Why the H*#4@ did I sign a mineral lease?
Being part of a 640 unit is crap for the folks with small acreage. Its all a pyramid scheme. We all joined in this thing together to make money together...at least that's what the feeling WAS. I remember when the first checks were given out, many Shreveport natives boosted the economy for this area by shopping for big ticket items like cars, houses, etc. in hopes of getting more and better checks. But what did Chesapeake do? Send out Div Orders with stupid decimal points in the writings, such as .00003 for example. A lease in the beginning stated that the mineral owners would receive 25% of monies made. The Div Order to be signed states different rhetoric with that decimal crap. When I asked Chesapeake where did they get those numbers from, they answered me back with, "It's something we made up." Mineral owners are treated like the enemy. What if Walmart was in this situation? They own the merchandise, but the only folks who make the real money are everyone except Walmart, (except mineral owners). Doesn't make sense. Try doing the math with screwed up numbers such as .0003 and see what you come up with. A bunch of zeros after a decimal point adds up to horrific under payments made to the mineral owner, the ones who own the product. And where are the guys in my 640 unit who own tons of acres and made nearly a million dollars? would be nice if they shared their profits with us guys making 80 dollars to 500 dollars a year. I signed up because I knew it would benefit those with small acreage as well as those who own large acreage. My neighbors are in shock and most folks are embarrassed that their checks aren't more lucrative after receiving their initial payments of thousands of dollars, now we all get hardly anything. So much for boosting the economy for Shreveport.
Tags: 640, chesapeake, division, law, mineral, order, owners, payments, pyramid, rights, More…
Views: 8932
Replies to This Discussion
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Permalink Reply by jffree1 on
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They will appear after the bad, mean, no good operator sucks all the gas out of the ground and it collapses in on itself, silly. Don't you ever read? O_o
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Permalink Reply by dbob on -
As I'm sure folks here know, there are issues with subsidence on the Texas and Louisiana coast that date from early very shallow conventional oil and gas. Also the Bayou Cornye sinkhole associated with a salt dome storage cavern. Of course, none of that is remotely applicable to Shreveport...
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Permalink Reply by Two Dogs, Pirate on
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Could come from the water company sucking all the water from 900 feet down or I would think it would come from the 900 gallon septic tank that is 2 feet Southeast of the corner of the 1976 model double wide.
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Permalink Reply by dbob on
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TD, I think he said sink holes, not stink holes....
Lee - The wells have a natural decline curve and gas prices are still in the toilet, relative to when you leased. Maybe you'll get lucky and they will drill more wells when the price of gas goes back up...
the decimal percentage of 0.0003 sounds about right based on what you've told us.
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Permalink Reply by Geologist on
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I'm not sure if this has been mentioned or not but here goes. In my experience, the royalty checks (paychecks you mention) aren't sent out until the payment reaches $50. Each oil/gas company has a different policy I'm sure but that seems to be the standard for the producers I have worked for in the past.
Fortunately you are mistaken about the minerals being siphoned off. When oil/gas/water is produced it is produced from small pore spaces, you aren't talking about large lakes of oil/gas/water but many, many, connected miniscule pores within the rock itself. This is the reason for fracking. In a shale the pore spaces are much smaller than many other sources of hydrocarbon because shale was originally an organic rich clay in most instances. If you are familiar with clay you will have noticed when it is stepped in or pressure is applied and then removed it retains it's shape as opposed to a sand. This is due to the cohesive nature of the clay. Hopefully you can see from this explanation that any valuable minerals would be unable to travel to the wellbore in any great quantity. Oil/gas is evaluated by the buyer in order to assertain the richness of the product. Minerals aren't product and as a result would be noted and the price of the product would be adjusted and noted. As far as what formula is used, your lease states your percentage of the production which in this case would be 25%. Now this doesn't mean that you get 25% of the entire production, you get the percentage of the production you own. It is assumed that the entire 640 acres produces the same amount whether you are on the fringes or your acreage contains the wellbore itself. This is as favorable to the mineral owner as you can get because the property on the fringes most likely contributes a bit less than to the production than the area near the wellbore. This is due to permeability and how far you can extend the frac, etc.
You are correct in stating that gold would yield a better return but gold is subject to market price just as hydrocarbons are and could change. As far as who is making money based on production you must also account for the operating expenses associated with the well. Royalty owners are not subject to paying for the operating expenses. The money paid is from production and isn't adjusted for any expenses. Producers have to pay these expenses which are deducted from the revenue of the well after royalties are paid. You are generous in splitting your profit 50/50 but that isn't the feeling of the majority of mineral owners, nor is it fair. You only own a certain amount of the minerals and as such only a certain amount of the minerals. As I said before, your productivity is significantly affected by the connectivity of the pores to the wellbore. Depending on where your acreage is you could be getting more money for your production than if it were actually based on how much your acreage produced. This type of information is hard (impossible) to know for sure so it is assumed to be equal production. This is the reason why you can see wells being drilled between two existing wells. It is an attempt to get undrained hydrocarbons.
Unfortunately the gas market has gone down significantly in the past few years and gas is no longer at the premium price it was before. As a result the royalty paid to you and other mineral owners will decrease, in this case significantly. You have gone from $14/MCF to $2/MCF in a relatively short time.
I'm sorry that this wasn't explained fully to you prior to a lease being signed but the burden is placed on the mineral owner to fully understand the lease. It sometimes is helpful to seek the advice of a qualified oil and gas attorney or someone who understands the industry and the specific lease.
Good luck, I hope for all involved that gas prices go up.
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Permalink Reply by lee on
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And also thank you, Geologist you for all your pertinent information on my posts and I have come to Jesus.. : ) By the way to all involved in my discussion, thanks for taking the time to answer any way you wanted. It's nice to debate and show passion for what you believe in and shows that I am indeed surrounded by knowledgeable think tanks...and your tanks are full. I chuckled at those who gave funny but tough remarks because I like a good laugh so thanks to all.
Lee
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Permalink Reply by 2p6y7ycljui0u on
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I would also encourage any landowner, when approached by a "professional" landman, to think of the approach as one from a car salesman of the seventies. Ask for the name of the person he reports to, "the man" if you will. No, not the operator, but his supervisor. Utilize a relative inexpensive software and do a criminal search on some of these characters. You just might be astonished.
Once you come to the realization of "the bidness," it will be much easier to justify the expense of an oil and gas attorney rather than go by what your "professional" landman assures you. Been that way for over a century. Be leery of the Oil & Gas and the Timber folks. It will not change.
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