Hilcorp updates??

Ok I did the HUGE leasing event in Lawrence Co. back in September with Hilcorp.  We actually got a letter in the mail from Co-Exprise stating that once our bank info was faxed our lease check would be wired.  Now what??  Yah, we have a nice sum in the bank now, but do we get notified somehow if Hilcorp is going to drill on our land? How do we know what's going on?  I google "News updates on Hilcorp" and get nothing recent.   View points please!

 

Views: 12395

▶ Reply to This

Replies to This Discussion

Permalink Reply by Finnbear on January 31, 2012 at 7:47am

So you DO owe taxes on their 5% but can deduct it IF you know that it is a deductible expense.

Lesson here - make sure you have a tax planner who is O&G knowledgeable or you will send more than you should to that black hole called Washington.

Permalink Reply by KML on January 31, 2012 at 8:08am

not necessaliry....but then again what i don't understand is they said that you should only get a 1099 for the amount of actual money your check was for....for example:

 

1 acre at 3000.00 would be 2850 .00 after the 5%...you should only get a 1099 on the 2850.  If you get a 1099 on 3000 they said write off the $150 (5%) as the professional fee....i understand what they are saying but if you got the 1099 for the whole amount then does that mean that co-exprise is not paying their share of the tax? 

We have not recieved our 1099 and don't really expect to anytime soon as we just got our bonus in 2012 so we would not know the answer to this until the time arises.

Permalink Reply by Tim R on January 31, 2012 at 9:17am

I'm looking at the Co-x agreement and here is what it says in section 2. 3. "....Owner shall pay a transaction fee through the Lease agreement with the successful Bidder, in an amount equal to 5% multiplied by the gross up front and primary term renewal payment..."  Notice it says gross not after taxes.  It goes on to say that "The payment of the Transaction Fee shall be a written obligation imposed on the successful Bidder...." So the check is written by the Successful Bidder on YOUR BEHALF.  I guess they don't trust the landowner to pay the commission?

The agreement you sign also says in section 5 c.  Taxes.  "All fees hereunder are exclusive of taxes, and Owner shall pay any and all taxes arising...."

You owe the commission, the successful Bidder (Hilcorp) writes the commssion check on your behalf, you pay taxes on the whole amount that is how I read that.  

I'm no lawyer, so if I'm reading this wrong I appreciate an explanation.  Maybe you can write the commission off your taxes.  I have heard both you can and that you cannot.  If someone has a definitive answer I'd like to know.

What I find really interesting is that in section 5 h) Nonassignability and Binding Effect. it says you can't assign the MarketPlace  agreement, your contract with Co-x, to a third party without their consent.  But the successful Bidder can assign the lease they want you to sign without your consent to anyone they want.  Am I the only one that sees some irony there?  I become disinterested in negotiating with someone presenting me with terms such as this. 

I want to sign a lease, but not one that I KNOW has trap doors in it.  Even if I never fall through one, I'd prefer it not be there in the first place.

Permalink Reply by Tim R on January 31, 2012 at 10:52am

These are the standard Hilcorp and Co-x leases going around.  Many of my neighbors signed, so no numbers for me.  They weren't concerned because most of them had no idea what they were signing, all they knew was they were getting 3K an acre.  Some were a little upset when I educated them on what they signed, oh well.  There are some leases in primary terms by me that speculators bought for $5 an acre.  I'm just going to sit back and watch, no hurry.  I'm just throwing some of these issues out there because nobody is even discussing the terms of these leases.  Even on this forum. 

Permalink Reply by Schnoozie on January 31, 2012 at 10:54am

Finally

something

useful.

Permalink Reply by Schnoozie on January 31, 2012 at 10:37am

I thought the Co-Ex lease with without any issues at all. 18% with No deductions!!

Like Robin Hood and his band of merry men, forging gracefully ahead to Fight the Evil Gas companies!!!  We are on your side!!! Yippie!!! hazzah!!!

Wow..Wow..Wow..Irony??? Thank you no.

