Why the H*#4@ did I sign a mineral lease?
Being part of a 640 unit is crap for the folks with small acreage. Its all a pyramid scheme. We all joined in this thing together to make money together...at least that's what the feeling WAS. I remember when the first checks were given out, many Shreveport natives boosted the economy for this area by shopping for big ticket items like cars, houses, etc. in hopes of getting more and better checks. But what did Chesapeake do? Send out Div Orders with stupid decimal points in the writings, such as .00003 for example. A lease in the beginning stated that the mineral owners would receive 25% of monies made. The Div Order to be signed states different rhetoric with that decimal crap. When I asked Chesapeake where did they get those numbers from, they answered me back with, "It's something we made up." Mineral owners are treated like the enemy. What if Walmart was in this situation? They own the merchandise, but the only folks who make the real money are everyone except Walmart, (except mineral owners). Doesn't make sense. Try doing the math with screwed up numbers such as .0003 and see what you come up with. A bunch of zeros after a decimal point adds up to horrific under payments made to the mineral owner, the ones who own the product. And where are the guys in my 640 unit who own tons of acres and made nearly a million dollars? would be nice if they shared their profits with us guys making 80 dollars to 500 dollars a year. I signed up because I knew it would benefit those with small acreage as well as those who own large acreage. My neighbors are in shock and most folks are embarrassed that their checks aren't more lucrative after receiving their initial payments of thousands of dollars, now we all get hardly anything. So much for boosting the economy for Shreveport.
Tags: 640, chesapeake, division, law, mineral, order, owners, payments, pyramid, rights, More…
Views: 8906
Replies to This Discussion
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Permalink Reply by lee on
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Why is there a decimal amount out of a whole number anyways? How does 640 turn into .0003? Annnnnnd...how can you do any math without regard to showing how much money was made per month? When was the last time you went shopping at a 30% off sale and money and pricing weren't in the equations? A whole lot if disinformation was given to land owners initially. I used to hear, "The real money comes after the initial signing bonus." NOT! The whole thing is a joke on the mineral OWNER. I find it hard to detach the Kick Me sign off A@#!
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Permalink Reply by Gale on
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You don't own 640 acres if I remember right you own less than a acre. If you had not signed that lease you would have been just left out.
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Example, in one of my gas units I own 150 acres of the 640 acres in the unit. They use those numbers to figure my decimal and the remaining 490 are used to figure the other owners percentage of ownership in that unit. Lord I would hate to even mention the word "Override" interest and really confuse you.
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Permalink Reply by buckmaster on
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i think that Lee thinks he is supposed to get 25% of the whole unit
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Permalink Reply by Dion Warr, CPL on -
Which of course would please the owners of the other 639.6 acres - but I am sure he would "share".
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Permalink Reply by DrWAVeSport Cd1 on
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Wrong...
In LA, Lee would have been force pooled, and did Not have to sign a lease...
He would have become an UMI, Unleased Mineral Owner, and been paid his 100% of his .00003, as soon as the nat gas well reached "pay-out." Of course monthly lease expenses (Lee's .00003% share of lease expenses) and monthly capital expenditures (Lee's .00003% share of capital expenditures) would be taken out of Lee's 100% of his .00003 share of the Unit's acreage.
Lee would however have given up the up front bonus money, but gotten to deduct his tangible and intangible expense each year on his income taxes, plus 15% depletion allowance.
Of Course, the O&G Companies are nickeling-and-diming the UMO's the same as they are their lessors. And, payout can be anywhere from two to four years, average.
Downside: To recoup his lost "bonus moneys" over time, would be a long time, at today's nat gas prices.
Upside: The "bonus moneys" are in one's hand immediately with some kind of a royalty check within a few months of production... No waiting for the well to payout.
IMO. Understanding that mineral owners had "options" in Louisiana, was not conveyed to mineral owners by the O&G landmen who came calling with their "standard" lease forms... Leasing vs. Unleased.
No mineral owner in the Haynesville Shale in Louisiana would have been "left out" for not having signed a lease...
DrWAVeSport Cd1 6/29/2013
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Permalink Reply by Dion Warr, CPL on
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DrWAVeSport:
Except should he possess sufficient acreage in a unit unleased so as to make drilling the unit financially untenable, or at least unattractive enough from an NRI perspective for any potential operator to just go drill elsewhere rather than carry a large UMI.
No well = left out, or at least left owning 100% of "something that is not producing" (most people would simplify or restate that as "nothing")
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Permalink Reply by Henry on
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Lee,
Why don't we do the following to wrap up this discussion? If you don't mind, would you please upload a copy of your latest statement? Then one of us will walk you through it, and explain all the numbers to you. Maybe at that point, we can all see if anything funny is going on or not.
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I have numerous mineral interest in Panola County, some are so small it's a waste of a written check. For instance in Carthage I have minerals under a building on the square that my grandfather owned and in Beckville I own rights on the 1.1 acre my grandparents home sat on. Then out from Town I have several hundred acres of mineral rights. Everyone of them have a decimal point and always have. I've gotten checks for under a dollar for the minerals under the building in Carthage. But, as I tell my children this is truly a gift and a blessing, do not count on it,and do not abuse it either, it can go away as fast as it came. So be thankful for the Gift you have been given no matter how much or how little it is.
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Permalink Reply by Bobi Carr ("parker") on
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1 / 640 = .0015625 (1 acre)
.0015625 x .4 = .000625 (.4 of an acre)
.000625 x .25 = .00015625 (25% royalty)
This should be your approximate decimal interest.
Of course, don't blow a gasket when this doesn't match your check, because not every unit is 640 exactly.
This figure should be a pretty darn good estimation of your decimal interest.
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Permalink Reply by Bobi Carr ("parker") on
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I am not a big fan of Chesapeake but I'd rather be getting mailbox money from them than a big fat zero any day of the week.
With .4 acres, you put up with NONE of the nuisance of drilling and get all of the benefit.
It just doesn't sound like a bad deal to me.
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