ATTENTION Landowner Group Members

The IDEA of "strength in numbers (acres)" is quite apparently agreed upon by many members. Let’s not forget that a portion of those "numbers' will not have a chance at the lease being paid.  Because if your "numbers" are not connected/contiguous to other "numbers" the valve of your numbers are not as appreciated by the potential LESSEE. And an outfit, no matter how financially secure, only has so much capital it is willing to spend/risk on a project.

Hypothetical Question: What if a group of 25,000 acres agrees to sign but only 10,000 of those acres are contiguous, what would be the incentive to pay the remaining 15,000 ac scattered all over the area? After-all, 10,000 ac would be quite enough leasehold to form producing units.

Also remember lawyers are paid directly from the amount of time spent "consulting" with the client(s) board leaders and it is very profitable to drag the process along for themselves. Every time a call/letter/email/fax is addressed concerning the process of your group.....cha ching, time is being billed. Another thing to remember, your area is not the
only area.....rather than drag it out, an outfit (especially a proven profit making producer not a flipper) just may pack in it and move to another more open-minded area and spend their money there. Which would leave your area open for another round of negotiations with another outfit and the much anticipated billed time for your friends at the law firm?

Hope you didn’t have plans for the bonus money anytime soon, yet the possibilities of a royalty check. Don’t worry, that new roof on your house/barn can wait (it isn’t leaking "that bad"). You can always wait for next year’s model of the truck/tractor you were planning on buying.  Paying off those loans can also wait...after all you've been paying on them for
years already. College tuitions can be paid for by the loans you were planning on getting anyhow. Your daughter’s/son's wedding will be fine downsized, their so in love it won’t matter. Vegas....you can do just as good at the local casinos that are closer to home and are popping up everywhere, you can’t afford to take that much time off of work anyhow.



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Permalink Reply by Nelson Roe on November 16, 2011 at 6:11am

LC, thank you for the wishes of good fortune for all.  I also hope that all, or at least a majority of the individuals that signed a lease actually get drilled as well.  & I spoke to quite a few people at the beginning of this process from attorneys to many group reps, to individual landowners who said that the signing bonus is as close to guaranteed money that you will get.  They compared receiving royalties to playing the lottery.  Some will get drilled & they will be very prosperous with that.  However, just like with the lottery, many who play (were leased) will not see anything beyond the upfront bonus(which differs from the lotto because many times you don't even see that). 

In my opinion, the upfront signing bonus' that we are seeing now, although they are very high in comparison to what they have been in the past are still somewhat pocket change to the large companies that are involved in this process.  Take for example the last JV that was announced by CHK.  Around my area, the top bonus amount that I have heard to date has been right around 5k or 5350 per acre.  In the JV announcement they stated that CHK made that deal for a 25% interest in the 650,000 acres to the other company & the deal was valued at approximately 15k per acre.  So, in other words, for a 25% interest in that acreage, CHK made enough to cover the "top" price that they may have paid per acre 3 times over.  AND, they still hold 75% interest in those acres as well, so they are still going to benefit from it once a well is producing. 

 

h bo - one note to your comment about wondering about some of the law firms...  Most of the groups that I spoke with (including the one that I ended up signing through) have a contigency payment.  Meaning that they do not get paid unless you get paid.  If the O&G company finds that you do not have clear title, or rejects you for some other reason, then you do not owe the group anything.  They only get paid if & when you get paid.  I probably would not have been as willing to get in on the group mentality if it were otherwise.

Permalink Reply by Finnbear on November 16, 2011 at 6:41am

h bo,

I think the Law firms should only get paid for leases that actually get accepted by the oil and gas company and after the landowner gets paid.  Our group in Wayne/Stark is structured this way. Our attorney will only collect on the leases that the landowner gets paid on. This gives him incentive to "fix" the title defects on parcels that have curable title issues. If the landowner gets paid, he gets paid. Allowing them to get paid just because people signed up is an invitation for those people who signed up to be abused and someone to walk away with a bunch of money. The firm needs to deliver if they want to get paid.

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 13, 2011 at 12:30pm

Typical land man speak, its cneap to pay me for the same thing your landowner group can get for nothing or a small % of upfront only,

Landowners never give away a % of your Royalty and have a partner for life on your Land.

Permalink Reply by Tracy Packer on November 15, 2011 at 5:09am

Amen Tom!

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 15, 2011 at 12:37pm
Yes Jim your right the atty has no obligation years down the road but he's also not sharing my royalties as your company wants to do
09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 16, 2011 at 8:13am

Hbo I don't know anyone atty or landman that gets paid if the lease isn't accepted and paid, and definatley in our group, no payout to landowner no money to our attorney group, sounds like more landman Rumor to try impact groups. how do they get a % of bonus if no bonus? a % of zero is Zero

Permalink Reply by Blindsquirell on November 16, 2011 at 8:54am

Tom, Im curiuos.....Why wouldn't a landman get paid if the lease fails for whatever reason and is not paid?  The landman has no control of whether title fails or the LESSEE decides to not pursue the lease acquisition.

Permalink Reply by time will tell on November 16, 2011 at 1:04pm

Maybe they work probowno  like some of the experts on here , catch my drift .

 

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 16, 2011 at 1:17pm

H_bo for someone that is just here to learn & help others you seem to spend a lot of time taking shots "like some of the Experts on here" I nor most of the people on here have claimed to be an expert. I in fact am far from that and try to learn more every day, What I offer is my opinion for what its worth to you or anyone else.

Permalink Reply by time will tell on November 16, 2011 at 1:44pm

I will only say this once Tom you drew first blood many time's on quit a few people  over the past few months .

You are very quick to bash anyone who doesn't have your same opinion . 

Looks like you don't like it either .

What makes you think I was talking about you ? Did the shoe fit ?

I am here to learn and teach , being that I have a lot of experience in this industry  - and no I don't work for the o-g companies .

I'm not going to argue with you any more .

09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 17, 2011 at 12:18am
HBO again it appears you don't know the truth or intentionally twist the only people I have ever bashed on here are flippers and landmen, when we clashed was when you attacked our landowners group defending your buddy Des fees and trying twist our commitment. Everyone is still waiting for u to divulge what group you really belong to and why if you had nothing to hide why you went back and deleted many of your previous posts. Showing your affiliations and motives
09bp5t05myjl3Permalink Reply by 09bp5t05myjl3 on November 16, 2011 at 1:13pm

Blindsquirell

Sorry your probably right if they work directly for the driller probably hourly but even then if they get a commission as I hear the wisgarders do per acre. I assume it must close, If I'm a car saleman and I sell a car but credit is declined I'm not getting my commission check on that, But let me clarify I was referring to the Landman that is organizing groups for 7% of the upfront bonus, no Bonus no 7%

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