Oil & Gas Pro

Intersting bill impacting UMO

http://www.legis.state.la.us/billdata/streamdocument.asp?did=697621

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Permalink Reply by Kat Bloomfield on May 26, 2010 at 7:53
I'd like to read the actual text of the proposed legislation. UMOs are left alone.

The proposed law, at least, according to this summary, is directed at the non-participating mineral interest owners and NOT UMOs.
Permalink Reply by Kat Bloomfield on June 5, 2010 at 1:42
GD: just keep in mind that a UMO's interest is NOT "royalty," overriding or otherwise.

Oil & Gas ProPermalink Reply by The_Baron on May 26, 2010 at 9:49
I took it to imply the law will affect the UMO's as well, but that the UMO's will still be free from the risk charge.

landownerPermalink Reply by Henry on June 3, 2010 at 13:10
Can you explain, in English, what all this means? Who is affected? How?

landownerPermalink Reply by sesport on June 4, 2010 at 1:11
but, but...They're going to need more money to offset the increased expenses of all the taxes & liabilities & high tech they'll have to pay after the regs & codes & standards are changed to improve drilling & safety and clean up after themselves even though they're just going to take their business overseas since they can't drill anywhere because of the GOM and the union workers want to be paid an arm and a leg.

Have I been readin' & compreehenin' things around here long & well enough?

80)

landownerPermalink Reply by Henry on June 4, 2010 at 1:39
GD,
Pardon me, but I haven't even fallen off the turnip truck yet. So, I'm going back, reading and re-reading this, and I'll start with my first two questions:

1. What is the difference between a royalty and an overriding royalty?
2. There seem to be a different classes of owners here. There is something called a nonparticipating leaseholder. Is this a company that has bought a lease, but is not the driller and does not want to participate? Then there is the nonparticipating mineral owner (what we typically call a UMO on this site). I'm having trouble separating how this proposed change in the law treats the first group differently from the second, of if it does.

Any help is appreciated.

Oil & Gas ProPermalink Reply by Les Bamburg on June 4, 2010 at 2:56
Henry, this bill has no impact on unleased mineral owners or royalty owners. You can see my comment below.

Oil & Gas ProPermalink Reply by The_Baron on June 4, 2010 at 3:00
1) An overrideing royalty is generally a royalty granted by the operator or lessee... its a way of compensating for work done putting together a deal etc... The overide will participate in production with no risk as a working owner would. A royalty is granted by virtue of a lease or royalty deed. (basically the overide is a royalty created out of the working interest and bears no expenses)

2) The law treats the nonparticipating leaseholder and nonparticipating mineral owner differint in the way that the risk penalty is applied. The nonparticipating mineral owner is not subject to the risk penalty while the leaseholder is.

Oil & Gas ProPermalink Reply by Les Bamburg on June 4, 2010 at 3:15
Baron, overriding royalties (with back-in option) can also be created when a lease holder farms out to another company.

landownerPermalink Reply by Henry on June 4, 2010 at 3:50
Les B and Baron,
Thanks. Your answers helped a lot.
Permalink Reply by BirdDawg, plain ole' idiot on June 3, 2010 at 13:57
GD,
I agree, I think this bill is pro O&G and anti-mineral owner. Like you said "if it ain't broke, why fix it".
I will tell you why. It is just like you said, it is to take bargaining power away from the mineral owner. I agree with you 100%.

Oil & Gas ProPermalink Reply by Les Bamburg on June 4, 2010 at 2:54
BD, actually the bill does not change the treatment of unleased mineral owners. Please see my comment below.

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