Beware of Any Group that Charges a % Fee

Some of you may have read a previous solicitation from a group that was charging 15% of the lease bonus as a fee. That discussion was a good lesson on the negative aspects of leasing. These vulture like businesses come in promising large bonuses then once they are behind closed doors they negotiatiate based on what works best for them, as menioned in previous posts in this thread, you bet they'll sacrifice your royalty for a higher lease bonus.

I have never heard of a % fee this high. I understand this is a recently incorporated entity which also means they probably do not have any previous results to display, or few. They would have to bring someing really special to the table, with proven results, to fetch 15%. In the Haynesville shale, the highest fee I have heard of that passed the laugh test was 6%. Look all this stuff can be done by the landowner or a free landowners group. Obviously you hire out some things. You'll want to hire out an attorney to review the lease. There's $300-500. Heck, you may want to hire an intermediary to negotiate - you pay hourly or come up with a scale that encourages him to get the best lease for you. To pay a flat 15% fee is throwing money down the toilet.

I would have left it up but frankly it was a solicitation and I do not want to promote anyone that is seeking to take advantage of the landowner.

 

When we were trying to seek our land we tried a % fee group - no where near as high as 15%, I believe it was 3%. Wouldn't you know it, while we were bound to this group, we got a great offer from a legitimate production company! Patience usually pays off.

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Replies to This Discussion

Permalink Reply by DKinPA on March 5, 2010 at 6:06am
Keith, excellent decision to take down their information and great advice as well! That is the beauty of this site (thank you very much Keith) it allows the flow of information so people will not be "taken" and as we all become more informed we are in a better position to negotiate a fair lease.
Permalink Reply by Carl L. Barton Jr. on March 8, 2010 at 2:27am
Good Morning Keith,
I can tell as administrator of this site, that You are a prudent, fair man. I appreciate all You have said. I have recently received a letter by mail from WILLIAMS APPALACHIAN. They offered as a start { A Paid Up-Front ] lease for [ 30 ] days $ 2,500 Per. Acre and a 17% royalty. I am in Donegal Twp. Butler County. I do not fell comfortable negotiating a lease on My own. I just want to feel I have done My best, when negotiating a lease. I need a referral to an attorney who serves Butler County, that I can trust. Thank You Bud,
Permalink Reply by terry hazlett on March 9, 2010 at 2:25am
Bud , i'm pretty close to you in clearfield twp. there are some landowners groups starting in butler co, you're right not to go at it alone. groups seem to be the way to go ,better addendums to protect your land ect..., we're trying to get a group going if interested , send me a friend request and we'll talk! let your phone # so i can call. Terry
Permalink Reply by Keith Mauck (Site Publisher) on March 17, 2010 at 3:51am
See Terry's post below? It's smart not to go at it alone.
Permalink Reply by Keith Mauck (Site Publisher) on March 17, 2010 at 3:50am
A local paper went and gave them free publicity - unbelievable...! You gotta watch yourself from all angles.

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