Replies to This Discussion

Permalink Reply by Samuel J. Orr on March 21, 2013 at 9:39am

If John Wells is an honest attorney and really knows DUX is a great company with great experience and great financials, WHY would he not want landowners to know these things?   If he has positive good news he should tell us. Such news would encourage others to sign with DUX and reassure others who have already done so. His silence is deafening. I believe that the recent long post by Landowner 1 reveals many of the potential perils of signing with DUX. If DUX is a shell company with few if any assets as seems apparent, why did Attorney Wells recommend DUX to the landowners?? Does he have a secret deal with DUX to be paid additional money by DUX if and when DUX is able to assign the leases to a real O&G Company???

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Permalink Reply by 2z248p19vqnh9 on May 10, 2013 at 11:02am

Cha-Ching...pull the lever & THERE is 'your prize'....

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Permalink Reply by Seeker on March 28, 2013 at 4:16am

Dux has not recorded a single lease with Washington County Recorder’s office and no one in the Recorder’s office has ever heard of DUX Petroleum – March 27, 2013

This is an update of a post on February 19, 2013 on page 8 of this discussion. The Washington County Recorder clarified that records are picked up every night and are available on the website (landaccess.com) within 1 – 2 days (as long as there is no glitch).

A landowner, Malinda Carlton, innocently repeated what the DUX landmen told her that “Dux is the largest lease holder in Washington County at around 40,000 acres.” DUX defenders Michael Householder and DrillBABY pushed the same story and added that DUX had purchased leases from shallow well drillers. If DUX has leased 40,000 acres (and paid for them) why has not one lease shown up at the Recorder’s office?

Don’t believe the argument that it takes DUX 120 days to do their due diligence on leases they have acquired from shallow well drillers – companies do their due diligence before they buy those leases and, like Reed Energy, record them days later.

Malinda went on to say that they signed in November and that “My family has been very happy with their timing pf (of) payment and the politeness of their landmen.” NOTE: Malinda did not say they had been paid, only that they were happy with the timing of the payment (120 days). If they signed even at the end of November, the 120 days are up this week. I am not recommending signing with Reed Energy but at least they have $100 Million to pay for leases and have recorded nearly 50 since the beginning of the year – generally less than 2 weeks after signing.

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Permalink Reply by Oliver Perry on March 28, 2013 at 4:53am

Most people on this site probably never saw the nasty and derogatory thread started by Malinda Carlton concerning one of the prolific posters on this thread. She didn't like him stating the truth about what the outcome would be for the folks that signed with DUX. 

The post was so vile, Keith removed it shortly after she posted it. I for one have no sympathy for Malinda Carlton if she never gets paid.

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Permalink Reply by Landowner1 on March 22, 2013 at 7:07am

Kathleen wins the prize for most obscure clue to the name DUX!

Jay wins the prize for the funniest (and unfortunately, probably the most accurate) definitions of DUX!

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Permalink Reply by Seeker on April 2, 2013 at 9:13am

The DUX Game – Part 2 of 3 - The DUX perspective (see part one on pg. 12 of this discussion)

Heads DUX wins. Tails DUX does not lose. Great odds for DUX – Bad deal for landowners.

Heads DUX wins – the well results in Washington County are good and DUX is able to flip the leases to a real oil and gas company, pocketing the difference between the $4050 DUX agreed to pay the landowners and the $5,000 - $6,000 the oil and gas company pays DUX.

PLUS an overriding royalty of the difference between the 18% DUX agreed to pay the landowners and the 20% the oil and gas company agrees to pay DUX. In this situation DUX will be collecting royalties FOREVER that should have belonged to landowners. As calculated in part one of “The DUX game” this could result in $2,000 / acre in royalties going to DUX.

Talk about a great return on investment! DUX’s only investment would be the minimal signup and marketing expenses. If the money for the leases comes from the legitimate oil and gas company DUX will have invested almost none of their own capital paying for the leases. 11,000 acres x $1,000 to $2,000 profit / acre = $11 Million to $22 Million in bonuses plus $22 Million in royalties (11,000 acres x $2,000 / acre).

