means I do not have a Rule 37 situation, so I get my drilling permit from the RRC easily. Skipping ahead, we make a good well, and I proceed to file my Designation of Unit at the county courthouse, which is the device we use to actually pool the minerals. As my trouble tract is within the boundaries of the unit, I do pool the leases that I do have in that tract…but not Cheerleader’s interest. I cannot possibly pool Cheerleader, because I have zero pooling authority as to his interest since I have no lease. Two months later, Cheerleader shows up at the Cheerleader Family Thanksgiving, and all his cousins run up to him to celebrate the arrival of their first royalty checks. But poor Cheerleader didn’t get a check, because he was not pooled into the unit.

Why does Texas allow this? Oil and Gas Law in the state has many doctrines, but one that you will hear time and time again is a mineral owner has a right to produce his minerals. This simply means that Cheerleader’s cousins have a right to produce (or cause to produce), and Cheerleader cannot stop them from doing so. If he doesn’t want to get in the game, then fine, but if they don’t see things the same way, he can’t hold them up in this situation. The other reason, which in my opinion is the real reason the state allows it, is money, money, and more money, as in ad valorem taxes. If we didn’t have a tool such as this one, drilling wells in this state gets harder and harder, and what would be the result of that? Fewer wells get drilled, less production comes out of the ground, and the state makes less revenue. Anyone that understands the greedy nature of government can understand that!

Now, why do we want all of the acreage leased, and do not like situations such as the above one? Because when it comes time to infill drill this imaginary unit, we probably won’t be able to maximize the potential of the unit…because there is good ole’ Cheerleader, stopping us from drilling one or more wells, depending on his tract shape and how it fits into the unit. More correctly put, he cannot really stop us from drilling a well (unless he successfully defends the Rule 37 action, which is unlikely), but we would owe him his 8/8’s royalty at payout, and we’re not going to do that. So, if we assume that each HS well brings $10 million is profit for the E&P’s, then Cheerleader is actually costing us $10 million in future profit by remaining unleased…so he does hold a couple of cards, and they are actually pretty decent ones. But with the longevity of the first well in the unit that did get drilled, and the time that will pass before we are forced to drill another, we will be dealing with Cheerleader’s children or grandchildren instead of with him."

Post by ogmladvisor. A "Shaler" who appears to be FAR mor knowlegeable than Jerry Smith and our favorite "Cheerleader"

BTW...J Smith and Cheerleader SURE have been quiet...

Permalink Reply by jerry smith on May 13, 2010 at 9:19

when you have money that means power over the oil company's and you cant kick around like a lot of people . So iam laying in my pool drinking my coke not beer that for people that have money problems are cant handle stress. I am happy and got money so if the oil company willing to pay the price i will take it. I will get what i want for my property one way or other.

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Permalink Reply by king john on May 16, 2010 at 1:06

oldguy, there wasn't a reply button for you, but, i am responding to you...

we would owe him his 8/8’s royalty at payout, and we’re not going to do that. So, if we assume that each HS well brings $10 million is profit for the E&P’s, then Cheerleader is actually costing us $10 million in future profit by remaining unleased…so he does hold a couple of cards,...

i appreciate your honesty in your reply. on the few, remaining, unleased acres i have, i am counting on this scenario. i know when it comes to infill drilling, yall got to have those 50 and 80 acre tracts. it will cost alot of money if you dont have them....lol, yea, its funny to me because you guys act like there is no tomorrow. not everyone on this website is old and not every land owner is stupid. you sound like a fear monger, who preys on the uninformed and under educated. i wouldn't think that is how the COO of a major player would want to be interrupted. it is what it is, and we all make our own deals, be them good or bad. i am curious why you, being an executive at a major oil and gas company settle for mid-grade whiskey...? what kind of cigars do you smoke???
kj

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Permalink Reply by jerry smith on May 16, 2010 at 3:42

See if you are smart and got money you wait until they drill the wells and then hire your own operator and drill your own wells then suck them dry

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Permalink Reply by reallyoldguy on May 16, 2010 at 11:11

J R Ewing: is this Jerry Smith for real? If he IS, Im going to feel terrible for being so mean to someone of his "intellect", or lack there of.
Personally, I think jerry smith/cheerleader are affiliated with this 'jicky' Jurrasic Exploration outfit. Your thought???

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Permalink Reply by BirdDawg, plain ole' idiot on May 16, 2010 at 15:05

J. R.,
As has so often been the case, you are wong again. I am in no way defending jerry smith, but you know as well as I do that he could hire an operator. Sure, he may still have to put uo the money to drill, but he could still hire an operator.

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Permalink Reply by jerry smith on May 17, 2010 at 1:29

It sounds like some one is unhappy the way i operate. Just to let you all know i have been in the oil business since 1985 and i can drill my on wells if i want to so quit your crying. I love it when a operator comes and drill's by me and we cant work out any deals because i will suck him dry next to me

Permalink Reply by jerry smith on May 17, 2010 at 1:34

I know what i am doing and i am not going to tell you everything but i have the money to drill when i want to .

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Permalink Reply by jerry smith on May 16, 2010 at 3:45

he drinks moon shine and then starts acting like Glen beck wanting something for nothing i guess he thinks people are dum

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