I am in shock and awe that an attorney would advise you to handle the deducts in that manner. I would be even more amazed if he were an oil and gas attorney.
Deducts will generally run about 5% of the value produced in my part of the world.
Even the more unsophisticated landowners will add a clause similar to this:
Notwithstanding anything to the contrary contained herein, Lessor will never be charged with any of the costs of compression, dehydration, marketing or transportation costs attributable to his royalty interest.
This is an easy work around and has the net effect of increasing your royalty percentage by about 5%.
christa fairbrother said:
Diane-
We are not in negotiations with SWEPI so I can't address that issue. The clause in your lease you're asking about, we had a similar one in ours and our attorney advised us to negotiate a cap of no more than royalties due to prevent owing the company money liked you asked about.
Good luck, Christa
Dianne said:
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment ... do we owe money?
One other question about the company SWEPI ... has anyone else received a better offer than $250.00/acre and 17.5%? Dianne
I am a little confused now. Buddy, you say that the lessor should not have to pay ANYTHING at all for the compression, dehydrating, transportation, etc. and that we need to make sure there is a clause stating that. Is that correct?
Christa are you in fact having money deducted from your royalty payment for the above?
Dianne
Buddy Cotten said:
Dear Christa,
I am in shock and awe that an attorney would advise you to handle the deducts in that manner. I would be even more amazed if he were an oil and gas attorney.
Deducts will generally run about 5% of the value produced in my part of the world.
Even the more unsophisticated landowners will add a clause similar to this:
Notwithstanding anything to the contrary contained herein, Lessor will never be charged with any of the costs of compression, dehydration, marketing or transportation costs attributable to his royalty interest.
This is an easy work around and has the net effect of increasing your royalty percentage by about 5%.
We are not in negotiations with SWEPI so I can’t address that issue. The clause in your lease you’re asking about, we had a similar one in ours and our attorney advised us to negotiate a cap of no more than royalties due to prevent owing the company money liked you asked about.
Good luck, Christa
Dianne said:
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment … do we owe money?
One other question about the company SWEPI … has anyone else received a better offer than $250.00/acre and 17.5%? Dianne
Dianne - No we are not having anything deducted at this time. Energy West is currently interested in leasing it, then assigning it to Shell for oil. We’re working with this firm so far. http://www.colo-lawyers.com/PracticeAreas/Oil-Gas.asp. The initial lease offer had many issues we weren’t happy with which highlights the importance of negotiation and good legal counsel. I’d posted on this before and just wanted to give you the brief idea of other alternatives. Good luck, Christa
Dianne said:
Thank you Buddy and Christa for your replies.
I am a little confused now. Buddy, you say that the lessor should not have to pay ANYTHING at all for the compression, dehydrating, transportation, etc. and that we need to make sure there is a clause stating that. Is that correct?
Christa are you in fact having money deducted from your royalty payment for the above?
Dianne
Buddy Cotten said:
Dear Christa,
I am in shock and awe that an attorney would advise you to handle the deducts in that manner. I would be even more amazed if he were an oil and gas attorney.
Deducts will generally run about 5% of the value produced in my part of the world.
Even the more unsophisticated landowners will add a clause similar to this:
Notwithstanding anything to the contrary contained herein, Lessor will never be charged with any of the costs of compression, dehydration, marketing or transportation costs attributable to his royalty interest.
This is an easy work around and has the net effect of increasing your royalty percentage by about 5%.
We are not in negotiations with SWEPI so I can't address that issue. The clause in your lease you're asking about, we had a similar one in ours and our attorney advised us to negotiate a cap of no more than royalties due to prevent owing the company money liked you asked about.
Good luck, Christa
Dianne said:
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment ... do we owe money?
One other question about the company SWEPI ... has anyone else received a better offer than $250.00/acre and 17.5%? Dianne
That is exactly what I am saying. It is a negotiating point that may be rejected by the lessee, but it is essentially granted every time it is asked for in Texas.
I would love to see the mineral owners in the Bakken stand as a group and refuse to allow their royalty share to be charged with these costs.
As an argument, if you have 3/16ths royalty and are charged 3/16ths of the cost of a compressor but not allowed to depreciate the equipment by the IRS because you have no ownership interest in the equipment, that is simply not equitable and therefore not tolerable in my eyes.
Dianne said:
Thank you Buddy and Christa for your replies.
I am a little confused now. Buddy, you say that the lessor should not have to pay ANYTHING at all for the compression, dehydrating, transportation, etc. and that we need to make sure there is a clause stating that. Is that correct?
Christa are you in fact having money deducted from your royalty payment for the above?
Dianne
Buddy Cotten said:
Dear Christa,
I am in shock and awe that an attorney would advise you to handle the deducts in that manner. I would be even more amazed if he were an oil and gas attorney.
