Can you help? We are new to the mineral rights leasing. Can you give us an idea of the difference between 12% Net and 18% Gross? We currently have a Clinton well and receive 12% Net (on oil/gas/gas contituents), we're being offered 18% Gross on oil/gas & 18% Net on gas contituents. Is this a good deal?
Gross means before post processing deductions, Net means after post processing deductions.
Gas Constituents have a lot of post processing costs, therefore they want you to help pay for them.
18% Gross is pretty good.
perhaps a reading comprehension course is in order
This sounds similar to what CNX is offering to sign an addendum to increase unit size for properties held by old Clinton leases. A nice adjustment in royalty amounts. At least they are willing to give the landowner something of value for the amendment to the old lease. Some companies will offer nothing in return.
You are right Devon is giving us 12% they bought the lease from an old clintin well that held our rights.
Shawn you got a good deal, see if they will call Devon lol.
RE: "This sounds similar to what CNX is offering to sign an addendum to increase unit size for properties held by old Clinton leases."
Tim, would you be so kind as to expand upon your comment?
I would be interested in hearing the types of concessions that CNX have been prepared to make in order to obtain a needed addendum.
CNX was very good to work with, they approached us with an offer to increase the royalty to a gross royalty not quite as high as Shawn is refering to but a nice increase as compared to a 12.5% net. The original offer did not include any value for the NGL but the neighboring landowners all worked together and requested a change, if it comes from your property the property owner should see the value in royalty. They came back with the changes including a net royalty for the NGLs. Their explanation was that they do not process the natural gas themselves and so were not willing to give a gross value for the constituents (NGL). While we could perhaps have held a hard line on this everyone involved wanted the relationship to be as good as possible between landowners and CNX (including CNX).
I believe they have acted in good faith to this point and am pleased with the relationship. We are hoping to see quite a bit of activity in our area in the next couple years.
Hope this helps. With our land all being HBP and so have no chance for bonus $ production is the goal and they are being very fair.
Like every other legal contract be aware of every detail but they did work with us.
One thing to keep in mind, there is always the chance that a landowner can push for to much. There are rumors in the area that some property owners tried to hold out and/or were simply impossible to negotiate with and the gasco just kept them out of the unit or withdrew the offer of more royalty.