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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Replies to This Discussion

Permalink Reply by Dave on November 14, 2011 at 2:48pm

jim-appreciate that- as to your ? yes it does and much more and due to the (nda) for you of much learned that means non-disclosure agreement

 

not everybody on this site is a neophyte intimidated by your vast knowledge gathered at the knee of a jouneyman-landman

enjoy the barbs

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on November 14, 2011 at 3:48pm

Actually , yes , my lease does. And like David McCune I negotiated my own lease. Shell was very agreeable to my reasonable requests. I am satisfied with what I got and I don't owe anyone a dime. They can make money and I make money. The more they make the more I make. AND it's ALL MINE (and the IRS's). God Bless America!

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on November 16, 2011 at 10:05am

What's up with all the attitude? Chill out there buddy. Don't be so uptight!

I DID sign with Shell and what's with the (?dry gas only?) CRAP ? Are you old enough you be on this site? Someone should tell your Mommy!

P.S.

Good luck to you in your endeavors...............with attitude like yours , you're sure gonna need it!!!!!!

Permalink Reply by Jim Litwinowicz on November 16, 2011 at 7:41am

Nelson Roe; I don't agree with the assertion that getting royalties is vary rare and akin to playing the lottery. Almost all land here has Utica and/or Marcellus under it and will be developed eventually. The problem is the time lines involved. Even if you sign a lease, it will be a long time for some to be in a producing unit. There is very little infrastructure and that takes time and money to get in place. Other areas will be competing for money and equipment.  Because of that some people may not get royalties for 15 years, 20 years, or even longer.  Many will get royalties much sooner but some will wait a long time.

You are right that the bonus money is critical to many people.  It will help many people get out of depth or other important things.  And for many, it will be all they get for many years, depending on the length of their lease. And if their lease allows a shallow well, which pay very small royalties, to hold the lease by production, then the bonus is more critical to many people.

Permalink Reply by Nelson Roe on November 16, 2011 at 7:51am

Jim, the lottery was just how it was presented to me as an example.  Pretty much just saying not to hold your breath for the royalties whereas the bonus money (if eligible) would be attainable in the forseeable future.

Permalink Reply by k farmer on November 16, 2011 at 8:29am

I was at a meeting and the geologist and petroleum engineer were asked directly what percent of landowners in the group would get a well in their opinion.  Their response was historically 50 to 70% of land in a play was included in a unit and recieved a royalty.  I know royalty income is more $, but there is a chance you won't get.   That put things in perspective for me better.  

Permalink Reply by Schnoozie on November 16, 2011 at 8:45am

Where was this meeting? was it a township community or a landowner lease group organization meeting.?

Permalink Reply by k farmer on November 16, 2011 at 9:23am

The meetings I have attended have been in Southern Monroe and Eastern Washington County.  Not really certain which one it was, like everybody else I have been to so many I lose track. 

Permalink Reply by Schnoozie on November 16, 2011 at 9:31am

Who sponsored the meeting? That was my question.

I am having a very hard time believing alot of what I read here.

Permalink Reply by k farmer on November 16, 2011 at 10:20am

It was sponsored by a lawyer group that gets paid on a percentage of the lease payment ( I don't like using "bonus", it implies we should be grateful for anything).  So there was certainly a conflict of interest there.  I am really not sure which one it was so I don't want to say.  My point is just to balance the "the real $ is in the royalty" mentality.  It is, but not everybody is getting a well. 

Permalink Reply by Blindsquirell on November 16, 2011 at 10:31am

FYI....you dont "need" a well to collect ROYALTY

Permalink Reply by Blindsquirell on November 16, 2011 at 11:08am

YES...Your paid for your proportional share of the unit.  I was referring to your post of..."It is, but not everybody is getting a well.".  It sounded like you thought you only got the royalty if you had a well on your property.  Many landowners have thought this to be true.

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