Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on November 15, 2009 at 15:51

The rights that you have remain yours, until you encumber them.

the force pooling would ONLY affect the zone that is referred to in the notice.

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Permalink Reply by James on November 15, 2009 at 16:00

Thanks for the info. That's what I thought but wasn't really sure. Have been reading so much I have a headache. Only have a small tract (12 ac.) but am seriously considering going as a UMI if I get the chance. Close neighbors got a couple of offers in the last two weeks so it looks like I might get in the game after all.

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Permalink Reply by RR on November 15, 2009 at 16:14

When I told a land man the other day that I was considering going UMI on some small acreage he turned up the pressure stating that I would be a full working partner in the well and would have to "pay my way" as we went. Also said the well had to pay for itself 300 per cent before I would start receiving payments!

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Permalink Reply by James on November 15, 2009 at 16:45

I've read that they might try to use that scare tactic to get a person to sign a lease but from what I've read, I don't think they can make you a working partner in Louisiana. I think they only recover 100% of your cost-share based on the size of your acreage in the 640 acre section and they have to take that from the well production revenues after costs. I'm pretty sure a person doesn't have to pay any out-of-pocket money. After all that, you should start to rake in the dough based on the size of your acreage/640 acre section. Don't quote me on this, but that's what I got out of all the stuff I read thru (but I could be wrong)

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Permalink Reply by RR on November 15, 2009 at 16:49

Thats what I thought too. Thanks.

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Permalink Reply by The_Baron on November 16, 2009 at 8:56

The 300% is for leased tracts. When the owner of a leease is force pooled, AND goes non-consent, they pay 100% of cost plus a penalty of 200%.

Unleased mineral owners only pay their pro-rata share of costs. Costs are paid out of their share of production.

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Permalink Reply by Mac Davis on November 15, 2009 at 20:29

RR, is your land in Louisiana? How small is the acreage?

Document very carefully what he says.

Does anyone know if it's legal to record a conversation in Louisiana without the other person's consent? I know federal law prohibits you from recording a conversation unless you're one of the parties in the conversation. Some states restrict further, some don't.

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Permalink Reply by Spring Branch,mineral owner on November 16, 2009 at 3:49

RR, he is actually probably ignorant and just doesn't know any better. If he is not ignorant, and does know better, then he is a liar, a cheat and a thief.

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Permalink Reply by James on November 15, 2009 at 17:18

I originally considered going with a lease if offered but the LandMan said they are not working small tracts right now. I thought if I could get a couple of extra clauses inserted it might not be too bad with the up-front bonus money and all. I was going to ask for 1. Shallow and deep depth rights. 2. To be paid the price at the well head 3. No cost royalties. Probably asking for too much but I won’t know unless I ask. I really don’t have much leverage with only 12 acres. Although, I did mention to him the part about the depth rights and he said “OK but we use our own language in the depth clause“. I didn’t like the sound of that but figure I’ll get the chance to review it before making my final decision.

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Permalink Reply by lanadan Ds3 on November 15, 2009 at 21:41

" . . .Also said the well had to pay for itself 300 per cent before I would start receiving payments! . . . "

HERE WE GO AGAIN ! ! ! Second verse same as the first! This "baloney" (an' I could use stronger words, I suppose) has been thorougly debunked and discussed on this site several times.

First, I would suggest that you go to justia.com and pull up Louisiana law, RS 30:10 and READ THE LAW in Louisiana. It SPECIFICALLY says that an UMI is NOT, and I repeat NOT responsible for the "risk fee" (penalty) of 200% ! ! This landman either does not know what he is talking about, or worse yet, is lyin' thru his teeth. He can get himself in a whole lot of trouble by doing so. (Go to LOGA web site , Louisiana Oil and Gas Association, and find where the author of the legislation points all this out in fine detail (Rep. Henry Burns authored HB 1128 which became Act 115 of the 2008 Louisiana Legislative Session. It changed the law from a 100% risk fee charge to a 200% charge -- making up the 300% your landman is talking about.) .

Second, this site has a WEALTH of valuable information on this subject. Seek this out thru the archives. Specifically, I would start with "UMI BASICS". Print it out -- read it ! -- no, better yet, MEMORIZE the more important parts. Also, look up the "TEN TOP MYTHS" about going UMI, along with "I AM UMI", and others.

Thirdly, having 12 ac in a 640 unit means that your share of the well will be 1.875% (12/640). You will NOT receive any of your 100% of the 1.875% revenue (less a well maintenance or supervision fee each month), and please notice that I used the word REVENUE and not the word ROYALTY, as that is just what it is, UNTIL you have paid your share of the costs of drilling, equipping, completing, etc., the well, which again, is simply 12/640ths, or the 1.875% figure.

Lastly, and again I go back to what Rep. Burns had to say on the LOGA site, a landman who intentially leads an unsuspecting UMI into a lease by using these kinds of "threats", and yes, that is EXACTLY what they are -- threats, may be in for some serious trouble with the LOC and others. BTW, in Louisiana, you CAN record your conversations without telling the other person you are talking to about it. A third party CANNOT record someone else's conversation (s) without a court order as that would be wire-tapping and agin' the law.

Finally, no one should advise you as to whether you should remain UMI or go leased (I certainly am not). You should, however do your homework and know as much as you can BEFORE you sign a lease. A good O&G attorney might be in order at some point.

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Permalink Reply by James on November 16, 2009 at 4:18

Thanks for the info. I know there is an unbelievable amount of info on this site. There is so much spread out in so many different places that I have been picking out bits and pieces from here and there. It can take a lot of time researching for an inexperienced person to find what they are looking for. I feel like I had the correct info. on everything except the 200% (instead of 100). Must have missed that in the sea of info. It’s always better to see things from several different perspectives and yours got me to thinking. I can (if ever offered) take the up-front bonus and 25% of 12/640 once they payout starts or no up-front bonus and 100% of 12/640 once the pay-out starts. If it’s a bad short-lived well, then the first choice is better. If it’s a good long-lived well, then the second choice is best. I guess I could try to research the output and decline of the other wells in the local area and try to guess how one around here might do(with strong emphasis on the word guess) for a long term investment or go for the quick sure bet. In other words, no matter how educated I become, I’ll probably come full circle and be right back where I started. It’s either an educated guess or a lucky guess. Either way it looks like a guess to me. I may just flip my lucky coin or roll the dice. Rest assured, no matter which way I go, it will be the wrong way. The story of my life on matters concerning money!! Have a Good Day !
P.S Can anyone recommend a good, cheap, honest O&G attorney around Sabine Parish ?

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Permalink Reply by John Avatar on November 16, 2009 at 4:18

A UMI tract is not subject to any risk penalty whatsoever, ever.

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