Replies to This Discussion

Permalink Reply by waltcop on February 5, 2010 at 7:52

Henry,
That is a good question to ask anyone that have had to get info out of their operator wheather they are an UMI or have an escalating royalty clause in their lease. How are you notified when a well is payed out.....is it a state law to notify all unit mineral owners or is everyone on their own to find out?

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Permalink Reply by daddy bill on February 5, 2010 at 9:05

Henry:
Next time add a clause in the lease that the operator will furnish you a payout statement every 3 months. If not furnished the royalty would immediately escalate.

Daddy Bill

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Permalink Reply by Henry on February 5, 2010 at 9:32

Waltcop,
For the case of the UMO, the law is pretty clear. It spells out when and how the UMO must notify the operator and how long the operator has to respond. It also lays out the allowable expenses (e.g., drilling, testing, completing, etc), but of course there is wiggle room in these things. The law also lays out how long the operator has to pay the UMO, once the well pays out. The law also lays out penalties for failure to comply. Go to Caliente's page, and she wrote a really nice primer on the process.

If you have a lease that has an escalating royalty clause, then I think you really need to be specific as to what info the operator needs to give you, when, as well as penalties. You also need to be very specific as to what costs can be attributable to the well cost.

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Permalink Reply by waltcop on February 5, 2010 at 12:19

Thanks for the help Henry. I appreciate it very much.

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Permalink Reply by Bacon on February 8, 2010 at 6:10

Henry, Great info. Thanks.

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Permalink Reply by Aubrey C. Sanders, Jr. on February 11, 2010 at 13:59

Good idea, I think.

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Permalink Reply by Michael Richardson on February 7, 2010 at 16:44

Now for another (dumb) question for anyone. How does one verify if they are being paid by all applicable wells? For instance, we own a small % of the rights on the southern 1/2 of S33 T13N R16W and possibly the northern 1/2 of the same section, but that is being debated. There are 3 active wells in this section. We currently receive royalties from two (154093 & 179849), but not from the third (236859). I am trying to determine if I should be getting any royalties from this well. There is also a 4th well being drilled (240506) and I am trying to determine the same thing for this well. The rights were inherited so I am trying to understand just what we have and what we are entitled to.

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Permalink Reply by Jester on February 9, 2010 at 6:56

I own minerals in Sec. 6, T15N, R15W in Caddo and have checked Sonris but have found no activity. Has anyone been aproached in this area? We had an offer of $5000 and 25% for three years from Chesapeake back in September. What should I be looking to get now?

Thanks everyone!

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Permalink Reply by Henry on February 9, 2010 at 8:37

Jester,
I cannot tell you what you should get. But be aware that there are good wells in your area:
#238539, 24-15-16, Chesapeake, 11,900 mcfe/day, 20/64 choke, CP 6240#
#238847, 13-15-16, Chesapeake, 10,700 mcfe/day, 20/64 choke, CP 5920#
#239581, 24-16-16, Chesapeake, 13,700 mcfe/day, 22/64 choke, CP 5800#
All of these are very good (not great) wells, and within 3 miles of your section. Good luck.

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Permalink Reply by Horseshoe Girl - a1 on February 11, 2010 at 6:48

Sir, is that $750 per acre just for your % interest owned, or for the whole. Say if you owned 5% mineral interest in the property, and the offer on the table was 12K/acre, you would get $600/acre for your proportionate share. If that is the offer for 100%, then ask the leasing company agent what tailgate he/she just fell off of. Get any offer in writing and make certain that the offer is specific regarding whole or fractional ownership. I personally wouldn't take less than 8K/acre, and I think its possible to negotiate up to 10-12K in some parts of DeSoto, especially for a 200 acre tract. Don't forget to have a pugh clause added to your lease, so you can lease deep rights later. Good luck!

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Permalink Reply by Bobi Carr ("parker") on February 11, 2010 at 10:40

With a 200 acre tract you ought to be able to lease just the haynesville and save deep rights and shallow rights.

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Permalink Reply by Michael Richardson on February 14, 2010 at 5:14

He gave each of the owners the same $750 offer based on net mineral acres. The tract is 194 acres, of which we own 5% or 9.7 net mineral acres. Therefore his offer to us was $7275 & 20%. The other owners received similar offers based on their % ownership. But the point is moot because as it turns out, the current lease will not be expiring after all. There is a well being drilled in 33-13-16 that has a PBH in 4-12-16. Apparently the landman did not realize this, but it is my understanding that this well will keep the lease in effect.

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