Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 6, 2011 at 12:43

UMOs are not due a royalty as such is only created by entering into a lease.  UMOs, under the LA. mineral code, receive 100% of their proportional share of unit production based on their total net mineral acres and the size of the unit after the well pays out.  They will also be liable for continuing deductions for well operation costs.  Were you offered a lease?

 

http://www.gohaynesvilleshale.com/group/unleasedmineralinterests/fo...

 

Permalink Reply by Tommy Johnson on October 6, 2011 at 12:51

We were offered $400 per acre, then $1000 and finally $4,400 but decided to not sign.  Not sure if it was the right decision or not.

Permalink Reply by Skip Peel - Mineral Consultant on October 6, 2011 at 12:55

The path of the UMO is not an easy one.  You should get busy doing your homework.  However, you should know that you can lease at any time.  It's still an option.  At current values of course.  How many mineral acres do you have in the unit?

Permalink Reply by Tommy Johnson on October 6, 2011 at 12:58

1.9 acres.  What would you recommend?

Permalink Reply by Tommy Johnson on October 6, 2011 at 13:00

1.9 acres.  What would you recommend?

Permalink Reply by Skip Peel - Mineral Consultant on October 6, 2011 at 13:02

Is your well a good one?

Permalink Reply by Tommy Johnson on October 6, 2011 at 13:11

For the report date of 06/01/2011 it had a production of 145,830 MCF; 05/01/2011 it was 151,336 MCF; 04/01/2011 it was 146,552 MCF; 03/01/2011 it was 141,972; 02/01/2011 it was 131,991 MCF; 01/01/2011 it was 167,627 MCF; 12/01/2010 it was 169,911 MCF; 11/01/2010 it was 160,692 MCF and 10/01/2010 it was 67,026.

Permalink Reply by Skip Peel - Mineral Consultant on October 6, 2011 at 13:54

Is this a Haynesville shale well?  What's the name and section-township-range or the serial number?

Permalink Reply by DrWAVeSport Cd1 on October 7, 2011 at 6:23

TJ,

You are quoting mcf monthly totals off Sonris lite numbers.  Do you get the Chk Quarterly reports for your well?  Because those mcf/monthly totals should be different, if you are UMO.  You should be getting certified mail, Quarterly well reports on your well/property/owner number, from Chesapeake Energy. 

Chk makes it a long haul for UMOs, and loooooooow nat gas prices aren't helping.  Looks like your well @ even a $3.50/mcf average (as of 7/11) is only a little over half paid out per UMO status. 

As Henry and Skip say, Chesapeake will make UMOs sweat!  So, make sure you know all the information per your UMO stake (what Chk has been withholding from your share of of well) and what you can get from Chk per the royalty owner side.  And, then get some good oil & gas legal advice before you sign a lease with Chk.  Chk is the lowest $/mcf royalty payor of all the O&G payors, and Chk also "nickles and dimes" their royalty owners to death, so to speak, IMO.

This is a bad time to sell a house, watch your 401K disappear, or sign a nat gas lease, IMO.  So, make sure you know exactly what your doing before you commit to either road, e.g., UMO or RO. 

Doing the Shale "due diligence dance" is for your and your Family's benefit. 

And, GHS is the perfect place to get started.  Just query search "UMO," join GSH groups "Leased by Chesapeake," look at "Henry's" discussions, etc. 

Good Luck to you and yours.

DrWAVeSport Cd1 10/7/2011

Permalink Reply by Tommy Johnson on October 7, 2011 at 7:41

I do get the Quarterly reports.

Well costs were $7,591,774.78

December 2010 Quarterly payout Balance was $6,476,894.56

March 2011 Quarterly payout Balance was $4,890,216.71

June 2011 Quarterly payout Balance was $3.497,023.32

The well appears to be averaging about 5,000 MCF DAILY.  With slight increases in the price of gas it could be possible that the well could pay for itself by the end of December 2011.

Can UMO's be charged differently than RO's for the same services?

Permalink Reply by Henry on October 6, 2011 at 13:54

If your driller is CHK, do not go UMO.  They will nit pick you until you never see a penny.  JMHO. 

 

And... if you sign a lease, get it back-dated to before the beginning of production.

Permalink Reply by Tommy Johnson on October 6, 2011 at 15:30

It is a Haynesville shale well by CHK.

HA RA SUNN; BRYAN 9-16-15 H

Serial # 241093

 

Thank you for your advice.

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