Replies to This Discussion

Permalink Reply by evan on February 23, 2014 at 2:23pm

What makes you say this. Maag

• ▶ Reply

Permalink Reply by maag man on February 23, 2014 at 8:21pm

inside info

• ▶ Reply

Permalink Reply by maag man on February 24, 2014 at 4:07am

hmmmm   first of all Vine isn't a driller...glad you received a check.. but anyways.. they couldn't have promised you a well...  amazing how they tell  land owners anything..   and if they paid you quickly it is because they needed your acreage...  did you have an old oxford lease..

btw Rick.. if you have been saying it for YEARS...  THEN WHY has the company only been in business for 5 months.. do you work for them.. ??

Company Name:	VINE ROYALTY, LLC		Status:	Active		Filing Date:	09/26/2013
Entity Type:	Limited-Liability Company		File Number:	0801856646		Company Age:   5 MONTHS

• ▶ Reply

Permalink Reply by maag man on February 24, 2014 at 4:48am

people are getting smarter..

• ▶ Reply

Permalink Reply by Hal Whitlatch on February 27, 2014 at 6:22am

Hey Rick,

Ask Maag man who he works for now and the past 2 years!

• ▶ Reply

Permalink Reply by J. Kinney LandRights on February 24, 2014 at 5:12am

Most of the E&Ps have buying programs or contractual relationships with companies that can provide the legwork on mineral buying. 

Oil and gas companies that don't necessarily have rigs that lease and buy leases from other O&G companies also have a reason to buy minerals outright. 

Buying minerals outright is obviously a lucrative business opportunity for anyone, whether it's an actual drilling operator, a leasing company that doesn't have rigs (couple of these are big companies that are very active in OH with leasing right now), mineral buying companies that buy minerals but are only getting the royalty percentage technically, and even down to the everyday joe that is looking to buy a few rights for himself. 

These companies have been doing this for years.  It's another form of opportunity.  They have info on the drilling results, they have the capital, they have more insider info because they are the insiders so why wouldn't they be out there looking to acquire more opportunities?  

When a landowner leases for 15% royalty that means the other 85% of the production/profit is NOT coming back (unless they have a severance or pugh clause) so it's the same as selling in that regard.  The oil and gas company isn't going to only produce half of it and then just had it back over to the landowner.  This is why a lot of these companies are buying LEASES from oil and gas companies.  They know that if they can buy a lease that calls for the Lessee to receive 80 to 87.5% of the interest then all they have to do is find a company with a rig and work out a JV or partnership and share within the working interest.  

  People have been saying since Aubrey paid $12k/acre for leases then mineral buyers should be paying $20k/acre to buy the minerals.  Do the math - Aubrey got 80% of the interest for $12k/acre (paid $150 per percentage point for each acre, assuming he bought leases that give 20% royalty to landowner).  When people sell their rights with a lease that doesn't call for a severance or pugh clause with a 20% royalty then the buyer is only getting that 20% and nothing else unless the lease expires.  If someone pays $10,000/acre for minerals already leased at 20% royalty then he is paying $500 per percentage point on each acre.  Makes sense why these companies with relationships with other drillers are buying leases at very high amounts.  That's the better buy versus buying mineral rights from landowners. 

I've worked with a lot of families helping them sell and the best thing you can do if you're wanting to sell is find the best price; regardless of who it is. Not sure why it matters who you sell it to because once you sell it you have no interest in it anyways.  With that said I've found the best offers in places you wouldn't expect.  Most mineral buyers want to buy deals and steals or have the flexibility to sell tomorrow and recoup or make a return.

I wish everyone the best of luck when selling. 

• ▶ Reply

Permalink Reply by Kathleen on February 24, 2014 at 7:25am

Hi Landrights,

I'm trying to wrap my brain around what you are saying and its only half way around :0).
How would a paugh Clause or severance clause change any of these numbers if all your land was leased at 15%.
A paugh clause protects land not placed in a pooled unit and isn't the severance clause about new taxes or any taxes the government can think of to add to a well head, landowner, mineral owner, ect..?

• ▶ Reply

Permalink Reply by J. Kinney LandRights on February 24, 2014 at 7:46am

A vertical Pugh Clause gives the Lessee (driller) a certain period of time to produce formations beneath the property.  Once that time expires and the driller has only produced the Utica formation then all other formations are cleared of the lease and the landowner can lease those other formations with another company.  Basically the vertical Pugh clause only allows a driller to hold the formations that have been drilled within a certain period of time.  This clause is difficult to get approved but it gives the landowner the upper hand.  Benefits for this is because you don't want the oil and gas company to only produce 1 formation and be able to hold all the others.  Lack of a better term - If they don't produce it, they lose it. 

What I mean by severance is creating a depth restriction to the lease.  If a lease has a depth severance then it ends at a certain depth or formation. This benefits because again you don't want the oil and gas company to have all formations by only producing one.  I've been able to get this written in more leases than a pugh clause.  Some leases will state the lease is only valid to 100 feet beneath the base of the Utica formation, or the Point Pleasant formation, or Queenston, Speechly, etc.   The goal is to not lease all your formations because one day another formation may be the money maker and you still have it. 

Sorry to confuse you.  Thanks Kathleen!

• ▶ Reply

Permalink Reply by scott peterson on February 24, 2014 at 12:33pm

Good explanation.....

• ▶ Reply

Permalink Reply by Utica JOE on March 3, 2014 at 9:47am

Landrights,

I believe the vertical pugh deals with acreage being released after the primary term, and the horizontal pugh is the one that pertains to depth. A lot of people in the industry mix these up and most info on the internet is incorrect. I recently have resorted to using 'strategraphic' and 'geographic' instead of the classical vertical and horizontal nomenclature used. 

• ▶ Reply

Permalink Reply by jett on March 3, 2014 at 11:06am

Isn't something Vertical up and down?

And Horizontal east to west as in the line of the horizon?

And aren't Vertical pugh clauses somewhat recent in the leasing around here the last few years?

Whereas, the first Pugh clause being recommended was the Horizontal Pugh clause to release acreage not included in a drilling unit by the end of the lease term.

Then it became clear that there were other viable layers that the Oil/Gas cos wanted than just the Marcellus, Hence the appearance of the recommended Vertical Pugh clause in newer leases.

• ▶ Reply

Permalink Reply by Utica JOE on March 3, 2014 at 11:42am

A Vertical Pugh should be thought of as if it was a cookie cutter cutting through the land "Vertically". The Horizontal Pugh stems from strategraphic zones running "Horizontally" under the earth. I believe both of these clauses are relatively new in Ohio and Pennsylvania . Whereas in some areas of Texas, both of these clauses were prevalent as early as the 1970's when the Austin Chalk got big.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page