Where's all the people that advised everyone the moneys in the royalties not the bounus?

Is there any chance there will be a turn around and the land owners will actually get what they were promised? Riches in the royalties. I remember it well. Back yard lawyers. "Don't give the lawyer any percentage give them $per acre" Well at the last minute I had a choice and went with giving the lawyer %1 of the royalties. He hasn't got nothing yet and, the $350 per acre is in my pocket. Well it was till I spent it all down to the level I was at before I was rich. (I wrote about that before how hard it is for anyone to hold onto a wind fall)  At the present after 3 yrs I think it was the right choice and, when the gas co. starts cheating me my lawyer has an interest with me and many others in our group to try to fight for us. That 1% of a group will line his pockets pretty good.

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My advice to my clients is to get as much of both the signing bonus and the royalties as possible.  Some are willing to take less bonus in exchange for more royalties, but they're usually very confident that the company is going to be drilling on their property soon.  Others prefer the bonus because they've seen leases come and go and the only sure money is the bonus.  

Don't forget, the royalties can get reduced if there are post-production costs allowed for in your lease.  But read the Tawney v. Columbia Natural Gas case (it's easy to Google).  It's short and reasonably free of legalese.  I'll be most of your leases don't allow for post-production costs under the Tawney test, even if they say they do.

I'd agree with Kyle's comments above. The best thing I can do for my clients is understand their personal situation so that I can best advise them and negotiate on their behalf. For example, if my client is on solid financial footing and have many years ahead of them, it's my opinion that the royalties should be the focus of any negotiation. On the other hand, if my client has medical bills or is facing the loss of their home, etc., it may be a better idea to shave some points off the royalty in order to more aggressively negotiate the bonus. There is no one size fits all approach to these negotiations. Understanding my clients own personal situation, wants, and needs is sometimes just as important as knowing the industry.


While Tawney is a wonderful outcome for West Virginians, I'm not at all certain either Pennsylvania or Ohio landowners can expect much help from the decision.  

Frank, I agree with you on the whole.

WV is what we call a marketable production state--i.e. the oil and gas company is responsible for all costs and expenses incurred to turn the raw ("at the well") gas into a "marketable product" unless the lease states otherwise.  WV goes further than most states by requiring the oil and gas company to pay transportation costs until that "marketable product" reaches market.  That is what the Tawney decision was all about.  

Like you indicated, Tawney doesn't offer any help at all to PA landowners since PA courts have basically come down with the opposite opinion.  PA is what we call an "at the well" jurisdiction.

I do think Tawney offers some help to OH landowners in the respect that there is a currently pending case before the OH Supreme Court as to whether it will be a "marketable product" or "at the well" jurisdiction--that is whether it will follow WV or PA.  The OH SC might look to Tawney for support in deciding its law.  

The pending OH case is Lutz v. Chesapeake:  http://www.lexology.com/library/detail.aspx?g=ee632574-9288-40c2-a5...


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