R.W.
I have come back to researching more on my mineral rights because in the beginning the information and research was and still is very overwhelming. So with that said I have continued to follow comments and concerns by all members. I have concerns about Legal documents that I have obtained and concerns also with leasing companies that haven't received great comments. I was hoping you could review the attachment and give your opinion on what it means for land owners/minerals owners in non-legal terminology that I can understand. I'm interested only in the first 6 pages where it lists my mineral description. If you can help me with this I would greatly appreciate it.
As always I appreciate you and this site.
Keli Graham
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465-1514193memorandumofoperatingagreementtrackerresourcedevelopmentiillcpublicrockymountainexplorationinc11.pdf (2.04 MB)
Keli, I wouldn't participate in the development of your minerals.
I just refreshed my knowledge of the area where your minerals are situated and I can tell you it's NOT an area where I would want to participate at this time. Tracker has some idea that they can improve on the vertical test wells drilled within the last 5 years within 3 miles of your minerals. The first few wells would be a high risk gamble until they refine their technique, in my opinion. Nobody wants to be the guinea pig.
I would not participate in wells drilled on your minerals until someone showed some success in the area. That would leave leasing and non-consent and of the two choices, in your particular situation I would lease because I believe Tracker is going to fail and while non-consent takes no out of pocket money, the cost of prior wells would become a lien on the future production, if any, of your minerals. If Tracker offered a lease of 1/6 or better I would take it as long as it didn't look as horribly disadvantageous as their operating agreement.
Keli, you don't want to agree to the operating agreement. By not agreeing you are responsible for paying your bills and if you should fail to pay your bills the remedies are the same for any unpaid bill, they can take you to court seeking to be made whole. You would have to owe them substantial amounts of money for months, possibly years, before it was worth their time to sue you. If you need to dispute a bill, you don't want to be a party to that operating agreement.
That operating agreement allows for penalties of 500% plus interest! They could wreck you by overbilling and forcing you to audit and defend in court. It appears that their ultimate intention is to have you forfeit your interests in any wells.
Pay your bills as they become due. If you haven't already paid to participate in the well, consider if you are likely to not be able to pay the bills and take another look at being non-consent.
You do NOT have to join the agreement to participate. If you do join the agreement you are agreeing to play by THEIR rules and not the laws of commerce.
You can agree to anything, even something that is horribly against your best interest. I think you already knew from reading the agreement that it wasn't something you wanted to sign.
Sadly, for Tracker to write such an agreement, I don't think you would have a smooth business relationship with them. I would count on having to audit them on every well, every few years.
Keli, I think you have performed a public service by showing here a document that people should not sign.