Comment

Comment by Kelly Fink on November 29, 2010 at 8:51pm

Bryan,
I AM NOT the landowner. I only OWN 2.5 acres out of the 405.44 total acres of the 6 contiguous land leases we own or have assignment of. please email me at kellyfink@windstream.net and maybe I can explain better or you can......since I am NOT the landowner. Below is AWESOME!!!!

Comment by Bryan D. Huwar on November 29, 2010 at 6:51pm

It doesn't sound like we're talking about an ORRI if you're the landowner. It sounds to me like you're just being offered a total royalty of 16.5%, which would simply be 4% over the statutory minimum. An ORRI would typically come into play where the lessee assigns the lessor's lease to another company. In that case if the lessor is getting the statutory minimum 12.5% then the lessee might require the purchasing company to pay it an additional 5% royalty, which would be deemed the ORRI. As far as the 2 grand, if you're talking about a 5-year lease, then that's not too bad of a deal in my opinion. The 16.5% wouldn't be bad either if you're going to be paid at the wellhead. If the $2K is for a 10-year lease I'd give it a long hard thought. If the 16.5% permits deductions, then I certainly wouldn't be jumping up and down. I've said this in this forum before, but I'll say it again, I would rather get a lesser royalty, even 2% or 3% less, but be paid at the wellhead price and know exactly what I'm getting, rather than permitting a gas company from making every deduction under the sun and paying sister companies. Plus, good luck fighting the gas company on an annual basis over deductions. If you give the gas company a window, then you're going to get taken advantage of and your recourse will be go to court, and if you end up in court you're going to lose almost every time whenever you do the cost-benefit analysis. My last comment would be don't make the mistake of doing this yourself, especially because odds are this will be the last gas lease you sign. If you don't like the costs that you'll incur, then get together with some neighbors and do it together. I have a 16- or 18-page landowner-friendly lease that I wrote for a landowner group and I feel like there's still holes to plug. Good luck.

DISCLAIMER (i.e., CYA – I suppose CMA): Attorney-Client Privilege/Confidentiality is not established and does not apply to either questions or responses. Hence, do not disclose any confidential information (which would be really stupid anyway since thousands of people are reading this stuff). Responses are not to be taken as legal advice. Only one piece of legal advice is being given: HIRE YOUR OWN ATTORNEY TO HANDLE YOUR OWN SET OF FACTS AND DISTINCTIVE LEASE TERMS AND ISSUES! A brief recital of facts and issues in a discussion forum can NEVER convey all of the facts in each idiosyncratic case. Likewise, a brief response to those incomplete set of facts and issues in a discussion forum can NEVER convey a functional analysis of your unique situation, and, as such, cannot be relied upon by you as legal advice for your unique situation. Believe me, fact situations are about as similar as fingerprints. Moreover, all of my responses are talking about Pennsylvania law because that is where I am licensed. That means if you are from outside of Pennsylvania you can go ahead and throw everything I said right out the window (darn, I was trying to make it through this without resorting to a cliché . . . or a French word). Thus, while my responses might be free, they are not legal advice. Do not be so stupid as to try to save $1,000.00 whenever you have the opportunity to make $100,000.00. So take it from Warren Buffett – “Price is what you pay. Value is what you get.” If you do not pay the price you will really pay the price. I hope I avoided ticking you off, but hey, wasn’t that a great disclaimer!

Comment by Kelly Fink on November 29, 2010 at 5:22pm

No. His grandfather got the acreage and it was bought by his parents and then we bought them.

Landowner Comment by Mike C. on November 29, 2010 at 4:48pm

So I am clear. You hold the leases for 405 acres in your name or a company that you control. Did you take those leases at 12.5%?

Comment by Kelly Fink on November 29, 2010 at 4:45pm

I "hold" the leases for 405.44 acres. We own the ogms of the leases. We are NOT the land owners.

Landowner Comment by Mike C. on November 29, 2010 at 4:16pm

What do you mean you have the leases? Did you lease 405 acres?

Comment by Kelly Fink on November 29, 2010 at 3:33pm

2k and acre. Have the leases but only own 2.5 acres of the 405.44.

Landowner Comment by Mike C. on November 29, 2010 at 2:43pm

There is a state mandate on minimum royalty interest (12.5%). As for an ORRI there is no minimum. 4% is really good. But if you have the leases for 12.5% then I would counter at 3/16. 405 contiguous acres would be pretty valuable. What are they offering for a bonus?

Comment by Kelly Fink on November 29, 2010 at 2:22pm

Sounds great! What do you mean that you want to know where you stand?

Landowner Comment by L. S. Reeger on November 29, 2010 at 1:19pm

Thanks for your comment. I'd really appreciate anything you learn. We are in different situations. Your concerned about your lease-holds, I'm concerned about were I stand.

We both wonder. If I learn more -- now that you made me aware (I'll search), I'll post. Hope you will do the same.

Thanks.

Linda

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