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Permalink Reply by Jim Shoos on April 2, 2012 at 10:53am

VG... I have been on this site long enough to know the history of you being under the impression that your deceased father got taken advantage of.  Whether or not that is true really isn't of any probative value in your assertions that lots of other landowners were somehow hornswoggled by lower bonus amounts or less favorable lease terms.  Bonus amounts vary over time (they go up, they go down) depending upon whether a company is leasing a rank wildcat area with absolutely no proven production within 10 miles, or whether they are attempting to acquire a lease offsetting a prolific well that is already making sales.   Additionally, the bonus amounts vary when you are selling natural gas at $8.00MMbtu versus the current price of $2.00MMbtu. 

It should come as no shock to you that oil and gas companies are not non-profit organizations... we are in it for the money.  We don't want to be negatively perceived, but the almighty dollar is the overriding goal... it has to be.  Publicly traded companies that don't produce profits get downgraded and their stock price tanks.  Private companies depend upon profits to attract capital financing... no profits = no investor dollars.  Another non-shocker for you should be that the more money we hand landowners, the less money we make.  Yes, things like Pugh Clauses have been around for decades, both horizontal and vertical, as have more specialized unitization clauses, and clauses requiring additional payments for specific surface uses... but again, inclusion of those types of provisions typically result in less profits for oil and gas producers.   If we have a choice... you aren't going to get these types of lease provisions included in your lease since they end up costing us profits.  If, as a landowner, you happen to be more educated or possess more leverage to demand inclusion of these types of provisions, we will grudgingly give them to you.  As producing areas mature the knowledge level among landowners increases (especially in the internet era).  Our business is no different from an automobile dealership.  Sure, you can get dealer prep knocked off (if you are smart enough to ask for it) and if you aren't... guess what, you pay it. 

Oil and gas producers certainly aren't the pariah's we are painted to be, we are simply businessmen trying to make profits and keep our bankers and Wall Street investors happy because if we don't... we no longer have jobs.  Despite the perception that we can dig a hole in the ground anywhere and produce copious quantities of gas, or that we are Jedd Clampett who can fire a bullet into the ground and oil comes bubbling up... this is an extraordinarily complex business and it is dog eat dog in terms of trying to make a profit and competing against our fellow producers.  So please, as a landowner, don't expect to be handed something out of the goodness of our hearts.  That's not really the business model for any American company I am familiar with.  If you wish to live under a socialist regime then you need to go visit Venezuela and Hugo Chavez. 

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Permalink Reply by Nicole Jacobs on April 2, 2012 at 10:58am

VG, I am not stating one way or the other on lease amounts. Ours wasn't horrible, but certainly nothing to brag about with only 3 figures and a low royalty percentage. But if you watch the whole video, the dairy farmer Amy is only the first story and hers was beneficial from leasing and later production. The other two women were able to return home because of employment. The first of these two has a husband working in the industry and one of her children is looking into it, rather than moving from home. The second moved out of state because their business was failing, came back to buy a bed and breakfast and now have a thriving business that allows them to be close to their families. This industry is dynamic in how it is impacting people and the overall economy and leasing is only one small portion of that greater picture.

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