Replies to This Discussion

Permalink Reply by Mark Gray on July 4, 2008 at 5:25

"When they have enough leasehold to be profitable is when it matters." That in itself tells me what I need to know. They would rather not have people that were unleased. Hmmmmm, wonder why?

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Permalink Reply by DrWAVeSport Cd1 on July 4, 2008 at 5:39

MG: You got it! O&Gs do not want to be bothered with "you" becoming a pseudo-partner in this huge ng bonanza! It messes up their accounting! (Ha! Ha!)

Have a great 4th!

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Permalink Reply by Mark Gray on July 4, 2008 at 5:52

According to Randy they can start drilling with 51% leased. If it was more profitable to only have 51% they would start moving rigs in the day they reached that number.

They are not trying to reach 75-90% lease rate so no one will be mad at them.

Enjoy the barbeque.

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Permalink Reply by Randy on July 4, 2008 at 5:55

Now I don't want to be making legal comments or opinions. hehe.

It is profitable to have a high leased area, yes they need as high leased percentage as possible. They are required to have a majority. They don't make any money off unleased interest.

Randy

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Permalink Reply by Mark Gray on July 4, 2008 at 6:02

Sorry for the wording, it is corrected now.

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Permalink Reply by Kassi on July 4, 2008 at 4:48

Revised Statued 30 section 10 (b)(i) as amended reads:
(b)(i) Should a notified owner elect not to participate in the risk and expense of the unit well or should such owner elect to participate in the risk and expense of the unit well and then fail to pay his share of such expenses within sixty days of receipt of detailed invoices, the owner drilling same shall, in addition to any other available legal remedies to enforce collection of such expenses, be entitled to own and recover out of production from such unit well allocable to the tract belonging to the nonparticipating owner such tract's allocated share of the actual reasonable expenditures incurred in drilling, testing, completing, equipping, and operating the unit well, including a charge for supervision, together with a risk charge, which risk charge shall be two hundred percent of such tract's allocated share of the cost of drilling, testing, and completing the unit well.

Section 10(e) goes on to say:
e) The provisions of Paragraph 2(b) above with respect to the risk charge shall not apply to any unleased interest not subject to an oil, gas, and mineral lease. Notwithstanding the provisions of Paragraph 2(b) the royalty owner and overriding royalty owner shall receive that portion of production due to them under the terms of the contract creating the royalty.

Many land men are telling land owners that they will face a 200% penalty if they do not sign a lease as a scare tactic. Even when told it does not apply to the unsigned lease holder one told me it does in certain circumstances. The typical land owner may not have the ability to dig through the regs and find out the truth of that matter.
I use the risk penalty in my example in order to illustrate that even with the penalty the land owner receives more money as an unsigned lease holder. Without the risk penalty, of course, the unsigned lease holder fairs even better on the royalty side of things. I opologize for any confusion my illustration caused however, I wanted to take the wind out of the sails of that scare tactic regardless of the circumstances.

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Permalink Reply by Randy on July 4, 2008 at 4:53

You know, the first I heard of this "scare tactic" was on this website? None of my associates have been discussing it. Just an interesting side-note.

I have never seen an un-leased interest royalty check or statement, perhaps if someone could track one down from someone who is an un-leased interest that would shed some light on this. As to the full extent of deductions that are possible in this scenario.

Randy

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Permalink Reply by DrWAVeSport Cd1 on July 4, 2008 at 5:00

That is the problem, Randy. You can't find anyone who fits this picture.
Ergo the frustration for those of us who want to see things on paper...not in "smoke and mirror" stuff.

P.S. TigerDroppings has had a great deal of "scare tactic" rhetoric over there. Those Tigers get ferocious sometimes! I guess you have to keep them fed! Again...JJ

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Permalink Reply by Randy on July 4, 2008 at 6:13

DrWAVE,

Have you looked at all the major players leases.... I know of one that doesn't include a deduction clause.

Randy

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Permalink Reply by steph on July 21, 2008 at 3:06

I have a friend who is unleased, he is not Haynesville, but he receives a "100%" royality. He receives checks every month and the check stub shows his total royality then they take out his due working expenses and he receives the balance. Much like a paycheck less taxes. He receives a separate check per well in his unit (If they drill more than one well in your unit you receive a separate royality check per well?). He ends up with approx. $8,000 combined a month after the working expenses are taken out.

I plan to talk with him further about the details. I will post when I do.

I am thinking the same as you guys.

It is to their advantage for you to sign so wouldn't it be to your advantage not to sign?

TwinCities spokesman said a church meeting, the money is not going to be from bonuses but from royalities, so wouldn't it just make sense that 100% will pay more than 25% even with the expenses.

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Permalink Reply by Les Bamburg on July 21, 2008 at 18:53

Steph, the amount your are referring to is 100% revenue not 100% royalties. You only get royalties when you sign a lease agreement. Plus you have to cover the well cost when you are unleased.

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Permalink Reply by Linda Whatley on June 28, 2010 at 6:01

Thanks Les B....... I was just about to say the same thing. Those that are unleased will have a working interest, and they will not receive royalties. They will get their pro-rata share of what is left over after all cost and expenses are paid....... and those expenses will be ongoing.

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