Replies to This Discussion

Permalink Reply by Bernie Horabik on August 22, 2011 at 3:57am

I mean county** Not country :)

Permalink Reply by Finnbear on October 5, 2011 at 4:34pm

Smith-Goshen Landowner group is now covering all of Belmont county.

Permalink Reply by Buckeye on September 11, 2011 at 1:20am

Started out with Mason Dixon out of St. C, was buying everthing for nothing around four yrs ago. Somehow forgot to mention the terms Marcellus and Utica to anyone at that time. They flipped those leases to Marquette out of Tx shortly after and I believe they were just bought by Exon last week. The "Utica landowner group LLC" has Ed Sustersic a lawyer in Brookside representing them just settled with Exon at $4,900 per acre and 19% royalty. I would expect this coming yr to go higher than that.

Permalink Reply by AT on September 11, 2011 at 2:38am

Marquette was bought by Hess Corp last week.

Permalink Reply by Shower Bath on September 11, 2011 at 4:38am

Can anyone in the Utica landowner group disclose what they paid attny. Sustersic for his services? If the above numbers are correct, it would appear that maybe the attny. received a 1% royalty override and maybe a % of the bonus? Or did he work on an hourly basis? Thanks....

Randy

Permalink Reply by Elsie Fox on September 11, 2011 at 8:53am

The group's expenses, including Mr. Sustersic's percentage, are paid by Exxon Mobil.  The landowners will receive full bonus and royalty monies. 

Permalink Reply by Buckeye on September 11, 2011 at 9:19am

Sustersic and Bell were asked this at one of their recent meetings. Said it is 1. something % of the signing bonus only and no royalty. Claims that works out to around $35 per acre.  Don't kid yourself though, no one is doing anything out of the goodness of their hearts. Attorney's have all but put their practices on hold cashing in on this and are literally pocketing millions representing large groups / acreages. As Elsie said and I heard as well, Exon covered that fee above the $4900 per ac they paid the group.    

Permalink Reply by Shower Bath on September 11, 2011 at 10:23am

When the O&G company pays the attorney fees, who did the attorney work for? What could the deal have been worth if the landowners paid the fee? Do you have any idea what the dollar value of a 19% royalty is versus a 20% royalty on that many acres? In a case like this shouldn't the amount and manner of payment to the attorney be disclosed publicly? A little tranparency would eliminate questions like these.

Randy

Permalink Reply by Elsie Fox on September 11, 2011 at 10:42am

Good question.  I joined the group late, so the only meeting I attended was the last one we had, and this is what was said.  The lawyer initially told the group that he would handle the negotiations for 1 3/4% of bonus money.  Apparently, the members were very much against this and quite vocal about it.  He ended up being paid by Exxon Mobil.  I agree that the group may very well have been better off paying him. 

Permalink Reply by Shower Bath on September 11, 2011 at 10:53am

This has happened with a number of the landowner groups put together by law firms, where the O&G company picks up all fees and the landowners save the expense, this case is not uniqe. Maybe this is a rock that souldn't be turned over. At any rate that is one of the better financial set of lease terms that we have seen disclosed in Ohio. Hope the lease was written with the proper Gross royalty protections that will ensure the landowners get the full 19% with no deductions.

Randy

Permalink Reply by AT on September 11, 2011 at 2:19pm

Unless this group had a different type of arrangement with this attorney, in most cases, the O&G company is paying those attorney fees to the attorney on behalf of you, the landowner. Therefore, for tax reporting purposes, the $4900 per acre bonus payment to you is actually $4900 + the amount per acre paid to the attorney on your behalf.

 

On the other side, when reporting this income, this amount that YOU paid to the attorney can be taken as a tax deduction on your income tax return for attorney fees YOU paid along the way to obtain your gas & oil lease. This is important because that deduction goes along way towards reducing your overall tax liability in the tax year you receive your bonus payment.

 

The question becomes, as Randy points out in the above post, who did this attorney actually work for? Did either the group or its members sign an Engagement Agreement with this attorney?

Permalink Reply by Finnbear on October 5, 2011 at 4:33pm

1.75% and it works out to $86.63 per acre.