Landowners getting royalties: Do you discuss?

I have a question for the landowners that have multiple pads,multiple wells, and getting royalties. Do you discuss this type of activity to friends, coworkers and family members? Just wondering...

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Permalink Reply by Bob Byler on November 9, 2014 at 11:19am
Not a word. Would only create jealousy. I'm sure that is why it isn't discussed more here.
Permalink Reply by Curt Sommers on November 9, 2014 at 11:58am
Well maybe instead of royalties, have you talked about pads/wells on the property.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 9, 2014 at 11:52am

Curt,

How about getting royalties regardless of the number of pads or wells?

Permalink Reply by Curt Sommers on November 9, 2014 at 11:57am
Well maybe not talk about royalties but the number of pads/wells.
0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 9, 2014 at 1:45pm

Curt,

      Discussion results in transfer of knowledge. Knowledge leads to making the correct choices.

In the old days, back in WV, my relatives kept everything oil and gas a secret. Friends in WV complained during the lease rush of 2010 that everyone was keeping quiet and their neighbors were getting "picked off" one by one signing bad leases. Meetings and discussions would have prevented that.

If a person cheats me in a deal, I tell everyone to watch out for his thieving ways so his next potential victim has been informed.

It's not complaining if you took action to correct the problem then told everyone to be careful of the same pitfall.

Now I could go on all evening talking about those folks I stopped after voting and had a 5 minute discussion about drilling, drillers, royalties, what to watch out for, GMS.com and the fact that they appreciated the knowledge I imparted in that short period.

Curt, am I getting close to answering your question?

Permalink Reply by Curt Sommers on November 9, 2014 at 2:04pm
Not sure. Lol. For an example...I belong to a camp, we are going to have 4 pads, 24(+ or -) wells. I don't know how to answer someone if the question come up... "are they drilling at your camp"? Should I answer yes or no. I don't want to lie or if I answer I wouldn't want them to think that I am bragging.
Permalink Reply by Clinton44 on November 9, 2014 at 2:40pm

Hi Curt,

One question for you is your camp registered with the IRS as a 501 C non profit?

If so you might want to consider splitting off a seperate LLC consisting of the members of your camp that are interested and have your camps lease appraised (hopefully before any pad building or drilling takes place) and buy the lease from the hunting camp.

The reason being if your camp is registered as a non profit all the royalties received must stay with the non profit they cannot be distributed to the members.

We had a similar situation and we did as I briefly explained above and we are very glad we did. 

We are in two seperate units with nine wells total that we receive income from and then dispurse to the members of the LLC that we formed.

In any case it sounds like you are sitting on a gold mine! Congratulations!   

Permalink Reply by Curt Sommers on November 9, 2014 at 2:51pm
Clinton44-
Thanks!

Yes have have formed a llc/lp company. Have you said anything to people of whats going on or do you keep quiet?
Permalink Reply by Clinton44 on November 9, 2014 at 4:05pm

Your welcome,

We keep it on the quite side, but do not mind giving friendly advise to others so they can make the best decisions possible.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on November 9, 2014 at 2:56pm

Clinton44,

    Good job at reading between the lines.

Even with the camp info, I probably would still be scratching my head as to why someone wouldn't want to talk about drilling.

It's never a good idea to talk about one upping the IRS. Those rascals have a rewards program if someone turns you in.

As it should be if someone cheats at taxes.

Permalink Reply by Clinton44 on November 9, 2014 at 4:10pm

Hi Ron,

Thanks, we weren't trying to hide from the IRS we formed the LLC to keep things legal for the camp and for the newly formed LLC.

Because our camp was and still is a non profit, which had to pay taxes on the original signing bonus (which was in the IRS's eyes unrelated business income) ,as  was the money we paid to by the lease from the camp.

But we all came out ahead in the long run. All very complicated but very interesting at the same time..

Permalink Reply by Adam Martin on November 9, 2014 at 2:51pm
Hi Curt - I think if folks are asking, they are looking for a somewhat honest answer and wouldn't think you're bragging. Perhaps they are asking out of curiosity or maybe they are dealing with the same operator and are looking for info that may help make sense on what they are experiencing. There's no book on info sharing so give out whatever information you feel comfortable with. These O&G Companies and associated landmen, keep folks in the dark and are not the most honest lot so the info we share here, helps inform the uninformed. I've been learning this industry for the past 5 or 6 years and I continue to learn daily, most of that happens by the info here on GMS.com.

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