great river royalties section good or bad??

 is this a bad royalty deal??

for all oil and gas substances that are produced and sold from the lease premises Lessor shall receive 20% of the sales proceeds actually received by Lessee from the sale of such production, less the same percentage share of all production, severance and ad valorem taxes.  As used in this provision,post production costs shall mean all losses of produced volumes(whether by use as fuel, line loss,flaring,venting or otherwise and all  costs actually incurred by Lessee from and after  the wellhead to the point of sale ,including,without limitation,all gathering, dehydration,compression,treatment,processing marketing and transportation costs incurred in connection with the sale of such production. For royalty calculation purposes, Lessee shall never be required to adjust the sales proceeds to account for the purchaser's cost or charges downstream from the point of sale. Lessee may withhold royalty payment until such time as the total witheld exceeds fifty dollars ($50)

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Permalink Reply by bo boboski on February 11, 2014 at 11:12pm

NOOOO!  you will end up with about 5%.

Permalink Reply by Kevin in Belmont County on February 12, 2014 at 12:43am

Adam,

I do not know how much acreage that you have or how much leverage you may have as far as the O&G company needing your acreage to complete a unit but, I would not sign any lease with this language in it. Find a good O&G attorney and have them review any lease before you have signed it, period! This language to me sounds very much like a "Market Enhancement Clause" which means as soon as they put the gas into a pipe line and send it downstream to a processing facility meaning "enhancement" the lease will allow them to then go back and take deductions for everything that has been done to the gas from the time it leaves the well. It basically say you will pay a percentage of all of the cost associated with the production of the gas until it is sold. A clause similar to this one took about 30% of my 20% royalty last year with deductions.

Permalink Reply by adam sorell on February 12, 2014 at 2:34am

Just realized there was addendum page in back. Wonder why they didn't delete the original one.??

"lessee  agrees to pay lessor as royalty for the oil gas hydrocarbons and by products produced and marketed from leased premises. the price upon which royalty is calculated shall not be less than fair market value for gas oil and hydrocarbons  so produced based on arms length transaction for similarly situated wells in the area producing the same quantity ,quality ands being sold at the same point of sale.Payments of royalties for gas oil and other hydrocarbons marketed during any calender month to be on or about the 30th day after receipt of such funds by the lessee. There shall be no deductions from said royalty payment for any reason,directly or indirectly,including but not limited to costs Lessee incurs for producing,gathering,storing ,seperating,treating,transporting,dehydrating,compressing,processing, marketing such  oil and or gas, nor shall there be any deductions for taxes, assessment,or any other pre post production costs. Production from the leased premises shall be measured in accordance with Boyle's Law for the measurement of gas at varying pressures,on the basis of 10 ounces above 14.73 pounds of atmospheric pressure, at a standard base temperature of 60F degrees and stipulated flow temperature of 60degrees,without allowance for temperature and barometric variations. This measurement  shall be at the well head. Reports, in reasonable and customary format,pertaining to the calcualtion of Lessor's royalty for any and all wells drilled on the leased premises or lands unitized or pooled with the Leased Premises shall be made reasonably available to Lessor."

Permalink Reply by martin on February 12, 2014 at 5:08am
What county are you in? Great River is notorious for not paying signing bonus until the very last moment. I would expect 30 days beyond the 120. How much per acre did they offer you ?
Permalink Reply by adam sorell on February 12, 2014 at 5:38am

$6800 an acre. the original requested 150 days but on addendum it's 120days to pay up. I got Paloma wanting to lease now but the guy told me they are only leasing until end of Feb then they are done.  He said ohio is a "race state" first one to record lease gets the rights but i don't know if GRE can sue me for not waiting 120 days.

No one has got paid yet and the first signing were Sept 23.

PAloma is offering $7000 an acre and 110% renewal.

Permalink Reply by Dave C on February 12, 2014 at 5:50am

Adam is it a straight 120 days or 120 business days?  We all signed with Rice and it was 120 business days which was almost 6 months.  We all received our money at almost 120 business days to the day. 

Also, check and make sure it doesn't have any clauses regarding extending the 120 days for "unforeseen or uncontrollable" circumstances.  Several courthouses had to limit the amount of people in the courthouse and this has reduced the speed at which deed searches can be completed. 

Permalink Reply by adam sorell on February 12, 2014 at 6:49am

on the front page it say's 150 days and if not surrendered or payment made by specific date  then lessor shall notify lessee in writing and lessee shall have 30 days from receipt ofnsuch written notice  to make payment or surrender lease

Addendum on back:

lessee shall pay to lessor the bonus consideration on all confirmed net acres within 120 days after receipt of this executed lease

Permalink Reply by Renee E. Dorsey on February 12, 2014 at 7:38am

My God - take the damn Paloma deal!  My advice is stay away from anything associated with Great River.   My lease with Paloma was checked over by an attorney - I can send you a copy or just tell the Paloma guy - Jonathan, right?  to use the same lease I had if he can.     The problem is yu need to get OUT of the GR lease - btw, I got about the same deal from Paloma and was paid at @ 85 days.    And yes, end of February - he will be out and done.   

Permalink Reply by Chrisco on February 13, 2014 at 6:47pm

I would be more comfortable with Paloma. GRE/AEP may end up with it (or anyone else for that matter) but your best lease terms is probably going to be with Paloma, not to mention faster pay and less run around. Getting a good lease is worth way more than a few hundred dollars extra bonus money. If you can get good/better terms with Paloma, no matter who the producer ends up being, those terms have to be followed by whoever may acquire the lease. Just like when another bank buys your mortgage, nothing can be changed.  

Permalink Reply by martin on February 12, 2014 at 7:01am
Our lease said the same thing . 120 but now they are into the extra 30 after notification of non payment.
Permalink Reply by ryan c on February 12, 2014 at 8:43am

Paloma is up to $7,800 an acre and 20% royalties and they are selling all the acreage they leased out to American Energy Partners. Paloma is only here to make a quick buck, not to drill wells, that's why they are done signing leases by the end of this month because that's when the transfer is happening.

Permalink Reply by bo boboski on February 12, 2014 at 10:17am

Aubrey may end up with bout all of it!

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