Deducts will generally run about 5% of the value produced in my part of the world.
Even the more unsophisticated landowners will add a clause similar to this:
Notwithstanding anything to the contrary contained herein, Lessor will never be charged with any of the costs of compression, dehydration, marketing or transportation costs attributable to his royalty interest.
This is an easy work around and has the net effect of increasing your royalty percentage by about 5%.
We are not in negotiations with SWEPI so I can’t address that issue. The clause in your lease you’re asking about, we had a similar one in ours and our attorney advised us to negotiate a cap of no more than royalties due to prevent owing the company money liked you asked about.
Good luck, Christa
Dianne said:
In one of the offers I received, there was this paragraph that says costs that are customary in the area which are incurred by the Lessee (them) in gathering, compressing, dehydrating, and in transporting gas to a pipeline or processing plant my be deducted from the royalty paid to the Lessor (us). What does this mean exactly? What kind of expenses are they talking about? What if those expenses are more than our royalty payment … do we owe money?
One other question about the company SWEPI … has anyone else received a better offer than $250.00/acre and 17.5%? Dianne
I’ve been following this thread for sometime now since my mother’s family own mineral rights in Moffat County. I just reviewed the lease extension offered to us by East Resources/Shell in early November. There is no such clause regarding cost of compression and dehydrating or transport. I carefully checked the original 2006 lease we had with East and there was no such clause in that lease either. I’m not sure what is happening, but my contacts with Shell’s land man Chris Foster is distinctly different than that mentioned by Christa and Dianne. What we have apparently are one (or more) entities allegedly operating on behalf of Shell offering different lease agreements, correct? This seems strange to me, unless the different areas are being targeted for different products (does not likely from past experience). We all need to be very careful here and heed Mr. Cotten’s advice. FYI…I’ve countered East/Shell’s latest offer for an extension at $200/acre and 17.5% royalty for a higher bonus, but haven’t yet seen a response.
I was asking about a clause concerning additional expenses for compression, dehydrating etc that was in a lease agreement offer from Nextenergy. I did not mention the company by name.
I think the confusion occurred when I went on to ask a question about SWEPI. I have contacted SWEPI to request consideration for an offer, but have not heard back yet.
Dianne
Gerald Hicks said:
I've been following this thread for sometime now since my mother's family own mineral rights in Moffat County. I just reviewed the lease extension offered to us by East Resources/Shell in early November. There is no such clause regarding cost of compression and dehydrating or transport. I carefully checked the original 2006 lease we had with East and there was no such clause in that lease either. I'm not sure what is happening, but my contacts with Shell's land man Chris Foster is distinctly different than that mentioned by Christa and Dianne. What we have apparently are one (or more) entities allegedly operating on behalf of Shell offering different lease agreements, correct? This seems strange to me, unless the different areas are being targeted for different products (does not likely from past experience). We all need to be very careful here and heed Mr. Cotten's advice. FYI...I've countered East/Shell's latest offer for an extension at $200/acre and 17.5% royalty for a higher bonus, but haven't yet seen a response.
Hi, Terry you mentioned Shell had aquired from East Resources and was uncertain of future plans. We have offer from SWEPI for any acreage we have in Routt County. Have you heard or know if Shell has solidified any plans for the area? Thanks…
Tim Metz said:
I'd like to read this unitization clause your referring to that is in both lease agreements but I'm thinking it is common with all leases. You mentioned what sounded like a 5+5 year lease with Nextenergy, am I correct? Below is the leasing agent with Core Land Resources, email or call him and tell him Tim Metz told you about him, he'll make you a better offer than your previous ones and give you one more potential company to lease with. Still with your lease bonus, royalty percentage and term length one must consider the experience of the company they sign with. From what I have been told Shell is not certain what they plan to do with what they acquired from East Resources in Colorado as it was part of a package deal with something else they wanted in the Marcellus. From what I'm told, prices are headed up as some are offering $175 and some $50 per acre per year x the number years they choose to sign for but unless an aggressive player moves in prices don't look like they'll go beyond that unless you own full sections. With the whole Northern half of Colorado and the whole South half of Wyoming being leased it's tough to get prices like Weld or Laramie are getting.
