Replies to This Discussion

Permalink Reply by Pittboss33 on July 3, 2008 at 12:05

Those rates are going to drop off significantly after the well comes online. It won't be like that for 30 or 40 years. But the first months will be very nice.

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Permalink Reply by Snake Stewart on July 4, 2008 at 1:54

Hello Pittboss,
The amount of gas can't increase under your property as a well comes under production. According to CHPK telecast "wells will only get better." Whats up with that ? Is he talking about choke that may be restricting flow ? Wells for the most part on Barnett are unchoked allowing full flow, I guess you would call it. When pipelines are all in place will that allow removal of choke eventually to allow full flow ?

Thanks and have a good one.
Glad to see you over here, those tigerdropping.com guy's are a little intense over there !

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Permalink Reply by Kassi on July 3, 2008 at 13:59

Don't forget that number is based on a no cost royalty. If you do not negotiate a solid no cost royalty then it will significantly reduce that number when they take out money for everything from production to transportation, compression, marketing, etc. It also does not take in the taxes to be taken out. You also have to realize the first check is the largest and within the first year (sometimes months) the mcf/day declines significantly (sometimes up to 50% or more) as does the royalty. Then it levels off and slowly declines over time.

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Permalink Reply by M. Mcwilliams on July 4, 2008 at 1:26

I'd like to know how willing or resistant the companies are to granting a no cost royalty? Wouldn't they be more likely to do this for smaller acreage?

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Permalink Reply by Randy on July 4, 2008 at 2:48

With smaller acreage you have almost no negotiating power past issues of the lease that don't matter in real life. For instance I'll be glad to give you a horizontal pugh because it won't ever apply to you.

No-Cost royalty (zero deduction) is a game the big boys play with their big acreage lots.

Randy

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Permalink Reply by M. Mcwilliams on July 4, 2008 at 4:03

I just would have thought that the costs per net mineral acre for a small tract would be so negligible that it might be something the company would agree to.

What exactly are the costs deducted from a royalty interest, anyway? How much do they amount to, generally speaking?

Thanks for your time.

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Permalink Reply by DrWAVeSport Cd1 on July 4, 2008 at 4:18

Go for the no-cost royalty clause. If they want you to sign...Tell them that is the deal. I would gladly take less bonus money against going without this.

Read article about "Where The Money Goes." It is a true story about how your royalty can be eaten up by 20-40% and up.

I have referenced this article (presented @ The Woodlands, Texas a couple of years ago) on this website.

Read it! You will understand how important this is to you...the mineral owner.

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Permalink Reply by DrWAVeSport Cd1 on July 4, 2008 at 4:43

Attachment to above:

"Where Does The Money Go?" Presented by Mr. John R. Hays, Jr., Austin, Texas; at the 2004 NARO-Texas Convention; The Woodlands, Texas; June 24-26, 2004.

You can google this on the web. Download this and read it. If this happens in Texas, it happens in Louisiana.

Just because a contract says 25%...or 100% has nothing in reality to do with the actual accounting for costs.

It will be the O&G's vision of 25% that lessors will see, not the lessor's vision of 25%. And those could be two completely different looking animals.

Get educated before you sign!

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Permalink Reply by MTA on July 4, 2008 at 4:56

Could you please put a link to this. I googled it several different ways and couldn't find the download.

Permalink Reply by Randy on July 4, 2008 at 4:59

Can we all agree, that even though everyone can see deductions. That with an un-leased interest the O&G company will have free reign to charge all kinds of deductions?

Randy

Permalink Reply by Randy on July 4, 2008 at 4:45

I dont disagree with you from a landowner perspective, from my perspective as a leasing agent, I'll probably just say "Thanks for calling, I'll think about it" and put it on the bottom of my stack of leases to follow-up on. Call you back 3 weeks later and say sorry I can't do it.

It is just too hard for a 1/4 acre tract to land to put pressure on me. There's just no negotiating power.

Randy

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Permalink Reply by DrWAVeSport Cd1 on July 4, 2008 at 4:54

Randy,

Respectfully...I agree with you. I would "put your offer on the bottom of my stack" of leasing offers and say "sorry" too.

No pressure. I just did same yesterday, and last week, and last month...and I am still hearing offers that have grown in one month...by double...what my neighbor signed for in early June 08.

Again, you are right about this. You can ask for anything...all leasing agents can do is say, No Thank You.

Only, there are around 4,000 of you...only one of me. Ha! Ha! Just joking!

Ah...the thrill of the chase!

Have a great 4th! Freedom Rings!

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