Replies to This Discussion

Permalink Reply by DM on September 21, 2011 at 8:46am

5% of the royalties?  Is this correct, or is this a typo?

Permalink Reply by scott peterson on September 21, 2011 at 9:11am

Yikes!

Permalink Reply by Nelson Roe on September 22, 2011 at 3:38am

Dave, this is a correct statement.  I attended one of Homeland's meetings a good while ago.  This was one of my main reasons for backing away from this group.  However, for those who are still trying to gather information, I am not sure everyone is seeing the actual number correctly here.  Homeland is asking for 5% of the royalty %, so let's say they happen to get you a 20% royalty in their deal (for the sake of less complicated mathematics).  5% of 20% is only 1%.  The landowner would receive 19%, while Homeland would receive 1%.  I do not care for this particular arrangement, that is why I ended up elsewhere, but I just wanted to make sure that everyone saw this for what it truly was, & they were not thinking that Homeland was going to be dropping the royalty from say 20% down to 15% to take out their 5%.  Or at least that was the way it was presented at the one meeting that I attended with them.

Permalink Reply by Red Skelton on September 22, 2011 at 4:22am

Any % of royalties is a bad deal that goes forever. No Thanks !

Permalink Reply by Nelson Roe on September 22, 2011 at 4:24am

Agreed.  I was just clarifying the numbers as I interpreted them.  However, if I remember correctly, it did not have to go forever.  I believe that after the primary term (or some point in time), you could contact the company & let them know that you did not desire them to continue to represent your interest in the well if one has been drilled.  Then you would recover the royalty percentage that they were deducting.  It has been a good while since I attended that meeting, so my memory could be getting slightly clouded with other information by this point.

Permalink Reply by DM on September 22, 2011 at 4:51am

Thanks Nelson.  That does clarify that statement.  I was interpretting it as the latter, 20% down to 15%. 

Permalink Reply by Red Skelton on September 21, 2011 at 9:18am

5 % plus 5 % of royalties ? And people are actually agreeing to that? WOW! Well,at least they're not getting ripped off anymore..........................

Permalink Reply by Private KeepOut on September 21, 2011 at 9:18am

5% on bonus and royalty....Wow! That's just plain crazy!

 

Permalink Reply by scott peterson on September 21, 2011 at 9:20am

If you add up the potential $$ invloved in that its almost criminal.....

Permalink Reply by DM on September 21, 2011 at 9:51am

"At this point, they can no longer rip-off people like my neighbors for $15-$50/ac, but there are other ways to be ripped off when dealing  on a subject we personally know little about."

 

5% of the royalties isn't a rip-off, it's more like highway robbery...

Permalink Reply by 09bp5t05myjl3 on September 21, 2011 at 9:35am

Judy, What you say makes all the sense in the world but 5% of your bonus & 5% of royalties for ever is way too much to pay under any circumstance, you can join landowner groups that are non profit, and even the atty groups are generally 4 to 4.5% of bonus I have not seen any that want a part of your royalty!

Permalink Reply by Christiane Marshall on September 21, 2011 at 5:41am

Someone mentioned the http://seohiolandowners.org/Process.aspx as a possible group to join.

 

However, I found some inconsistencies on the website. Please note these two conflicting pieces of information. Note that the most favorable statement is bolded and on the front page. The second is more obscure and easier to miss. This is very different from KWGD's clear opt-out provision: 

 

(1) Unlike other landowner associations there is no cost to participate in the Association. All legal and consulting fees will be paid solely from the up-front bonus payment made to the landowner by the oil and gas company. This means participating landowners will receive the rest of the up-front bonus payment as well as the full amount of their royalties, and will not be responsible for any costs and expenses incurred by the Association, its attorneys, or Dr. Chase.

(2)

[1] A landowner is not required to sign the lease. If the landowner decides not to sign, he or she may negotiate his or her own lease, but will be obligated to pay the attorneys’ and engineering fees if he or she decides to sign a lease with the same company as the Association. This protection is built into the landowner agreement to make sure oil and gas companies do not try to divide the association, and to protect the majority of landowners in the association.

 

I can see the logic behind it. But it also makes you stuck if the group decides something that you totally don't agree with.

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