Looking for Jamie Velsor to contact me. My In-laws rec'd the same offer in mail as you did. We all ard confussed and would like to chat more with you on what you have found out. Thank you, Karen
I received a letter from Shell last week offering $250.00 acrea nd a 17.5% royalty rate on a small mineral interest I have in Moffat. Unfortunately I cant find the letter and I think it was signed by Dale Thompson or something close to that. Does anyone have a contact number for him ( and the correct name). Thanks
Karen Bennett said:
Looking for Jamie Velsor to contact me. My In-laws rec'd the same offer in mail as you did. We all ard confussed and would like to chat more with you on what you have found out. Thank you, Karen
My landman from MJLandservices (SHELL) just sent me a quick email saying he is no longer working for the company. We worked for hours gathering information, and then, he wishes me luck and doesn't say if anyone else is planning on picking up negotiations for our lease. I feel at a loss what to do next. Oy
Dianne, your in 8N are you not? If so I don' think Shell is leasing that far North, but some of the others are so lease to one of them. I don't know why you would have worked for hours but don't let it get you down and hit up one of the other companies leasing.
Do you know of some names of oil companies that are leasing in 8N? That would be big help. Dianne Dianne said:
Tim Metz said:
Dianne, your in 8N are you not? If so I don' think Shell is leasing that far North, but some of the others are so lease to one of them. I don't know why you would have worked for hours but don't let it get you down and hit up one of the other companies leasing.
I just received a phone call from Dale Thompson !/10/2011 about minerial lease we own in Moffat. His phone # is 970-629-9979 Located in Craig . Hope I’m not to late .
Chuck Tucker said:
I received a letter from Shell last week offering $250.00 acrea nd a 17.5% royalty rate on a small mineral interest I have in Moffat. Unfortunately I cant find the letter and I think it was signed by Dale Thompson or something close to that. Does anyone have a contact number for him ( and the correct name). Thanks
Karen Bennett said:
Looking for Jamie Velsor to contact me. My In-laws rec'd the same offer in mail as you did. We all ard confussed and would like to chat more with you on what you have found out. Thank you, Karen
Where would I look to see who is leasing in the area. When you said go online, is there a particular website to go to? Do you have the phone number handy for Quicksilver and Core Land Resources? NextEnergy gave us an offer already and we're just waiting to see if they'll match what Shell is offering. Thank you for your information, Tim. Tim Metz said:
Dianne,
Seems like yours are in Moffat and I haven't ever checked over there but I'd contact Quicksilver, Core Land Resources or Next Energy (not paying the best bonus though). I believe Core Land will be your best bet. Look online and see who's leased around yours.
I am still working with Shell. The person I was handed off to has handed me off to another. That makes four agents for the same company. The phone numbers you sent will come in handy because I am getting weary of fooling around with companies offering leases and then not following through. I just wish they would deal a straight hand and not give me the run around. These games are becoming tedious.
Tim Metz said:
Dianne,
I have only used the Routt county web site but was told Moffat offers online records as well. Go to the county clerk's web site, I'd search it but have to run. You could call and ask them at Phone: 970-824-9104 and let me know if they do have records online please.
Here is the landman for Quicksilver I have dealt with in Routt or you can call the main office in Texas and they will let you know who is over your area.
After giving it some serious thought, after the holidays I finally signed a lease extension agreement with Shell. Bonus was $250.00 per acre with 10% upfront, 90% balance due by August 2011 (when the current lease expires), and 17.5% royalty. As you may recall, we had formerly leased with East Resources who was acquired by Shell last year. Shell's landman from Houston kept the dialogue going, as the previous three offers made to us were not acceptable. The landman I've been working with is Chris Foster and he is located in Houston. His cell phone number is 281-691-2223, and his E-mail address is Chris.Foster@shell.com.
You might contact him directly if you're not having any success with the other intermediaries.
Where is your land located again? Dianne Gerald Hicks said:
After giving it some serious thought, after the holidays I finally signed a lease extension agreement with Shell. Bonus was $250.00 per acre with 10% upfront, 90% balance due by August 2011 (when the current lease expires), and 17.5% royalty. As you may recall, we had formerly leased with East Resources who was acquired by Shell last year. Shell's landman from Houston kept the dialogue going, as the previous three offers made to us were not acceptable. The landman I've been working with is Chris Foster and he is located in Houston. His cell phone number is 281-691-2223, and his E-mail address is Chris.Foster@shell.com.
You might contact him directly if you're not having any success with the other intermediaries.
Township 5N, R90-W, 6thPM, Section 36. We have mineral rights only.
Jerry Hicks
Dianne said:
Jerry.
Where is your land located again? Dianne Gerald Hicks said:
After giving it some serious thought, after the holidays I finally signed a lease extension agreement with Shell. Bonus was $250.00 per acre with 10% upfront, 90% balance due by August 2011 (when the current lease expires), and 17.5% royalty. As you may recall, we had formerly leased with East Resources who was acquired by Shell last year. Shell's landman from Houston kept the dialogue going, as the previous three offers made to us were not acceptable. The landman I've been working with is Chris Foster and he is located in Houston. His cell phone number is 281-691-2223, and his E-mail address is Chris.Foster@shell.com.
You might contact him directly if you're not having any success with the other intermediaries.