Whoever wrote that doesn't know what they're talking about. Royalties are based on revenue. No production = no revenue = no royalties.
Some times there are rental fees that get paid when shut-in rights are being executed or no production is taking place. This might be what he is mistaking as a royalty? Whatever fee is paid allows the Lessee to maintain its rights under the lease agreement. Typically in oil and gas leases, if there is no production for 60 - 90 days the lessee could lose its lease rights unless the rental fee is paid. I am coming into this late so I might be completely off topic.
No, I didn't. Do they do this to and from their powerplants? Or is this just a seperate commercial activity? Also, and I know I am getting pretty detailed here, but operating a pipeline is still different than owning a fuel producing asset. I am totally not saying you are wrong, it might be enough of a differentiator in CPS' charter. If they are allowed to, I would think that your idea should definitely be added to the portfolio.
the lease holders wrote contracts that mandated both lease fees and royalty fees. is that hard to understand? the lessor have to keep selling NG to keep up the royalty payments, or lose the lease (and the investment in drilling)
So in other words, no production no royalties. yeah. We've said this before.
Call it what you want but it is not a lot of money. $1,000 - $2,000.00. Further, if you are producing oil/gas you usually do not need to pay a "lease fee". You only pay this if production stops and you want to maintain your lease. If there is no product, the lease holder will usually try to sell the lease or simply walk away.
these new types of contracts says production MUST continue so the royalties are paid. GFY
the lessor have to keep selling NG to keep up the royalty payments, or lose the lease (and the investment in drilling)
Please show me an example of these "new types of contracts".
Do Your Own Research
-- WC
There is nothing new. Cessation provisions have been around for a very long time. It is standard in both oil and gas leases as well as simple easement and right of way agreements. Stop flowing product, lose your lease/easement. In O&G the time limit is usally 90 days or less. In easement agreements it is usually 365 consecutive days or 2 consecutive years.
It's not hard to understand at all. No revenue means no royalties. But as I stated earlier, they still have to pay on the lease whether they're producing or not, so no revenue does not mean there isn't any money trading hands.
I'm aware of cessation agreements. Boutons was claiming some "new types of contracts". But as usual, he doesn't have a clue.
OK, CPS purchases ng for their power plants and also purchases and resells ng to all it's consumers on it's wholly owned NG pipeline system. I buy NG from CPS for my home. So CPS is already buying and distributing natural gas, Supplying NG once the well is drilled is pretty much an autopilot procedure. You cap the well with the christmas tree of valves, put in a pipeline to the nearest distribution pipeline, put in a compressor station and a meter and open the valve. From that point on it's pretty much a guy in a pickup running around servicing and keeping the equipment operating.
yeah, I wasn't even thinking about the residential natgas pipelines, I figured you were talking more about the industrial type pipelines. What you describe is exactly what I thought you were proposing and like I said, I think it would be a good idea. I just know that there are sometimes strange stipulations in the charters of quasi governmental en ies like CPS. Owning fuel sources seems like one of those things especially since they aren't currently doing it.
boutons might be referring to the "cash and carry" deals referred to three days ago in this NYT article. NYT is pretty sketchy about the structure of the deals but fairly preachy about the result. One guy basically gets the blame for the NG glut.
The latter. Duh.
Of course if he had gone with the more expensive 'Mericans, the cry would be "why is he wasting our tax dollars".
Sigh.
The issue was that the consortium in Dallas bid a couple cents less.
I wonder if there were any property tax breaks? Those are almost never justified or offset, rather just yielding to extortion.
That's existed since OGL's started to be taken.
No production past primary term = lease is released.
This isnt some new and amazing concept you are yammering on about.
lol boutons
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