Replies to This Discussion

Permalink Reply by ShaleAdvice (Steven C. Townsend) on August 9, 2011 at 10:11am

I would be careful of only looking at the dollar amount for royalty and bonus payments.  Although those are very important factors to consider when deciding whether to lease, there are other factors you must take into consideration.  Remember the lease is written to protect the oil company, not the landowner or mineral rights owner.  Also, there are a number of clauses and provisions that should and must be included in addendums that will protect your current and future interests. 

I am dealing with a land group now of over 130 who wished they would have looked at more than the numbers when they signed their leases. 

LandownerPermalink Reply by Jon on September 21, 2011 at 6:25am

I was talking to someone that signed a lease elsewhere the other day and they were telling me that you have to watch what the royalties are for. Apparently the lease may say that you get commission on methane, but the well is also outputting butane, propane, etc... which the gas company can sell and not pay you for. Has anyone heard of this?

LandownerPermalink Reply by PRESTON D Joswiak on September 21, 2011 at 7:19am

I have seen many lease's that only pay on oil or gas. How the landowner is paid is up to the drilling company's policy. My lease we have "on oil and gas, along with all hydrocarbon and non-hydrocarbon substances produced in association" ..." realized by lessee for that produced and marketed off the leased premises"  covering the royalty payment.    The only way I won't be paid is if there is not a market for what comes out of the well.    You just have to read the lease and understand what is covered, or have your attorney explain it to you.

LandownerPermalink Reply by Jon on September 21, 2011 at 7:34am

Thanks for the info. I'll have to keep that in mind in the future. It would be interesting to see a list of what all actually can come out of the well. I'll have to look at the next lease that comes and see what it says. Yeah, definitely on the attorney. If the lease was bad for the gas companies, they wouldn't want us to sign it.

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