The Uncertainty of It All

I think I posted this to the wrong group, so I am reposting it.....

I had an interesting conversation with someone last night about the gas and oil business. I'm just a landowner thrown into this, so much of it went over my head.  But I hung up the phone with these basic concepts: even IF you get into a unit, and IF there is a well drilled, there are a thousand and one ways the gas and oil company can screw you.  You might have a pad and get no royalties. You might be in a unit and get no royalties.  You might not get royalties for all the wells in your unit. Plus, no one REALLY know what they are pumping out because there are no "meters" on the wells. So you are automatically screwed there--yeah, they're going to give you royalties on the whole amount--not.

Honestly, it seems that selling the mineral rights (if the price gets high enough) and just selling the whole mess and getting a new place somewhere is beginning to make more sense.  Can anyone comment on the above?  If it is all true? And how often does it happen? And what is the difference between a drilling unit and a production unit?

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Permalink Reply by evan on February 25, 2014 at 8:32am

I agree most of this can happen and i agree with you about selling a portion of your mineral rights.  they have you at their mercy for sure..

Permalink Reply by JREwing on February 25, 2014 at 8:41am

After reading everything I could possibly take time to read on this site in the last two years and my own personal experiences, I would be more and more inclined to sell mineral rights, invest that money wisely, and let somebody else deal with and worry about the effing oil companies and their royalties.  Legal fees have run into the thousands over two years and still have nothing to show for it.  Don't care to share or explain the whole story, but if you're offered a great price to sell, give it some serious thought.  Two years ago I would have said your were crazy, but not anymore. 

Permalink Reply by Susan A Tippel on February 25, 2014 at 9:13am

Yes, I'm beginning to get that.  It's just not that simple--you get in a unit, they drill, you get rich. Sorry for all you have gone through. Plus, I could be dead before they ever drill. I'm definitely going to think about it.

Permalink Reply by Kathleen on February 25, 2014 at 9:14am
Hi,

1st look more into the information you were given. So many state, with authority, they know ALL the facts, but they are misinformed. A lot of your basic info here is not correct, or highly unlikely.
Its fun to talk minerals but to get the truth, make sure you are getting it from someone knowledgeable.
If you choose to sell, slow down, look where your minerals are located, then make an informed decision.
One thing, to strongly consider, if you do plan on selling, is not selling all the minerals. Keep some skin in the game. If you own enough minerals, this would help you know what's happening. If your minerals are owned right now through land ownership, this would also keep you in the know of what's planned around the place you live.
I am not against selling minerals at all, since they are taxed different, and this different rate is attractive compared to waiting on royalties that could bump your income tax burden up. It all depends on your income level. But, I also agree on holding them, if you are in a good area, primed for development.
Permalink Reply by Susan A Tippel on February 25, 2014 at 9:25am

Oh, I'm not going to do anything quickly.  And I don't live on my land.

Permalink Reply by catt on February 25, 2014 at 9:51am

Stop and think about where some of the information comes from also. I'm not against selling mineral rights either.....everyone has their own circumstances to consider. But when the 'mineral buyers' give people this song and dance about how bad it is and you may never get drilled.....why would "THEY' still want your mineralsl if this was so true. There is a profit to be made.....and they want it. I agree maybe for some people in certain areas it might benefit to sell some of your minerals, but do your research very well before considering doing so.....once sold they (the mineral buyers) will make what ever profit for as long as it is there.

Permalink Reply by Frank Walker on February 25, 2014 at 9:58am

Leasing of your minerals is akin to many other of life's activities:  What you get out is largely related to the effort you put in.  Leasing of one's minerals is easy to do, but difficult to do wisely and well.  Many landowners have a good experience and outcome, many others do not.  For those unable to put in the time, it might well be a better idea just to sell.  But sadly, even selling of mineral wealth takes time and effort if returns are to be maximized.  Mineral wealth, not unlike other forms of wealth, must be well managed in order it not be lost. 

Permalink Reply by Tony Yurina on February 25, 2014 at 2:55pm

If you have any kind of decently worded lease agreement, each well should have its own dedicated equipment such as, free liquid separation & stabilization unit, liquid storage tank(s) and gas vapor metering for fiscal calculation.   This will ensure your unit or well is being prorated correctly to the associated land owners participating in the unit. 

Permalink Reply by Booger on February 25, 2014 at 5:01pm

it really sucks to all the folks who have been getting screwed........i can only hope that there are some laws put in place to stop the theft..........i have a good lease but have heard many stories about the gascos doing what they want no matter what the terms of the lease say.

one thing to consider - maybe the gascos are the ones buying up the mineral rights........maybe part of their strategy is to screw folks on royalties so others will consider selling....once they have the rights, they won't screw themselves.

Permalink Reply by Nancy LeNau on February 25, 2014 at 5:11pm

BINGO !!!!!!!!!!!!

Permalink Reply by Susan A Tippel on February 26, 2014 at 1:44am

I have thought of that! Exactly!

Permalink Reply by DONNA M SELLERS on February 26, 2014 at 3:11am

Then the companies ( CHK) example are the only one who knows what a well is producing? How do they get their numbers from said well? Does every well have a meter reader that does the reading? or is it all hooked up to each well by a computer that sends the info. to that company? exactly how does this production reading work...

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