Has anyone done business with Northeastern Resources? I talked with a rep yesterday and they seemed interested in buying a portion of my 20% royalties here in wills township. I am willing to sell 25% and they offered me an estimated 50K for that and said it would be a partnership and they would negotiate future lease agreements and get the best possible lease bonus and % of interests. My lease with A.E.P. expires in about 2 years and I have yet to be in a unit. There are rumors about a well going in near me but have not heard anything from anyone.....   

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Lance,

You need to clarify. If they are trying to buy a portion of your royalty interest they would not have the ability to negotiate a new lease for you because they would not acquire any executive rights. Did you mean buy a portion of your mineral interest? Also, the lease you signed does it have an option to renew? If so there will be no negotiation for a future lease because aep has the option to
Renew it. If the lease does not have an option they will probably include you in a unit prior to the lease expiring to hold the lease

While it sounds good that they want to partner with you, because of the reasons above I don't think thats a very relavent selling point.

Hi Jonathan, The way I understood it they want a portion of my 20% Royalty interest. I am willing to do 5% of that. The rep said they would be partners with me on my lease and A.E.P. does have a renewal clause. If they do renew, they have to pay my bonus again if I'm not in a drillable unit. Of course that will be 2 years from now or if I do get in a unit before then. It sounds good that I will retain 15% of my 20% and still have a lump sum of cash and some one to help with any future lease agreements..... Where are you located? And are you in a unit yet?

Lance, they'll be a partner insomuch as they'll own a piece of the same potentially monetized asset that you own.  But their use of the term "partner" is a stretch in every other sense of the word.  They'll be a joint owner with no responsibility to you (and you will have none to them) and you'll mutually benefit from drilling operations.  But it won't be symbiotic in any way.

Dexter,

Why wouldn't / couldn't any sales agreement / sales contract stipulate certain mutually agreeable terms / caveats / symbiosis / protections ?

Also in these matters if a landowner maintained a 'Majority Interest' in the Gas and Oil Development Rights of the land would it not provide the landowner more control / 'say so' (on whether or not to accept a development offer for instance) and especially so if the sales agreement / sales contract so specified ?

Or is it unrealistic to expect such ?

I question why anyone would want a relationship with this company.  What does a landowner gain?  You're selling them something, they're buying it, done deal.  No need for these guys to be on your Christmas card list.  Landowner has executive rights, so Northeastern has no control over any future decisions. 

They buy a portion of the Royalties and then are considered partners with the landowner. They help negotiate any new lease agreements with there lawyers and share info with the landowner about certain issues that may arise. If they buy 50% of your say 20% that leaves you 50%. So 50/50 partnership with your oil and gas interests

Lance,

You need to be clear on what they are buying. Royalty or minerals. Huge difference. Find out then you can determine what value, if any, a potential partnership could bring.

Lance, that's not how royalty ownership works.  They have zero influence over any future negotiations unless you actively ask them to participate.  Look at it this way: you own an apartment with five renters.  I want some cash flow and you need money now to pay off a lingering bill.  I buy the rights to the rental income generated from two of your tenants.  I don't own your building.  I can't show up and start asking your tenants for more money.  I own nothing but the right to a portion of the cash flow.  When it comes time to renegotiate the rent prices it's not my decision.  It's your building and they're your renters.  I'm at the mercy of the limited contract that you and I signed.  

Jonathan is correct.  There's a huge difference between royalties and mineral rights.  Huge difference.

Dexter,

No 'relationship' beyond striking a sales agreement. Any company not just this one.

Agreements / Special Conditions can preclude perhaps costly challenges later.

Forget about Christmas Cards from us - we would just want a square deal.

Thanks for your reply.

If it's me then I'm selling them potential cash flow and telling them that they have no rights beyond collecting a check every month.  That's all the contract allows them to do.  I wouldn't sign anything that said otherwise.

At first glance it looks (reads / sounds) like a pretty concise way of putting it.

It should be very straightforward.  A mineral rights sale is infinitely more complicated and requires much more heavy lifting by an attorney.  

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