I have mineral rights in Jack County. Single well on property was plugged in 1994. Well produced from 1983 to 1994. Fenced in retention pond,(I assume that is what it is), fenced in area of storage tanks still on property. Recently been contacted by several production companies with lease offers. Most leases do not contain "Gross volume", all have "post production" clauses. Have several questions:
1. Is the lease worth more due to an existing well that produced in the past?
2. Can I insist on a "Gross volume" royalty without PP deductions without scaring these Production companies away? They offer 20% with PP, $250 an acre.
3. Any reviews/reputation on Arrowhead Productions LP ?
4. Looking for production records from the well 1983-1994.
Ref: L.C. Mayo survey Abstract #1147 Lease name was S.P.Collins Oil lease #23169
Operator was listed as S and J Operating Co. / Stephens and Johnson Operators.
Original Operator was Liberty Oil and Gas Corp.(early 1980's) then Taylor Operating.
Field name: Jack County regular Field #: 45274001
Well # 34894
Appreciate any feedback!
G.Cataldo
I understand the Post-Production deductions what confuses me is the Gross Volume. If you have a lease that states no post production costs don't you get the % of gross volume (Production) you negotiated anyways?
Appreciated, Thank-you W.C.
Wade Caldwell said:
Greg-
1. Not necessarily.
2. Yes. Too low.
There is a video on the Home page that shows you how to pull this info off the RRC website.
My mistake, all leases received, state the Lessor's royalty % of Gross Volume(Production). The same % they offered for the Gross Volume, was also applied to some of their PP costs.(Transportation, marketing, etc..)...which would reduce the Lessor's original royalty %.......in terms of actual payments received.
To answer your question, I believe "yes", you do get the % negotiated for Gross Volume(Production). However, I'm still curious if a lease with no PP costs, typically, will have a "lower" royalty % offer for Gross Volume. I've been researching various Oil/Gas Leases, but will certainly seek the advice of an experienced Oil/Gas Lease Attorney before signing any offers.
Pecan One said:
I understand the Post-Production deductions what confuses me is the Gross Volume. If you have a lease that states no post production costs don't you get the % of gross volume (Production) you negotiated anyways?
Greg, even if the royalty was lower for a lease that absolutely forbids charging your royalty for anything but taxes, you might be much better off. You have no control what so ever over what they charge you for transportation, for example. There is a dairy farmer in Pa who has 4 gas wells on his farm and receives $0.10 checks because the operator spun off their local pipelines to another company, in which they own interest. This new company charges so much to move the gas a few miles that there is virtually nothing left of the mineral owners royalty.
The parent operating company on the other hand pays the same amount to move their gas in theory but they get a rebate, and even if they didn't, they own an interest in the pipeline company. There is an ongoing investigation. If you have a lower royalty that they can't take anything out of, you could be thousands of times better off, possibly tens of thousands of times better off.
Greg Cataldo said:
My mistake, all leases received, state the Lessor's royalty % of Gross Volume(Production). The same % they offered for the Gross Volume, was also applied to some of their PP costs.(Transportation, marketing, etc..)...which would reduce the Lessor's original royalty %.......in terms of actual payments received.
To answer your question, I believe "yes", you do get the % negotiated for Gross Volume(Production). However, I'm still curious if a lease with no PP costs, typically, will have a "lower" royalty % offer for Gross Volume.
Pecan One said:
I understand the Post-Production deductions what confuses me is the Gross Volume. If you have a lease that states no post production costs don't you get the % of gross volume (Production) you negotiated anyways?
Great info/feedback, much appreciated! Thank-you R.W.K.!.....I have heard similar "unfortunate" stories on leases containing "deductions" from royalty %........ I would think 80-85% of the take should be fair cover for the PP costs/deductions! ...Thanks again!
r w kennedy said:
Greg, even if the royalty was lower for a lease that absolutely forbids charging your royalty for anything but taxes, you might be much better off. You have no control what so ever over what they charge you for transportation, for example. There is a dairy farmer in Pa who has 4 gas wells on his farm and receives $0.10 checks because the operator spun off their local pipelines to another company, in which they own interest. This new company charges so much to move the gas a few miles that there is virtually nothing left of the mineral owners royalty.
The parent operating company on the other hand pays the same amount to move their gas in theory but they get a rebate, and even if they didn't, they own an interest in the pipeline company. There is an ongoing investigation. If you have a lower royalty that they can't take anything out of, you could be thousands of times better off, possibly tens of thousands of times better off.
Greg Cataldo said:
My mistake, all leases received, state the Lessor's royalty % of Gross Volume(Production). The same % they offered for the Gross Volume, was also applied to some of their PP costs.(Transportation, marketing, etc..)...which would reduce the Lessor's original royalty %.......in terms of actual payments received.
To answer your question, I believe "yes", you do get the % negotiated for Gross Volume(Production). However, I'm still curious if a lease with no PP costs, typically, will have a "lower" royalty % offer for Gross Volume.
Pecan One said:
I understand the Post-Production deductions what confuses me is the Gross Volume. If you have a lease that states no post production costs don't you get the % of gross volume (Production) you negotiated anyways?