Tails DUX does not lose – DUX cannot flip the leases, does not pay the leases and walks away having invested very little other than signup and marketing expenses.

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Permalink Reply by Landowner1 on April 6, 2013 at 9:27am

It is interesting to see how, whether DUX is able to flip the leases or walks away, DUX either wins big or does not lose but the landowner loses every time.

This raises the question – Why would Southern Ohio Energy Consultants (SOEC) agree to the DUX deal? Did SOEC not do its due diligence on DUX?

Obviously, if DUX is able to pay for the leases SOEC gets its 1%. Why not wait and do a deal with a real oil and gas company with experienced management, actual offices with telephone numbers and employees, and the verifiable assets to pay for the leases? What was the rush?

This is not to suggest that there is something underhanded going on here – it just does not make much sense.

If anyone has any suggestions why SOEC may have agreed to the DUX deal, please post them.

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Permalink Reply by gary smith on April 6, 2013 at 11:44am

wonder if frank dux is their redheaded step child.

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Permalink Reply by Landowner1 on April 8, 2013 at 3:14am

Fang, you and Seeker make several good points.

When ever landowners are involved in a large landowner group it is important for the landowners to always remember that each of the parties in the deal will act according to what they think is in their best interest. In a for profit landowner group the organizers of the group are looking out for their own interests and those interests are frequently in conflict with the interests of the landowners.

The organizers are interested in maximizing the number of acres leased and the bonus – because that maximizes their payout. The quicker they do a deal the sooner they get paid. They would be willing to trade a lower % royalty or less landowner friendly clauses for a higher bonus because the higher bonus is all that benefits them. It is the landowners who will have to live with the consequences.

Seeker makes a strong case for SOEC’s possible motives. Anyone else have any suggestions?

The only way landowners involved in a for profit landowner group can protect their interests is if the landowners participate in and have some control over the negotiations and it is made clear to the organizers that they work for the landowners, not the other way around.

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Permalink Reply by Seeker on April 8, 2013 at 9:07am

Jay, your are right.

Frequently it is the landowners to do most of the work (recruiting, organizing, meetings etc.) with the attorneys doing little. In many cases the attorneys are just order-takers, when the companies come calling. Landowners are paying fancy steak house prices and getting fast food service.

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Permalink Reply by Seeker on April 7, 2013 at 4:24am

The DUX Game – Part 3 of 3 – Southern Ohio Energy Consultants (SOEC) perspective (See parts 1 & 2 in the posts above)

Heads SOEC wins. Tails SOEC may not lose. Good odds for SOEC – Bad deal for landowners.

Heads SOEC wins – the well results in Washington County are good and DUX is able to flip the leases to a real oil and gas company. SOEC gets paid by DUX (with the real oil company’s money) 11,000 acres x $4050 / acre x 1% = $445,500.

Tails SOEC may not lose – Prior to the DUX deal there were several companies competing for the 11,000 acres in the DUX deal and there was a real possibility that landowners would leave SOEC and sign with the other companies. By pushing through the DUX deal those 11,000 acres are tied up for at least 120 days.

If the DUX deal falls through SOEC will have bought itself 120 days to find another buyer and may still make their 1% (SOEC will be looking for another buyer for the rest of its Washington County acreage anyway). That is, if they can convince the landowners who were not paid by DUX to sign with the new buyer that this time could be a legitimate company that can pay for the leases.

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Permalink Reply by Samuel J. Orr on April 18, 2013 at 6:20am

When is DUX supposed to pay the bonus money to the landowners in Washington County? Perhaps Drill BABY or Michael Householder can answer this question. As I recall it was 120 days from when a landowner signed a lease. I believe many signed by January 15, and a whole lot more by February 15. Any who signed January 15 should receive payment by May 17 according to my calculations. Hopefully some of the landowners who signed leases can give us better information!!??

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