Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on August 1, 2008 at 14:52

No, I do not think 30 and 30 would be foolish or unreasonable!!

Permalink Reply by Snake Stewart on August 1, 2008 at 17:00

I agree with you for the most part parker but why should we take so little ? It is ours even if we don't own a rig to get it out of the ground with.Remember first and foremost that I owe them nothing. When you see the profit margins for these guy's my pitty tears dry up quickly!

Permalink Reply by Johnson on August 6, 2008 at 9:01

If you are a "working interest" partner then

I beleive the answer to this question is "Yes"...then it seems you would be wise to form an LLC and assign them your mineral rights to limit liability.

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Permalink Reply by Jerry on August 1, 2008 at 17:16

If they are called revenues then are they taxed at different rates. This will be something that in the future many people will be looking at. Uncle Sam's share.

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Permalink Reply by mike wilson on August 1, 2008 at 17:18

If I am the oil company that wants to drill a well on 640 acres and I get say 320 acres and the rest do not want to sign a lease then the well probably does not get drilled no the well definitely does not get drilled. If I get say 95% I may be inclined to let the 5% ride me down but it is my call. The unit that gets drilled first is the unit controlled by me 100% and then the next 100% one and then the next 100% unit and so forth. Yours may never get drilled so you never get ANY money. You have to be very astute to know all info before you try to bluff an oil company....been there done that.....

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Permalink Reply by Snake Stewart on August 1, 2008 at 17:37

Gray Sands ,

Slow down a little and ask the question that is giving you the headache. Sometimes their knowledge surpasses our ability to understand it so give it another try.

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Permalink Reply by M. Mcwilliams on August 2, 2008 at 0:07

Not sure what you're asking. If they never drill in your section, then they aren't producing anything to pay royalties or to pay make revenues from. You just happen to be a mineral owner who is not leased.

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Permalink Reply by Les Bamburg on August 1, 2008 at 18:42

Read the regulations and you will see that an unsigned mineral owner is a "carried" working interest owner with liabilities and responsibilities like the remaining owners. The only exceptions are no penalty for non-consenting wells and costs are covered from revenue. But if the operator drills a well that doesn't reach pay-out then you would be responsible for paying the remaining balance. You would also have to cover costs of surface facilities from production.

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Permalink Reply by Rick on August 1, 2008 at 23:23

Les B, I am in a section that has a well being drilled by Chesapeake, it is about 5-6 weeks into the drilling process. The section is predominately owned by 3-4 families. I had one offer back in April of $300.00 an acre for my 1.16 acres and did not take it. I don't know how many other landowners from my section are unleased but it is so few that the section isn't represented in any of the area neighborhood groups. What do you think I might can expect to happen next as the well being drilled nears completion?

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Permalink Reply by Les Bamburg on August 4, 2008 at 1:27

Rick, maybe after the well is drilled Chesapeake will make another offer. If not, Chesapeake will retain revenue until the well reaches payout. After payout you would receive any revenue from the well less operating expenses.

You did not mention the royalty % offered by Chesapeake. You would want to consider that in any decision regarding a leasing offer.

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Permalink Reply by Rick on August 8, 2008 at 7:19

Les B., thanks for your reply. The offer I got in April included a 20% royalty amount, which I think was kinda standard around here until the HS came along. I have not read any other lease offers before so I was not familiar with what to expect, but this one had some terms that seem off base now that I have read and researched on this site. Things like, $100.00 payment to hold the lease if wells are drilled but unable to produce because of market. Unit size of 640 acres except in the event of a horizontal completion which may embrace as much as 1920 acres; the lease offer was for a primary term of 3 years and did not mention additional extentions.
I would be surprised if the well being drilled in this section isn't a good producer, so I expect to eventually receive some revenue after operating expenses but I'll have to research further to determine how I'll track what is happening and what I'll need to do to insure I get the correct share for my property.

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Permalink Reply by SBossierGuy on August 8, 2008 at 7:26

Rick,

Make yourself aware of this statute (LA RS 30.103.1). Basically, it lists what the O&G companies have to provide if you request it.

103.1. Operators and producers to report to owners of unleased oil and gas interests

A. Whenever there is included within a drilling unit, as authorized by the commissioner of conservation, lands producing oil or gas, or both, upon which the operator or producer has no valid oil, gas, or mineral lease, said operator or producer shall issue the following reports to the owners of said interests by a sworn, detailed, itemized statement:
(1) Within ninety calendar days from completion of the well, an initial report which shall contain the costs of drilling, completing, and equipping the unit well.
(2) After establishment of production from the unit well, quarterly reports which shall contain the following:
(a) The total amount of oil, gas, or other hydrocarbons produced from the lands during the previous quarter.
(b) The price received from any purchaser of unit production.
(c) Quarterly operating costs and expenses.
(d) Any additional funds expended to enhance or restore the production of the unit well.
B. No operator or producer shall be required under the provisions of this Section to report any information which is not known by such operator or producer at the time of a report. However, the operator or producer shall report the required information to the owner of the unleased interest within thirty days after such information is obtained by the operator or producer, or in the next quarterly report, whichever due date is later.
C. Reports shall be sent by certified mail to each owner of an unleased oil or gas interest who has requested such reports in writing, by certified mail addressed to the operator or producer. The written request shall contain the unleased interest owner's name and address. Initial reports shall be sent no later than ninety calendar days after the completion of the well. The operator or producer shall begin sending quarterly reports within ninety calendar days after receiving the written request, whichever is later, and shall continue sending quarterly reports until cessation of production.
D. Notwithstanding any other provision of this Section to the contrary, at the time a report is due pursuant to this Section, if the share of the total costs of drilling, completing, and equipping the unit well and all other unit costs allocable to an owner of an unleased interest is less than one thousand dollars, no report shall be required. However, during January of the next calendar year, the operator or producer shall report such costs to the owner.

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