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Permalink Reply by OLYMAN on July 3, 2010 at 5:07

Harvey, I am a umo also, in the last couple days we started a group for umos for us free loaders lol, i think if you repost your question there you will find your answer. I to was offended by barons commit on freeloaders

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Permalink Reply by Jeff on July 3, 2010 at 5:09

Not everyone on this site is looking at things from a landowner point of view. That is one of the things that make this a great source of information. Terms like freeloader obviously from the O&G company point of view.
Just because you are unleased doesn't mean you didn't try or were not open to being leased. It also doesn't mean you were trying to take the company to the cleaners or get rich on bonus money. You don't have to be a greedy landowner to be unleased. I know this first hand. I have a well drilled in my section waiting on fracturing and we are unleased. We negotiated in good faith with the O&G co. and did not reach an agreement. We did use an oil and gas lawyer to write the lease agreement. We couldn't come to terms on the wording of the lease, specifically the vertical pugh clause, they didn't want one and we did. They were also not willing to give up any additional money for not having the clause.
My advise to you is if you are able, get an oil and gas lawyer and make sure that you get every bit of information that is due to you under state law. Once the well pays out you will get your share of the production. And if I may add this, Stay open to the possibility of leasing your land.

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Permalink Reply by Pam on July 5, 2010 at 3:01

Harvey, if you haven't already, do read Caliente's UMI Basics. Henry reposted the link on the first page of this discussion thread and Dion pointed to the particular paragraphs addressing your questions. It's a very informative document and Caliente put a lot of work into it.

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Permalink Reply by Dion Warr, CPL on July 5, 2010 at 6:10

Harvey:

First off, my hope is that you have read past some of the more inflammatory postings in your thread and found some of the advice and information useful.

UMI (or UMO) as "freeloaders" - for some of those in the industry, it is a bane to oil and gas development in LA that owners within a geographic unit are allowed to exist and be de facto participants in a unit well (or any other subsequent well drilled in a unit), and not be penalized beyond the statutorily defined well costs). The way that LA law and Mineral Code treats UMI owners is markedly different than other states, in which wells are either predominantly drilled on a lease or pooled basis (whereby unleased mineral owners largely are cut out of proceeds from production), or mineral owners are integrated (more or less forced to choose to lease from the prevailing lease terms in the area, which the regulatory body determines to be fair compensation), or the m/o incurs a penalty akin to a 'risk charge' for not leasing. In LA, UMI pretty much gets charged the costs of the well, which are offset from UMI's proportionate share of revenue once production is established. UMI does not have to choose to consent to the well (or face penalties), nor do they have to advance any portion of the well costs upfront (the operator carries this cost), so the risks (other than missing out on bonus or rental proceeds) are minimal. However, should any such well become profitable (reach payout), the mineral owner may recoup its full proportionate share of production, by virtue of the mere fact that the mineral owner own rights within the unit. Hence, the derisive terms 'unwanted mineral interest', 'freeloader', etc. Regardless, this situation is a fact of life of O&G development in LA.

Caliente (or K___, as some of the 'regulars' know her) put together her 'non-legal' brief about UMI which had grown out of her own research and fact gathering in her preparation that she had made in dealing with her own family's interest. She made this treatise available to the members here on the site. Being that she is not offering this as 'legal advice', it is available as a reference (some might call it 'required reading') for those owners who seek to assert their rights as UMI owners. At least one will know something about which they speak when they negotiate with a landman, or meet with their chosen counsel to look after their rights. While she (yes, she's a she) and I may not always see eye-to-eye on issues (she as concerned, educated, mineral owner, myself as a landman), she has done her homework, understands the major issues at play, and put together some good information for the folks here at GHS. Where she is opining, she says so; where there is precedent, she can cite it.

As far as the 'affectionate' monikers, take them with a grain of salt, and remember the POV of who is doing the posting. And think of that proverbial water sliding off a duck's dorsal section as you do.

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Permalink Reply by Harvey White on July 5, 2010 at 13:29

Thanks Dion. I put that danged ol mousy pointer on that attachment and went clik.clik.clik.clik.clik, but nothing happens. I would like to read her umi basics. Is there somewhere els I can find it?

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Permalink Reply by Robert Griffin R on July 5, 2010 at 17:16

Harvey,
Hope this is what you need. Best of luck.

Attachments:

• UMI BASICS by CALIENTE MAY 2009.doc, 172 KB

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Permalink Reply by Dion Warr, CPL on July 6, 2010 at 17:08

Harvey:

Are your security settings set so that you can download attachments from GHS? If the settings are too high, are GHS is not a "trusted site", it may be crapping out on you when you try to download.

Just guessing out loud. Please do not mistake me for an IT person.

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Permalink Reply by Antsu-in-Japan on July 6, 2010 at 19:50

Thank you, Dion, for clearing that up for us.

Funny how the industry thinks that we should be penalized simply for not agreeing to have someone take something that is already ours by law in LA. Maybe the rules should be changed throughout the US to model what happens here. :-)

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Permalink Reply by jerry smith on July 7, 2010 at 0:22

I got the same problem in Texas i was just trying to get something at a fare price. I was not out of line in my lease with the oil company. They were trying to rip me off. i told them i will see you at the mouth of the well. How many oil company's state in there lease if there oil rig get stuck it will automatic extend the lease for 2 years. I don't think so

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Permalink Reply by Kat Bloomfield on July 7, 2010 at 2:38

ditto to Dion. Great informative post.
The term "freeloader" is an utter misnomer. Why? Because it factually is incorrect. The UMO bears its share of expenses in the drilling and completing and supervision of the well. Thus, the UMO is not, by definition and in reality, a freeloader. So, those that use the term do so in a Beck-ian way, i.e., they make it up.

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Permalink Reply by The_Baron on July 7, 2010 at 4:06

What if the well does not pay out or is a dry hole?

Then the UMO is not responsible for the loss. so maybe, freeloader is a bad word...maybe parasite is more applicable.

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Permalink Reply by Kat Bloomfield on July 8, 2010 at 4:21

Baron, you are so off the mark it's ridiculous. Just because the mineral rights are owned by someone other than you or another O&G, does not make that someone a parasite or a freeloader, you pig. The pig is O&G which has bullied its way through cutting costs and enormous profits to infiltrate every branch of government, to have tax incentives and tax breaks issued to it when totally unnecessary, to have limits of liability put in place so O&G can screw up the world in its quest for the almigihty dollar. I suggest an attitude change. Why? because the facts bear it out.

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