Replies to This Discussion

Permalink Reply by Steve P on October 22, 2013 at 11:14

And, again, the key point is what cheapshot says above - the operators "hang stuff" on the DO that is not necessary, and benefits them exclusively. 

I have been signing DOs for 40 years.  None of those wells ever paid me much of anything until the HS arrived (and boy do those days pass quickly).  After reading many posts on this blog, I've stopped signing them.  I've not had a problem over the years with a DO, but I don't want one either, and if an issue arises, I do not want to have signed away or conferred some rights that I didn't knowingly bargain for. 

 

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Permalink Reply by Douglas Rayburn on October 24, 2013 at 7:08

If it was me and again if it were me. I would first check the division order and see if it changes anything in my signed lease, few people understand that a division order has the power to change what was in a lease. If it doesn't ok sign it. They are not suppose to go forward without it. If it does change the wording of your lease than add to the division order an amendment denouncing any changes it makes to your lease and that you in no way approve of any changes to your original lease. Be-sure you send it back by certified letter. You never, never agree to anything you are not in agreement with. 

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Permalink Reply by LN on October 24, 2013 at 11:24

Hi Doug,

I don't have  lease agreement.  I'm a UMO.

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Permalink Reply by LN on October 24, 2013 at 11:43

Forgot to add, as many of you already know, I don't have a lease with CHK, but 3 people supposedly found a  "14 year old will" and entered into a lease agreement with them.  I was able to legally challenge this  "will" and have it thrown out of court!

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Permalink Reply by 1kw6x71km1v37 on October 24, 2013 at 13:25

I am assuming LN is an UMO in Louisiana. If this is the case, LN's mineral rights are stronger than if they were leased. That is not me talking, but rather a Louisiana court of appeal justices. As I have stated elsewhere, the operator has 180 days from the date of sale to pay LN, less costs. Signing a DO could potentially reduce LN's status to below that of the average lessor, depending on the DO terms, and the operator could potentially avoid having to pay back royalties through payout.

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Permalink Reply by Skip Peel - Mineral Consultant on October 24, 2013 at 13:31

UMO are due no payment on well production until the well has recovered its cost to drill.  180 days does not apply to UMIs.

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Permalink Reply by Andrew on October 27, 2013 at 18:29

Skip, once UMI's hit payout, the operator has to remit proceeds allocable to those interests within 180 days of production/sales.

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Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2013 at 2:09

You are correct, Andrew.  They are supposed to.  Don't always happen.  Regardless the point is there is no payout, 180 days or otherwise, unless the well recovers its cost.

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