Who is who on here??
I have land in Southern Mercer Co. and have been looking for some help with trying to understand all of this since nobody drills near my township. I have been reading the posts here for a while. It seems that some people sharing genuine and thoughtful input are "land group organizers who may or may not be fee-based lawyers who might or could be contractors? But definately, and not actually a landman, or could be just concerned advocates, helping get everyone together so that everyone sees the most from all of this.
Has anyone else found this to be the case? It's Confusing.
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Replies to This Discussion
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Permalink Reply by monty deruyter on -
You have to wade through all the info. good and bad . It's not easy ,but in time you get a feel for it. At times I'm still unsure who's who and what's what.
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Permalink Reply by Jim Litwinowicz on
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At least some of us, like myself, admit who they are. I am a landowner in Lawrence County that used Co-eXprise to get a great lease and now I am helping them get more landowners included.
What township are you in and how many acres?
Leasing is very complicated and it takes a lot of time to understand it to the point you are comfortable enough to sign. Take your time and study all the issues.Took me 3 1/2 years!
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Permalink Reply by Schnoozie on
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The "great lease" that they got for you, what was the royalty percentage and up front bonus? And how long afterwards did you decide to sign on with them as an employee? 3 1/2 years from the first time you saw a lease to sign one or then go to work for Co-Exprise.
Did you have a background in Oil and Gas before working for them?
To answer your question I have land in Worth Twp., more than 100 acres.
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Permalink Reply by Jim Litwinowicz on
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$3000/17% no cost deductions. The best offer a month prior was $1500/15% with deductions.
3 1/2 years since first offer of $350/12.5% Started with Co-eXprise in June of this year. Not an employee but a contractor for them.
Prior experience was self employed contractor.
But what is more important than the bonus/% is what addendum you get to protect you. The wrong lease on 100+ acres will cost you millions over time. And possibly leave the land unusable/livable.
Study all the issues, not just the financial terms.
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When did you sign the agreement?? How did you get that when their current contract says that they will take 5% of your royalty for the first five years of prioduction %17-5 =12 and 8% of your bonus.
That would leave you with only 12% royalty and $2,760 up front.
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Permalink Reply by craig on
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It isn't 5% off the percentage he signed for, it is 5% of the 17% which equals .85% of your personal royalties....which will amount to a tidy sum in the time period specified. If you don't have the time to invest in understanding the whole lease thing, than perhaps it is a good deal, but it is not for me.
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I am lost, What does this paragraph mean then? Its in my contract.
It says they will take 8% of any upfront bonus and 5% of any production for the first 60 months of operations. That would seem like a whole pile of money to me and well, 5% off my entire royalty.
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Permalink Reply by Nelson Roe on
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The upfront is fairly self explanatory. For the sake of easy calculations (as well as current market pricing in my area) let's say that this company gets an offer for 5000 per acre with 20% royalties. Then their cut of the bonus would be 400 per acre (5000*.08).
Their cut of the royalty would be 1% (20*.05). So in essence your overall deal would be 4600 per acre with 19% royalty (for at least the first five years).
& Yes, 8% does seem like a somewhat high cut & I personally decided that I would not use a group that took a cut of the royalties, but that is up to each individual to decide for themselves...
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Ok I think I am seeing the 5% a little better, I think. It just says "any and all royalties" in the contract. That made me think they get 5% of the whole thing.
8% is pretty steep. Lets say they got 5000 acres together, it went for 3000 per acre they keep $1,200,000. am I right?? 5000 x 3000 =15,000,000 x .08
= $1,200,000.00
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Permalink Reply by Nelson Roe on
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That looks about right to me. I know I have heard of some groups representing for anywhere from 1% - 5% of the upfront bonus & they did not touch the landowner royalties, there are also some out there that are totally non-profit, so it may be worth shopping around a bit. Also, as Jim mentioned above... The Lease itself is of higher concern in any negotiation than the fees or bonus. If someone represents you for free & recommends you to sign a bogus lease, then they have not done you any favors. Educating yourself & becoming familiar with what all is offered around you is essential.
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Now that I think about I wonder what the group leader's cut of the 8% is.
Lets say he gets 5% of the 1,200,000 thats a payday of $60,000 for putting 5000 acres together. if I divided right.
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any company that takes a % of a landowners royalty are vultures, if they want to make a profit, charge a flat fee of the bonus
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