Replies to This Discussion

Permalink Reply by Private KeepOut on August 9, 2011 at 8:51am

No offense taken.....that's why I wish we had a some emoticons on here....I could have left you I nice wavy guy with a smiley face. lol

Permalink Reply by Robert Fulton on August 9, 2011 at 11:07am

True enough it is so hard to determine fact from fiction on here.I am sure there are alot of genuine good neighbors with sound experiences regarding dealings with various companies , landmen , and groups but unfortunately there are also predators who can use this forum for the hunt. They should be ashamed to try and rip people off in these hard times and you do reap what you sow eventually. I have met some very nice neighbors on here and wish them all the prosperity The good Lord can give them !

Permalink Reply by scott peterson on August 9, 2011 at 11:22am

I couldnt agree more.

Permalink Reply by sawtooth on August 9, 2011 at 7:41pm

i understand from a friend that Eclispe is now offering $2800 and 17.5%.  Sounds like they are really becoming aggressive.  Sun Oil is also working the area and is offering 2600 and 17% but a friend of mine said they are not paying some of the leases in time and are asking for extensions.  Man its crazy trying to figure out who to go with.  Oh well i waited 2 weeks longer than my neighbors and have seen a increase of $300 / 1.5% perspectively so i'm not complaining.  By the way, i did confirm that KWDG is taking 5% commission out of the signing bonus but CHK paid for those expenses last go around.  I believe this will be the 3rd bid offering that KWDG has negotiated for landowners.  Also, they don't use your own lease or any oil company's lease agreement but they use their own developed to protect the landowner.  I'm not sure i want to go this route but the more i look into what they offer the more i'm starting to like it.

Permalink Reply by scott peterson on August 9, 2011 at 11:30pm

KWGD group #5 before tonight's meeting in Cambridge was at 10,500 acres. Sign up closes on  8/24.

Permalink Reply by Nelson Roe on August 9, 2011 at 11:41pm

I was pretty impressed with that number when I heard it tonight.  & there is still a couple weeks before the group closes, so it should potentially get even larger. 

 

It was nice to meet ya tonight as well!

Permalink Reply by scott peterson on August 10, 2011 at 6:16am

I was too and wouldn't be surprised if it ends up around 15,000. Nice to meet you as well.

Permalink Reply by Private KeepOut on August 10, 2011 at 9:11am

I finally got a lease from Eclipse yesterday. The offer is 2600/16.5, but I dislike all wording regarding the royalty payment and sign bonus payment. They tell me that there is no gross at the well head because we are dealing with Utica shale that has different oil/gas that needs to be separated. Here goes.

1. Oil. To pay Lessor an amount equal to 16.5% of the revenue realized by lessee (after deducting any severance, ad valorem and any other applicable taxes) for all oil and any constituents thereof produced and marketed from the leasehold, less the cost to transport or market the oil to the point of sale.

2. Gas. To pay lessor on actual volumes of gas sold from said land, an amount equal to 16.5% of the net amount realized by lessee, computed at the wellhead. As used in this lease, the term "net amount realized by lessee, computed at the wellhead" shall mean the gross proceeds received by lessee from the sale of oil and gas minus post-production costs incurred by lessee between the wellhead and the point of sale......ya-da ya-da ya-da......etc.

 

Sounds like a net royalty payment to me...also they are calling the sign-on bonus a "Advanced Delay Rentals" and the leasing clause gives them rights to all oil and gas (including, but not limited to coal seam gas, coalbed methane gas, coalbed gas, methane gas, gob gas, occluded methane/natural gas and all associated natural gas and other hydrocarbons and not-hydrocarbons contained in, associated with, emitting from, or produced/originating within any formation......and the kitchen sink lol.

Unless I'm reading this incorrectly....this appears to be a producer friendly lease! See y'all at the next kwgd meeting!

Permalink Reply by scott peterson on August 10, 2011 at 11:32am

Sounds terrible and that royalty is a net royalty that will likely be chopped in about half.......

Permalink Reply by BMR on August 10, 2011 at 11:41am

The royalty would be chopped in half???

 Where do you come up with that Scott?

Permalink Reply by scott peterson on August 10, 2011 at 12:14pm

You will not know until it happens and royalty starts coming in  but according to what I have heard is gross royalty vs. net can "potentially" be up to a 50% difference.

Permalink Reply by Nelson Roe on August 10, 2011 at 1:41pm

On a net royalty, I believe it could be reduced dramatically.  It could only be a 10% difference, or it could be up to 50% difference versus someone receiving a gross royalty on the same production unit.  It all depends upon what the company you are dealing with chooses to show as an expense.  The more that they can show as an expense... the more they can drop the amount that they pay as a royalty.  I would say that there have been enough people negotiate gross royalties now that anyone that has done any amount of research should know that if they talk to the right people or enough people, they will be able to find someone that will agree to a gross royalty payment versus a net!

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