They can try to change the “implied covenant” by putting clauses in the lease to make you pay those charges. I will not allow them.
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M. Barnes,
I have been reading your comments on PPC’s and I am hoping you can direct me as well as others. My problem is that in early 1970’s Oxley drilled and produced 4 gas wells in Sec 6-5N-8W which later were purchased by Chesapeake. Never were any ‘PPC’ deducted which was our intent when the original lease was made in 1970. In 2018 Chesapeake sold these wells to Territory Resources. They immediately started deducting PPC charges. When I protested and send them a copy of the original lease (partially) shown below I received the reply below. The wells are all still producing, and I am not sure if this would justify a lawyer. Do you think I have a case? Thank you in advance for your time and consideration. TMF
’Excerpt from Territory Resources reply’
As stated below, ”at market value at the mouth of the well”, the gas is not marketable at the mouth of the well and it has to be processed to be marketable.
’Excerpt from my lease’
"The ·royalties to be paid by lessee are: (a) on oil, and on other liquid hydrocarbons saved at the well, one-eighth of
that produced and saved from said land, same to be delivered free of cost at the wells or to the credit of lessor in the pipe
line to which the wells may be connected; (b) on gas, including casinghead gas and all gaseous substances, produced from
said land and sold or used off the premises or in the manufacture of gasoline or other products there from, the market
value at the mouth of the well of one-eighth of the gas so sold or used, provided that on .gas sold at the wel1s the royalty
shall be one-eighth of the amount realized from such sale, payment(s) to be made Monthly"
A lawyer can answer this better. Generally, those old leases were gross proceeds. A few newer companies are trying to charge PPC on them. A bunch of class action lawsuits have been filed about this very issue.
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I currently have my rights leased on 28-9N-7W and and 31-9W-7W (“SE/4 NE/4 NE/4; SW/4 NE/4 NE/4; SE/4 NE/4 of Section 31, Township 9 West, Range West”). Any drilling underway? Also getting offers to buy. Not interested in selling but am curious to know how high the offers are receiving. Thanks!
Continental has the Dobry 1-16-21-28XHM well finished. Splits were just approved on June 19, 2019 Cases 201808815 & 16. Surface location was in 9. You should have gotten all the massive mailings on it.
No new cases for 31 yet. However, there is a surface pad in the far NE corner for a well going north. Perhaps could be used again.
Hello, it’s been awhile since I posted here.
I received an offer to purchase my minerals in 27-4N-4W , Garvin Co., OK. The offer was for $4,400 nma, and I assume it is from a speculator. Does anyone know the going rate for such offers in this location?
Many thanks in advance.
Bob Milner
$4,000.00/acre is a lease price. 4N 4W is a great place to own minerals.
That is more of a lease price. Hear of $8250/ac @ 3/16ths in sec 23. Your offer seems too low.
Thank you, Tom
Bob Milner
Thank you for your quick reply.
Much appreciated.
Hi @M_Barnes - I have two current lease offers which I’m unsure of the language used. One provides for net proceeds rather than gross, and the other states ‘lessor’s interest bears the cost of treating oil to render it marketable pipe line oil’. I am working on counters for both, and wondered if you would be able to share any recommendations on the language for both a lease form and Exhibit A.
You do not want either of those as you want a pure gross proceeds. I just answered your question in the general area where you posted it first.
Hi Martha, Will you share a copy of what you want and dont want in a lease, such as post production cost and wanting to limit the pay bonus time from 15 - 30 business days to max. 30 consecutive days . You posted it once and I saved it but that computer died and did not have docs saved. I appreciate your assistance. Have an offer to lease 19 - 8 - 7 grady county and curious what is happening in this area. Thank you Martha
Patti, who is your offer from?
Blue Chip Energy partners
I am not giving legal advice… these are suggestions only
I do not hand over a signed lease without getting paid. My accountant will hold the signed lease until a cashier’s check arrives and then will overnight it to the leasing company. I will send a cover letter by email that includes a scan of the signed lease with big magic marker across every page “COPY DO NOT FILE” (especially over the signature lines). The letter states that if payment is not received in 15 business days, the lease will be returned to me for shredding and the offer is null and void.
I strike the “free use of oil and gas and water” clause. I strike any extension to extend, any top lease clause and I strike through the first part of the warranty clause. I always carefully read their royalty clause and adapt accordingly in the Ex A for no deductions other than required taxes.
I attached a fairly extensive Ex A which limits the shut in time to one or two cumulative years (not consecutive). I have a depth clause with 100 feet below the base of the deepest producing formation (not penetrated). I have a fairly standard Pugh clause at 90 days after expiration of the primary term, Cessation of drilling clause at 90 days for OK (longer for states with hard winters). I have a very tight no deduction clause which can probably always be improved as they figure out ways to wiggle around it. I have a true commencement of drilling clause requiring a drilling rig on site actually drilling. A few more clauses are in there to protect the minerals more, but you get the drift.
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I would suggest not signing anything with Blue Chip. We signed with them in April and they filed the lease without payment first and then we’re unable to make the bonus payment. The held it for over 60 days before I finally got them to file a release at the courthouse. Good luck. JB
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thank you for that information to both M. Barnes and jbrat!!
Just got two notices of continuance re Camino resources I Grady County 9/7/6. Cause numbers 201804513-T and201804510-T. My property in 9/7/6 is leased to Continental,and producing.
Any idea what this is all about?
Jim Brock
201804513-T and 201804510 go with 4 & 9-6N-7W. Is that the section you meant?