Replies to This Discussion

Permalink Reply by Billy Park Whyde on April 4, 2012 at 11:53am

Ron that sound one H of a lot better than 10%!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Permalink Reply by Utica Shale on April 8, 2012 at 4:56pm

Ron,

"...  Gulfport is going to give me a call tomorrow with amounts. Thinking in the ballpark of $4800/14-18% gross royalties ..."

 

 Did Gulfport every call you back ? What where the terms?

 Gulfport has leased some acreage in other counties in eastern Ohio.

 Did you already have a lease with Patriot?

 Why did you call Patriot for a lease?

 

Permalink Reply by Ron Ward on April 4, 2012 at 12:02pm

Called patriot today to get them to send me a lease to review and found out that gulfport just bought the leases from them. Gulfport is going to give me a call tomorrow with amounts. Thinking in the ballpark of $4800/14-18% gross royalties. Has anyone had any dealings with gulfport lease contracts????

Permalink Reply by Ron Ward on April 8, 2012 at 7:20am

Thanks drill! I will check it out

Permalink Reply by Jonathan Blair on April 8, 2012 at 10:14am

Ron what county and township are u in?

 

Permalink Reply by Billy Park Whyde on April 10, 2012 at 1:28am

Wanted you to see this Ron

Posted by Utica Shale on April 8, 2012 at 11:43pm in Muskingum/Licking County

Ron Ward,

 I am going to start a DISCUSSION because it is not possible to reply to your WALL POST.

 

 You wrote ...

 "... Has anyone encountered leases by patriot? Know they are a flipper but got offered $4500/10% gross. Was told the $4500 was a minimum and i would get whatever they sold it for so could be higher minus 10% of what they sell for???? Any help on this one???? ..."

 

 The Signing Bonus ($4,500/acre) is only a one time payment if they drill within 5 years. But the Royalties can occur (from decreasing production) for up to ten years. Have you done the math to determine the difference between you getting 10% Royalties while Partriot keeps 7% royalties VS you getting the 17% royalties?

 

 Please do the math and let me know what 7% Royalties would "cost" you !

Permalink Reply by Utica Shale on April 10, 2012 at 4:43am

Ron,

  What is the difference between 17% Royalties and 10% Royalties ???

 Given:

 1) $300 / Acre / Month Royalties ( at 17% Gross )

 2) 50 Acres

 3) 10 Year well lifetime

 

 $300/Acre/Mo x 50 Acre x 12 Months x 10 Yrs  / 2 = $900,000 Total Royalties at 17% Gross

 

 Now split the 17% between 10% for you & 7% for Patriot ...

 Patriot gets $370,000 of your Royalties

 You get only $530,000 Royalties

 

 Is a higher signing bonus of $25,000 worth losing $370,000 in Royalties?

 

 

Permalink Reply by Tom on April 10, 2012 at 7:18pm

Billy,

  I bought 31 acres of land in Portage Co. last year with mineral rights on it but it is leased with an old producing well on it. My question is, it used to be a farm with 120 acres on it, all of it on the same lease. Now it is split into 4 parcels. If the gas companies want to amend the lease, do we all have the right to amend our own acreage or how does that work? At the recorders office, what would the lease look like if say 2 people amended and 2 did not? Also, is it the big gas companies or the small ones that have to come to you to amend the lease. Thanks

Permalink Reply by Billy Park Whyde on April 11, 2012 at 2:21am

 Hi Tom, first of all I am no attorney, what I will say is general in nature so hopefully it might give a better understanding.

?1.  Also, is it the big gas companies or the small ones that have to come to you to amend the lease. Thanks

 Answer: It would be who ever happens to be the lease holder. It could be a smaller company that would like to modify the lease to then flip it to a larger company. It could be a larger company  that purchased the original lease. 

?2.  Now it is split into 4 parcels. If the gas companies want to amend the lease, do we all have the right to amend our own acreage or how does that work? 

Answer: A lease can be modified by the lessee to some degree (this is hypothetical as it depends upon the lease) A property can have  a leased area say half of a 140 acres farm released if the lessee so desired. For example land owner wants to sell 70 acres of that 140 but feels without the mineral rights it would hurt the value of that 70 acres. He contacts the leaseholder and explains a desire for that 70 acres to be released. The leaseholder could do that for free or at cost.  The leaseholder could rewrite the lease as 2 separate leases as well, being halved do not expect the same percentage of royalty.

  Some leases contain unitization or pooling clauses, some contain what I call blockers where under the lease they must drill x amount of wells in a time span or the balance of the land goes back to the land owner.

  You need a to look at the original lease to get a idea of what may or not be possible.

Hopefully this helps. In some counties you can go online to the County Recorders Office

and search on line and download the lease.

  Question though if you bought the property with MINERAL RIGHTS it would sound to me as that acreage was released otherwise you did not purchase the mineral rights since they might have been under the lease. Another point is are you getting any royalty from the old well?

Permalink Reply by Billy Park Whyde on April 11, 2012 at 5:34am

From Richard Cotterman to You
Sent 1 hour ago

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Hi Billy,

Owning and leasing mineral rights are two different animals.

If you buy land and you get the mineral rights with it, you will always own them unless you decide to sell them. (Bad decision)

If someone has your oil rights leased, they will never own your mineral rights. They are just renting them. Depending on your lease, they might be able to rent them forever. (That is a bad deal)

I am no expert on this but I just went through it.

I hope this clarifys this for you.

Have a good day.

Richard

 I thanked him for the input.

Permalink Reply by Tom on April 12, 2012 at 1:56am

Billy,  Yes I do get all the royalties from the gas well, but the mineral rights have not been released. I thought when you buy property, you own the mineral rights unless reserved by a previous owner? (or something might have been overlooked on a prior lease) If this is the case in my situation, I thought all 4 owners would own their mineral rights even though I am receiving the royalties? You do bring up a good point though, the original farm had been in the family for a long time and our royalties are very low. (28-30 dollars a month) I did my research before buying the land, I tracked the deeds back to the early 1800's and researched the current oil and gas lease and it's assignments, and didn't find anywhere where it said each parcell gets a percentage of royalties. Although, it does state on the original lease, that if any of the land is used as storage, then the owners of that parcell of land bears the entire acreage of that unit.

    It's confusing because you would think each owner would have to amend the lease somehow and unless their acreage was released, (which I do not think it was) you would think that all the acreages would still be connected to the original lease.

    It's not it is that big of a deal unless you are starting a landowners group which included leased land, which I have thought about.

Permalink Reply by Billy Park Whyde on April 13, 2012 at 5:24am

 A lot more land is held by production than most people realize. Each one is dependent upon what the lease states. I know of land owners that bought  a well or wells upon their property but not the lease. Hmm but what does the lease say? As long as gas or oil is produced, if your the owner of the well stop production and void the lease. 

Every lease seems to have something different. 

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