American Energy Partners

Has anyone been paid by American Energy Partners or any of it Subsidiaries yet? (American Energy Ohio, American Energy Orange, or Great River Energy)

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Permalink Reply by Philip Thackray on December 25, 2013 at 4:22am

Notes on “clear title” and lease payment terms.

When the O&G company goes off to check your title following a tentative leasing agreement they are looking for an Abstract of Title which is an exhaustively intensive summary of all documents pertaining to the surface and sub-surface activities going back to approximately 1850 and performed by a specialist called an Abstractor.  This is a time consuming process, hence the typical 90 day waiting period.  This Title Abstract is submitted to an Attorney and if he is satisfied that the title is ironclad, he issues an Attorney Certificate of Title.  This is the gold standard of “clear titles” and the Attorney is usually insured against any possible errors in the Title Abstract.  (Which is good for you).

Simply having your property’s deed recorded and having obtained “title” insurance at the time of purchase rarely assures sufficient quality of title for an O&G company to proceed with including your property in a unit.  Number one, conventional “title” insurance only includes the surface ownership not the sub-surface ownership.  Secondly, “title” insurance companies are not “title” companies they are insurance companies.  They do little if any actual “title” researching they just charge enough money so that if there is a title problem (small chance) they can pay out a claim and still make a profit – standard insurance business with the actuarials calculating rates based on the likely hood of surface title problems.

Should a title problem arise that cannot be easily resolved (at your expense) the O&G company simply abandons the lease.  However, should the O&G complete their payment to you thereby accepting the quality of the title, from that point on it is typical language in most leases to require the O&G company to defend any attacks on the title.

Ninety days to payment is probably reasonable but 90 banking days or 120 banking days (heard locally) is not.

I’m in Butler County, PA so I can’t speak for how this goes down in other states.

Phil

Permalink Reply by martin on December 25, 2013 at 5:45am
It would be nice if the O&G companies would communicate with people. You have to wait 120 days to know if there is a problem or not. It just doesn't seem right to keep people in limbo wondering if they will get paid or not. I realize it takes time to research but they should at least send a letter stating what the official end date will be. Common curiosity goes a long way. I know a guy that was expecting to be paid in 90 days. On day 91 they told him they need an extra 30 days. That is unprofessional in my opinion.
Permalink Reply by Philip Thackray on December 25, 2013 at 6:13am

Martin,

Once they are into leasing an “area”, the big O&Gs most likely have Abstractors that have at their fingertips the relevant historical documentation.  So I doubt it takes 90 days in most cases.  From the O&G perspective however why not take as much time as you possibly can get away with – if for no other reason, you can stretch your payment out as far as possible.  No doubt the reason we are seeing “90 -120 banking days” language.

I’m looking into what happens if the O&G walks away from the lease prior to any payments for reasons other than poor title.

Phil

Permalink Reply by martin on December 25, 2013 at 7:23am
They way I read my lease they can walk poor title or not before 120 days.
Permalink Reply by bo boboski on December 25, 2013 at 7:49am

Shell did that to us hear in Guernsey county.  it was actually 16 months after we signed the lease that we got paid. The lease was null & void after 120 banking days, so they had us sign a new one about a year later. Some people had to get their lease released at the county recorders office, after the 120 days, only to have Shell contact them months later to re-sign. They seem to try to stretch it out as long as possible. If they want to drill you real soon, I'm sure they could clear title & get you paid in about 2 weeks!

Permalink Reply by Philip Thackray on December 25, 2013 at 7:53am

Martin,

The recent XTO Order of Payment (bonus consideration) document that I have seen requires XTO to pay the bonus within 90 days if a lease agreement is approved and the title is confirmed by XTO.

Of couse, other companies will do things differently.

Phil

Permalink Reply by Chris on December 25, 2013 at 7:48am
Remember that they may have a few thousand parcels to run title on in that 90 days.
Permalink Reply by martin on December 25, 2013 at 7:58am
I am sure they would know before day 91 it may take more time. They could have sent at least an email saying they will need an additional 30 days. The landowner had to send numorous e mails to get a reply. Bush league IMO
Permalink Reply by Philip Thackray on December 25, 2013 at 8:03am

Martin, Bo,

I had my attorney start a title abstraction, get the results and issue an Attorney Certificate of Title in under three weeks for a piece of O&G speculative property I bought in May 2013.  So yes, I think that the long delays to payment are just that!

Phil

Permalink Reply by martin on December 25, 2013 at 1:05pm
Promises promises. I will believe it when the check is in my hand.
Mike MurphyPermalink Reply by Mike Murphy on December 25, 2013 at 3:01pm

THE STATEMENT FROM THE LANDMAN PROBABLY HAD A FEW MORE WORDS IN IT THAT THEY ARE TRAINED TO USE LIKE ............MY FEELINGS ABOUT THIS AREA IS PRBABLY GOING TO BE DRILLED QUICK ........THOSE WORDS ........I FEEL .......AND PROBABLY .........ARE WORDS THAT MAKE A STATEMENT HAVE A WHOLE DIFFERENT MEANING .....BUT MOST PEOPLE ONLY HEAR WHAT THEY WANT TO HERE AND BLOCK OUT CERTAIN WORDS 

Permalink Reply by Sam Moore on January 28, 2014 at 7:37am

I thought an update was in order as it has been over a month since this post has been visited.  Of the 150 or so leases AEP signed in our group they have paid 2% of them.  They claim that all the leases that where to paid in Dec. will be paid by the end of Jan.  I don't know if they own a calender but that is Fri.

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