Replies to This Discussion

Permalink Reply by Bandit, UMO on December 11, 2008 at 17:58

That's the understanding that I'm getting. And the mineral owner is PAYING the fees to the banks for those subordination agreements!!! That's WRONG! Since it's to benefit the O&G, then the O&G should be paying those fees, not the mineral owner - that's what I think!

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Permalink Reply by The_Baron on December 11, 2008 at 18:02

Bandit, does your lease have a warranty clause? I bet it does.

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Permalink Reply by Bandit, UMO on December 12, 2008 at 4:29

No lease yet.... that's why I'm trying to learn as much as possible. Please forgive my ignorance. This is a great place. I've learned a lot here.

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Permalink Reply by Grice on December 11, 2008 at 18:46

Jim, since some lenders require a non-refundable processing fee, could the reimbursement be dependent on the approval of the subordination. Should the lender reject the subordination, the O&G company would not be required to reimburse the processing fee. I would think it would be more beneficial to the landowner, to make the O&G company responsible to paying the processing fee. This could be written into the LOI, and the execution of the lease would be partly dependent of the approval of the Subordination agreement.

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Permalink Reply by Grice on December 11, 2008 at 19:07

Thank you. I was considering what you stated earlier "The oil companies used to handle all of that kind of stuff as part of the curative work." and was thinking if they use to do it in the past, then what prevents them from doing it now? Sure it may be overwhelming, but none more than it is for the landowner. Could requiring the O&G company to secure the subordination be considered just part of doing business? We have already experienced the emotions of when an anticipated lease was not honored, and that was at no expense to the landowner (excluding attorney fees, which are generic). Imagine the outrage if the same thing happened again, but after the landowners have already paid the non-refundable fees to the lenders. After the recent community outrage, I would image the landowners would request as much protection as possible. Demanding that the O&G companies pay the non-refundable fees might offer just such protection, since it is them (the O&G companies) who are demanding the subordination agreements.

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Permalink Reply by The_Baron on December 11, 2008 at 18:48

Considering the current finaicial markets...very prudent.

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Permalink Reply by The_Baron on December 11, 2008 at 18:02

Spring branch,

absolutly. it assures the viability of the lease.

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