Seismic Permit Question

We have about 500 acres under lease with Southwestern Energy. The lease has been in place a little over a year. Over the past month a company named Diversified Land Management has been sending multiple requests for authorization from us for a seismic permit for the land. They say they are working for Seitel Corporation. Why would they be doing this? Is there normally a fee paid for the right to do this? Any insight would be helpful.

Thanks... jay

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Permalink Reply by adubu on May 8, 2010 at 13:31
YES-----they are looking at large multiple sq mile area that will include multiple companies leases and some unleased area. Seitel is doing this seismic for a client and Seitei could care less who may have what leased. They will not be harvesting the minerals so does not effect your lease with SWN. They run title only to find surface owner. As leasee to SWN call them for information. Seitel will tell you who order the shoot if you ask. If SWN did not order it they can purchase it from Seitel or the client that paid for it to be done.
Permalink Reply by Explorer on May 8, 2010 at 16:23
SEITEL shoots speculative shoots....meaning they license (sell) the data to multiple companies. DLM would have used the tax assessor records to obtain your information and they will send a permit to everyone within the boundaries of the project to try and obtain permission for ingress/egress. SEITEL probably has it worded in their permit that once you give permission, if you have a non-exclusive lease with a company, their surface permit will then act as a mineral permit, thus giving them permission to record the sub-surface data.
Permalink Reply by adubu on July 27, 2010 at 10:31
Explorer ------If your minerals are leased SEITEL must have the Lessee sign off before they can shoot across your surface land. Lessee signing off means they have paid SIETEL DATA for copy of seismic which usualy is in 5 figure range. Of course they could sign off without paying and they would not receive the data either. Some companies have no desire to drill deep well but still have to OK because sound waves go thru their leased area.
Permalink Reply by Craig Cooper on July 27, 2010 at 14:31
Seitel only needs mineral owner permission to acquire seismic data. However most seismic acquisition companies also like to secure surface owner permission for ingress/egress during their operation. Generally a fee is paid to the surface owner for access and the acquisition company will pay for any damage done to the property and/or crops, etc. during the project (though most operators really try to minimize damage & disturbance).

Up-front fees are generally NOT paid to mineral owners; rather permission is granted in exchange for receiving specific future benefits, e.g. the ability to buy data at a discount or the ability to view the final processed data within the mineral owner's area.

Mineral owners do not necessarily participate in or pay up-front for spec data acquired on their acreage.
Permalink Reply by Craig Cooper on July 28, 2010 at 10:57
Agree with your comments re rarity of granting data viewings. I merely used that as an example of a potential future benefit.

For tracts not approved for inclusion in a seismic program, things are a bit more complicated than simply excluding physical operations (i.e. seismic data acquisition). All data originating within/under the excluded tracts should also be deleted during the seismic data processing stage. Most seismic operations today acquire 3D data and therefore collect useful data within/under unapproved tracts even when the physical operation avoids them.
Permalink Reply by jay w on May 10, 2010 at 9:29
I just talked to the company that is looking to shoot seismic and they say the $15 or so per acre is only paid to the person that owns the surface rights. Is that true? We only have the mineral rights not the surface rights.
Permalink Reply by Explorer on May 10, 2010 at 11:55
Yes, that is correct. The surface fee is for "ordinary damages" and inconvenience.
Permalink Reply by Donna Thornton on July 31, 2010 at 4:00
I just received a check one week ago for 3-D seismic surveying. The original request for permission only mentioned the $15 per acre. I called my letter's contact person on a few points I had questions about. One point was the damages. He said $10 per acre, agreed. So, the $25 per acre everyones is saying is standard. I will say the payment came before they are going on the property and the amounts are broken down on the stub between seismic pay and prepaid damages. Very important. True, don't pay taxes on the damages amount. You will probably not receive a 1099 if your entire amount is not more than $600. Keep your documentation in the event that you receive a 1099 and the damages part is not broken out. I am an accountant so I have some background here. And please, please, please everyone, be careful. If you do not live in La., be sure to be filing your non-resident La. tax return for any monies you are receiving from the La. properties in the Haynesville Shale. The state of La. is not ignorant. They know all of this revenue is flowing to property owners of the HS. It may take a couple of years, but they will catch up with you. They are not going to just let it pass by.
Permalink Reply by P L Campbell on July 31, 2010 at 6:01
How long did it take for you to collect after signing seismic permit? Since you are an accountant and know more about this than I do, it is possible for this scenario. We are a "C" corp, trying to avoid double taxation. Company wanting to do seismic shoot, says they can word the seismic permit anyway we want, making the payment go straight to the mineral owners instead of the surface owner to avoid double taxes, is this possible, or are we setting us up for an audit?
Permalink Reply by Donna Thornton on July 31, 2010 at 16:23
My form was dated 2/17 but did not mail back until 3/05. So, about 4 1/2 months lapsed. But, I do not think there is a norm. The seismic company is actually contracted by the oil company so I think it depends on when and where the oil company wants them to do it. Just my thoughts. As far as the taxation, I don't see a problem. The IRS is only going to be concerned about the income being reported by the person or entity whose SS# or I.D. # was submitted on the 1099 form. As long as it shows up on the return of who it was submitted on, all is good. Hope this helps.

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