Is this right? Or is it seller beware?
Hypothetical: Company A leases land for 300.00 an acre and 20% royalty a few years ago. Drills a veritcal well into the HS. Caps the well.
Then suddenly a few months later the family that leased the land to Company A is approached by Company B with a higher than usual (whatever that means) offer to sell their royalty Company B states they are willing to take the risk. Once again this is before the play became common knowledge. The offer is researched thoroghly and the sale is made.
Later seller finds out Company B was related to Company A and that Company B had some information on the well that the family could not have found out in their research.
Very soon after mineral sale signed pipelines are placed, three more wells are punched and the wells are bigger than average.
Is this common practice in O&G? Is it right? Or should seller beware?
Then suddenly a few months later the family that leased the land to Company A is approached by Company B with a higher than usual (whatever that means) offer to sell their royalty Company B states they are willing to take the risk. Once again this is before the play became common knowledge. The offer is researched thoroghly and the sale is made.
Later seller finds out Company B was related to Company A and that Company B had some information on the well that the family could not have found out in their research.
Very soon after mineral sale signed pipelines are placed, three more wells are punched and the wells are bigger than average.
Is this common practice in O&G? Is it right? Or should seller beware?
Views: 52
Replies to This Discussion
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Permalink Reply by Two Dogs, Pirate on -
Everyone should be aware that some will always waiting in the shadows to take advantage of anything.
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Permalink Reply by reg on
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Jim it happend in Louisiana. Are you familiar with the ethical rules of landmen/O&G-- if so send me a email ryangatti@bellsouth.net
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Permalink Reply by Grice on -
Sorry, do not take this the wrong way....
"The American Association of Professional Landmen is a voluntary international professional organization that unites approximately 8,500 landmen and land-related persons through professional development and service."
I just wanted to throw some fuel on the fire. Forgive me.
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Permalink Reply by Debbie on
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I just read the Code of Ethics outline and would you consider the landman saying and I quote "he could quarantee without a doubt that the money to lease our land would never be worth anymore than his offer ever and he would stake his job on that statement" ethical?
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Permalink Reply by mike wilson on
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Personally I think a lot would depend on how much money was paid for the royalty. Certainly the seller is aware of the possibility that company B wants to buy for a reason. If the sale was hundreds of dollars an acre compared to thousands then a lawsuit would have to be filed and the burden on the seller to prove company B was connected and had info about prospect and future plans. Also did the buyer buy 100% of the sellers royalty or 50% or less. That also I think is important. Just my thoughts.
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