If UMO signs lease in section w/ producing well, is he owed back royalty

Scenario: Owner gets ready to sign a lease. Gas co. backs out because it is feuding with a group of UMOs in that section. If owner gets gas. co to sign, is it at discretion of gas co. to pay back royalties (gas co. told owner this). Well is a good producer and has been producing for over a yr. during which time owner has been getting quarterly reports from gas co. Well pays out in July, so 100% royalties will start paying

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hey, thanks all for the info. Guess my friend will just stay unleased and see what happens. Irony is he was cooperative with the gas co. & got caught in the feud between them and a group who wanted more for their lease money
just goes to show that banding together is not always what its cracked up to be.
If they get more money as UMOs than as lessors, then banding together and not getting a deal was a pretty good thing.

Why would a company drill if the land/minerals owners don't lease. With that attitude you won't get a well unless you drill it yourself. So, are you going to drill your own well? If you do you will have 100% of the production from your acreage and all of the other mineral owners will have 100% of their's from your well. Sounds good to me. I hope you drill next to my land. I would appreciate that VERY VERY much.

It probably is at the discretion of the gas company to pay back royalties.  Of course, it's at the discretion of the UMO to not sign unless he gets them. 


This is a good point.  I'm sure there are a lot of scammers who would try to get a UMO to sign a lease, offer a "good" royalty and bonus rate with no back royalties, effectively stealing all the gas produced in the past from the landowner.


You should also get a better signing bonus and maybe even royalty rate.  When they're leasing undrilled land, it's a gamble.  You're selling your interest in the gas from a unit with a working well.  It's like the difference between a lottery ticket for the next drawing and a winning lottery ticket from the last drawing. 


Don't forget to get all the other important lease terms as well as bonus, royalty, and back royalties. 

Stealing the gas? Not really, those revenues would be paid to the share of costs accrued by the mineral owner for their pro-rate share of the well.


Why would I as an operator pay back royalties if I new I could use those monies to pay for your portion in the well?


If I was a MO and was looking at a bad to mediocre well, I may want to lease just so I could get something. If I was looking at a great well, why worry about it and wait for the well to pay out.


Although, I would also be looking at the future, one day prices will rise and unit development will take place. An operator may be willing to offer back royalties with this in mind.

We signed a lease with Questar on lands that were already producing. The effective date was as of first production on any lands covered by the lease. Several wells had been producing for over a year. Tis is in a section that was previously Wil Drill. I have spent hours trying to get Questar to pay back royalty. They have not done so.


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