Land owners beware! This should be illegal.

"To keep royalties low, companies sometimes set up subsidiaries or limited partnerships to which they sell oil and gas at reduced prices, only to recoup the full value of the resources when their subsidiaries resell it. Royalty payments are usually based on the initial transaction."

I've read about this above issue before along with some others but this is just outright theft. We need our states to protect land owners from this. Land owners getting screwed doesn't help future development or economic development. Operators and land owners need to act with ethics for a win/win situation at all times. If they can't, then our elected officials are going to have to act. 

 

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Permalink Reply by Kaufman on August 31, 2013 at 0:45

I noted SWN refusing to comment on the screwing practices. I think Mr. Jenkins has it right. Make them beg. I cannot imagine anyone giving a petroleum company the right to gouge for 300-400 bucks an acre and the outrageous time allowed on these agreements.  

Permalink Reply by G.L. Jenkins on August 31, 2013 at 3:21

I'm retired, I don't know enough about the Gas and Oil business but I do know that my house and stuff is paid for and for me to get involved with a bunch of Oil and Gas companies and their Lawyers would be nothing more than an aggravation. They come along every few years and lease the property looking for oil and gas and tell me it's down there and would like to lease for test holes. It's only 40 acres, surrounded by nice country homes so maybe I'll just plant daises and give the oil and gas people the finger. 

Permalink Reply by Kaufman on August 31, 2013 at 3:33

It is really a quick draw contest, who will shoot the bird first, the lessor or lessee. I think from the moment the contact starts, if one is in a position to, fire that finger at the O&G version of Mr. Haney the minute he shows up on your door step. The game is rigged against the land owner.

Even if you are initially happy, things change in a moment. You are a target to be assigned to a "bad cop" operator who is usally a subsidiary to your initial savior. Save the headaches, if you own the minerals and surface, flip them off.

Permalink Reply by P.G. on August 31, 2013 at 2:43

Rather than no cost (which operators seem to be ignoring) how about putting a max % limit on costs..or sharing of costs..

That would put the burden on the Operator to show how they justify any expenses wouldn't it?

Permalink Reply by Henry on August 31, 2013 at 5:57

P.G.,

They will only "show how they justify any expenses" if the lease language call for them to show you all relevant info.  Otherwise, they are under no obligation to show it, and they likely won't.

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