Intersting bill impacting UMO
Replies to This Discussion
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Permalink Reply by Kat Bloomfield on
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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.
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GD: just keep in mind that a UMO's interest is NOT "royalty," overriding or otherwise.
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Permalink Reply by The_Baron on
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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.
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Permalink Reply by sesport on -
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)
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Permalink Reply by Henry on
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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.
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Permalink Reply by Les Bamburg on
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Henry, this bill has no impact on unleased mineral owners or royalty owners. You can see my comment below.
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Permalink Reply by The_Baron on
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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.
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Permalink Reply by Les Bamburg on
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Baron, overriding royalties (with back-in option) can also be created when a lease holder farms out to another company.
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Permalink Reply by BirdDawg, plain ole' idiot on
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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%.
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Permalink Reply by Les Bamburg on
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BD, actually the bill does not change the treatment of unleased mineral owners. Please see my comment below.
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