Permalink Reply by Tim R on January 31, 2012 at 11:57am

Chill out dude.  These are ligitimate issues.  I'm not against oil companies, I've got friends in the O&G business.  I'd even sign a lease and let them compress on my property.  But legal contracts are enforceable, and I've negotiated many.  You don't think the wording is important?  Check out this website of REAL legal cases related to the O&G business:

http://www.oilandgaslawyerblog.com/lessors-remedies/

Right from the site: "Landowners are usually surpriesed to learn that, under a "standard form" oil and gas lease, the lessee's failure to pay royalties does not give the lessor the right to terminate the lease.  The lease remains in effect, and the lessor's only remedy is to sue for the unpaid royalties."

Further check out the Nations v Heritage case to see how things work.  Nations Bank was so sure of what their lease's royalty clause said in regards to transportation deductions they spent a lot more than I have trying to prove it and lOST!

http://www.oilandgaslawyerblog.com/postproduction-costs/

The leases we are discussing don't terminate if the royalty is not paid.  I can't afford to sue IF that happens and Hilcorp has the right in the lease to sell the lease to ANYONE.  Actually in PA they pretty much have the right to sell the lease no matter what it says since PA is a Fee Simple Estate state.  Down the road that "anyone" could be someone less reputable than Hilcorp.  I'm not comfortable with that.  If your cool with that just say so, that would add more to this discussion than Yippie!!! and hazzah!!!  In the end its just business to the oil company and it should be to the landowner too.  Hoorah:)

Permalink Reply by Finnbear on January 31, 2012 at 5:26am

Every time I hear someone say " I can't afford it" about hiring competent legal counsel, I remind them that they can't afford not to. These are the same people who usually end up mad 5 years later because "they got screwed by the oil and gas company".

My wife the teacher and coach continually tells her students and athletes,

"Failure to prepare is the same as preparing to fail".

Permalink Reply by Finnbear on January 31, 2012 at 5:14am

Mark,

You hit the nail on the head.

The first reply to any question like this should be:

"What does YOUR lease say about this issue?"

The lease either defines the answer or not. If not, then all replies are just speculation or educated guesses.

Permalink Reply by KML on January 31, 2012 at 5:07am

I am not an expert in this area but for someone still contemplating signing I look at it like this.....If you go to a car dealership with a friend and buy the same car at the same time, you more than likely get the exact same terms.  Same people go to buy the same car on different days.....probably not going to be the same terms......there is strength in numbers and Hilcorp and Co-Exprise are more than likely going to be your best options.....I personally don't feel the gas companies are going to give an individual a golden lease.

I also found this article.....gas companies are cutting back...

http://loga.la/haynesville-shale-news/?p=869

Permalink Reply by KML on January 31, 2012 at 6:31am

Thats the thing.....you never know.....shoulda, coulda, woulda.  I am learning daily that we don't always make the right choices.  It could be from such huge life changing decisions to such a dumb little thing as kicking yourself for not bidding high enough and losing an item on ebay. 

There are things that I have researched for months before doing and then still not happy with the outcome but hey - thats life....you have to make the best of it.

I see what you are saying with the car scenario....but just used that as a generic analogy.  I do have a list of list of what is most important to me the next time I buy a car.  Same as your list of things that are important to you for your lease.  I have rewritten my list several times as things change.  What if I had bought the car several months ago before I changed my mind about what features were more important to me?   Back to the shoulda, coulda, woulda. 

You will probably say well a car can be replaced and this lease is forever.  True, but I don't know what else to compare it to.   Maybe if you had to choose between conventional medical treatment and experimental treatment for a loved one.  You chose one and then beat yourself up because you are unsure if you made the right decision.  But you already made the decision and can't pull out now....all you can do is hope and pray for the best....but you had to chose one, and you thought you chose the best for your situation. You could have held out for better treatment to come along but sadly by then it was to late and you can't get back what you could have had.

 

You probably think I'm simple but I do try to put a lot of thought into things and don't really post much on here because I am afraid of getting bombarded by the experts but everyone has their opinion.

 

Good luck!

Permalink Reply by Finnbear on January 31, 2012 at 6:02am

I also found this article.....gas companies are cutting back...

http://loga.la/haynesville-shale-news/?p=869

Some clarification needed here:

Cutting back on natural gas (only) development (dry gas areas).

Shifting those resources to focus on more profitable (wet gas & oil) areas.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service