Replies to This Discussion

Permalink Reply by Private KeepOut on August 11, 2011 at 12:39pm

I saw this topic on this site and thought I would bring it forward. If you're going to sign a lease you best make sure you're getting gross royalties.....and none of this post production BS! Do your homework and don't be taken advantage of by these oil companies. They stand to make trillions of dollar off the marcellus & utica shale plays. Read as much as you can!!!

 

http://gomarcellusshale.com/group/tiogacounty/forum/topics/chesapea...

 

You should see something like this in your lease:

Costs of Production.  Lessee shall place oil and gas produced from the Leased Premises in marketable condition and shall market same as agent for Lessor, at no cost to Lessor. Except as expressly provided in (d) above, Lessor’s royalty shall not be charged directly or indirectly with any expense required to make gas marketable, including but not limited to the following: expenses of production, gathering, dehydration, compression, manufacturing, processing, treating, transporting or marketing of gas, oil, or any liquefiable hydrocarbons extracted therefrom.

Permalink Reply by Mark Curry on August 11, 2011 at 1:14pm

A statement to that effect is in the FCEC leases.Everyone should make sure you're clear on the type of royalty stipulated!

Permalink Reply by sawtooth on August 11, 2011 at 1:47pm

Hello Mark do you have a phone number for Fossil Creek? Thanks

Permalink Reply by Mark Curry on August 11, 2011 at 2:51pm

Try 405.949.0880 or 800.580.0885. We worked with Brady Meyer. I think this is the Oklahoma number..

Permalink Reply by Private KeepOut on August 11, 2011 at 5:22pm

Okay, I knew I had a reason to be suspicious of the bonus payment language in the Eclipse lease. Here is a snippit of what it says in the lease:

Advanced Delay Rentals: To pay to the Lessor within 90 days of the Lease Date, as pre-paid delay rentals, the sum of $2600.00 per net mineral acre (the "advanced Delay Rental Payment") Notwithstanding anything contained anywhere in this lease or any public law to the contrary, The parties hereto stipulate and agree that this is a "Paid Up" lease with no further delay rental or delay in marketing payments due to lessor during the Primary Term of hereof, and that any and all bonuses and delay rentals due or payable hereunder have been prepaid to Lessor for  the purpose of keeping this lease in effect during and for the entirety of the Primary Term.

 

This is what I found on Delay Rentals:

 

http://www.hh-law.com/News/20110201PaymentOfdelayRentalsAloneCannot...

 

Delay rentals have long been used in the industry as a means to suspend the implied obligation to develop the leasehold during the primary term. By paying the delay rental, the operator can preserve and maintain the lease without actual production. As long as the operator pays the delay rental, it is under no obligation to drill a well or conduct any exploratory activities. Such payments are “in the nature of liquidated damages for the lessee’s decision to forego production” and are viewed as the consideration paid to the landowner in lieu of a production royalty. See, Hutchinson v. Sunbeam Coal Corp., 519 A.2d 385, 388 (Pa. 1986); see also, Jacobs v. CNG Transmission, 332 F.Supp.2d 759, 785 (W.D. Pa. 2004) (“[I]t is customary for the parties to an oil and gas lease to agree that a minimum advance royalty shall be paid for the lessee’s right to forgo immediate development...”); Marshall v. Forrest Oil Co., 47 A. 927 (Pa. 1901) (delay rental compensates the lessor for the lessee’s delinquency in commencing production). In the absence of actual production, the failure to make a timely delay rental payment can result in the automatic forfeiture of the lease during the primary term. See, Bertani v. C.E. Beck, 479 A.2d 534 (Pa. Super. 1984).

 

Boy, these guys are a bunch of weasels!!!!!!

Permalink Reply by Robert Fulton on August 12, 2011 at 6:27am

well...hmmm....uhh...ok.  lol

Permalink Reply by Private KeepOut on August 12, 2011 at 8:43am

Well.......hmmmmmm....ya live and learn.....right? lol :-)

Permalink Reply by Robert Fulton on August 12, 2011 at 9:41am

TP you are absolutely right ! (but I still think I have the wet spot)  lol

Permalink Reply by Private KeepOut on August 13, 2011 at 12:07pm

I'm excited to see the lease from kwgd. I think they will have a specific clause in my lease that says I sit on the wet spot. LOL

Permalink Reply by Robert Fulton on August 13, 2011 at 8:24pm

"Ok Ok I give up you get the wet spot...lol

Permalink Reply by Finnbear on August 12, 2011 at 8:50am

What is the primary term of your lease?

 

Permalink Reply by Private KeepOut on August 13, 2011 at 12:05pm

Finnbear, it is 5 years with a provision for another 5 years.

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