Replies to This Discussion

Permalink Reply by Red Skelton on September 23, 2011 at 9:45pm

If you have a good lease, the lessee would be responsible for reimbursing you for any tax increase directly attributable to operations of the lessee.

Permalink Reply by Steven Gardner on September 24, 2011 at 9:04am

I don't think they have the authority to tax you for mineral rights on your Property taxes.. unless they rewrite ORC. This has been discussed here before somewhere.. maybe the Minimizing Taxes topic. A lease that would pay for future prop tax increases would be insane for the lessee... a guaranteed payout.. forever!

Permalink Reply by Shower Bath on September 24, 2011 at 11:32am

I think the state/county/townships will all get their cut of the royalties through the ad volem and severance taxes. Also keep in mind that some states are also considering NEW excise taxes to help raise revenues. I agree that the ideal lease for the landowner would have the lessee pay ALL of these taxes.

If you don't get this in your lease, it may cost you 1 % to 1.5 % of your gross royalty. Not an insignificant amount.

The second question relates to your property taxes. I don't think the value of your surface real estate will increase because of the drilling. However, let's suppose you are the lucky one to have the well pad on your property, or they install major pipelines, or possibly a compressor unit. Now the county may view these major improvements as increasing the value of your property, even though it is owned by the O&G company. Who should pay for that possible property tax increase which is due to their operations? The landoner? I think it is perfectly reasonable for the landowner to expect them to cover any increase which is due to their development. I don't think it reasonable to expect them to pay increases due to general value appreciation.

Randy

Permalink Reply by Ruth Dickson on September 24, 2011 at 11:50am

Randy,

I like your assessment of the tax situation, seems reasonable to me.  Appears some folks just can't believe that the O&G companies are willing to look at landowner friendly leases with all their addendums, and are surprised that they ARE looking at them seriously.  Plus some landowners that have locked in with terms they now don't like or signed agreements to wait for a year for a deal (plus give royalty money to business partners FOREVER), seem to want all their neighbors to sign up and get the same lousy lease they have?? 

As landowner's it is our responsibility to educate ourselves and represent our family's best interests with the best lease out there.  Thanks GMS and people willing to respond to questions like  yourself.  You've all been very helpful to folks like me that came into this frenzy very green indeed.  We are very appreciative of your time and efforts.

Mrs. Dickson

Permalink Reply by Mickgyver on September 24, 2011 at 12:54pm

MUCH MORE VALUE THAN IT APPEARS ON THE SURFACE ,  Yes I agree this site is very informative . It appears lately that some folks get on here to criticize others good fortune or feel cheated because of their own decisions ,This is why I have encouraged people to stay together and tell your older neighbors what is going on so they understand the situation better.  as it is said research before signing your rights away. In addition as far as the taxes ,it appears a lot of people don't realize how much the oil companies will make even if they are"'only" getting to keep 75% . This equates to enormous profits after they do additional  processing to make higher profit products. One thing for sure we all realize how the the gas prices affect our ability to live and do for our families ,and how oil per barrel prices affect this across the entire country., I have read that wet gas with the natural gas liquids are as valuable or sometimes even more valuable than pure OIl . With that said recent prices of oil are still over $80 per barrel and sure to climb. I recently saw that one test well with some additional levels of fracking and other modifications produced 50,000 barrels of oil and 150,000,000 cu.ft. of gas in only 60 days . at even a value of of $80 a barrel ,I think that equates to about $4,000,000 for the oil and $600,000 for the gas .Also they have various expenses related to selling these products but this is only 60 days . If it can be done on one well imagine the potential here . I believe we will all agree they can afford to pay any additional cost that the landowner is saddled with such as taxes as long as they are profitting like this.Also don't forget this recovery was only supposed to be at a 3-5% level and these new special designed well systems will enhance this recovery to amazing levels for the benefit of all of us.  Information is key to truly understand what we may have under us .

Permalink Reply by William Lucas on September 24, 2011 at 4:21pm

Thanks everyone for the informative information, it is greatly appreciated. Our group will have to make sure that these issues are covered before we sign any type of lease. Good luck to everyone else as we move forward.

Permalink Reply by Mr. Bill on September 25, 2011 at 10:22am

As someone who has been looking to sell their house, is it wise to hold off till we see the economic impacts and influx of new people moving to the area because of the oil and gas industry?