Replies to This Discussion

Permalink Reply by frank ellis on February 18, 2012 at 12:53pm

Gale,
The market enhancement deductions are fairly standard in leases that cover the liquid hydrocarbons/wet gas. The operation of these provisions will depend on the specific facts and circumstances for each landowner and their oil company lessee. The Southeastern Ohio Landowner Association lease in Noble County contained a market enhancement provision in the royalty provision with certain constraints on the costs and expenses that could be deducted.
If you need more information on this you need to join a group or start your own group and hire attorneys that have answers and will protect you and your group.
Whatever you do, don't try and negotiate this once in a lifetime deal by yourself. They will eat you alive.

Permalink Reply by 09bp5t05myjl3 on February 21, 2012 at 10:37am

Wow some huge variences in prices here in same approximate areas? why is that? How could the same Group accept $1000 less than they got 3 months earlier when prices seem to be increaseing & $1900 less than anther group in same Twps in less than a week? does that set the process back?

Permalink Reply by Angela Smith on February 21, 2012 at 4:12pm

The difference is in the terms of the lease.  The Eclipse deal had several provisions that were very advantageous to the landowners. 

Permalink Reply by 09bp5t05myjl3 on February 21, 2012 at 4:59pm

Angela you obviously didn't see the anterro lease it is the most landowner friendly I have seen to date! I guarantee thats not the reason.

Permalink Reply by Angela Smith on February 22, 2012 at 5:56pm

The Eclipse deal had a commitment to drill within 3 years and guaranteed unitization of all leased land.  I believe the Anterro deal was an anomaly because of the Ruble acreage.  

Permalink Reply by 09bp5t05myjl3 on February 22, 2012 at 6:14pm

Angela think about that It’s that whopping $750/acre more you get if they don’t drill in 3 years that the oil company saves for 3  yrs?  So $4750 total for a five year primary term. Or maybe it’s the $5462/acre you get for giving them another FIVE years (instead of 3) or maybe it’s that 19% royalty instead of 21%? not to mention the 4 1/2% Fee

Or maybe that eclipse paid $4,000 & sold in a joint venture for $8,000 a $4,000 net profit & the landowners get shorted again!

Permalink Reply by Angela Smith on February 23, 2012 at 4:09am

They have a deal they were obviously happy with.  What do we have?  Personally, I would give a little on the bonus in exchange for a commitment to drill. 

Permalink Reply by 09bp5t05myjl3 on February 23, 2012 at 10:22am

Very well said Gale, Bottom line as usual we the landowners are responsible for making sure we don't get taken advantage of no matter who we deal with & if the group Attorney only represents the group & not the individual landowner then we better get our own attorney, I know I would be upset it I signed with a group that represented me and the oil company sells 1/2 my lease for twice that amount in 2 weeks! Sure have to wonder if I could have gotten that same deal!

Permalink Reply by Billy Park Whyde on February 25, 2012 at 8:19pm

 At this point of the game no one should be in a hurry. They have leased thousands of acres and how many drilling rigs are there in Ohio? It will take a while. 

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