Mineral rights owners aren't satisfied with Continental payment offer


This is not a typo: Continental Resources (CLR +2.6%) says it wants to pay North Dakota state taxes and make royalty payments on natural gas it improperly burned off at dozens of wells in recent years, and is asking state regulators to approve its plans.

But lawyers for land and mineral rights owners who have sued CLR over what they say are unpaid royalties believe the company's main goal is to minimize its liability as the state finally moves to curb flaring; natural gas that is pumped out of the ground along with more valuable oil is burned at a much higher rate in North Dakota than in other crude-producing states.

How to value the gas that has been flared off is at issue: Those who are owed royalties are pushing for a higher valuation than CLR wants, and want royalties on flared gas the company says is legally exempt from royalty and tax payments under state statue.

Other companies that have been accused of failing to pay land owners or the state treasury for flared gas include Exxon Mobil (NYSE:XOM) subsidiary XTO Energy and ConocoPhillips (NYSE:COP) unit Burlington Resources Oil & Gas.

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Comments (4)
  • ljames2
    , contributor
    Comments (53) | Send Message
     
    At less than $4/mmBtu of natural gas, and going down, of course Continental wants to minimize the damage from holes that are not quite "wet" enough. Consider the number of wells being drilled in areas that have no piping infrastructure. What if these wells, with rapid production decline rates, are here today and gone tomorrow? What does this do for the economics of ancillary gas recovery?

     

    Clearly, industry in this instance will move to exclude uneconomic gas recovery from what they do as a business. Why pay anyone anything if a business does not receive direct revenue from flaring "nuiscance" gas? It has always been this way -- just locate the revenue meter downstream from the flaring.

     

    Of course, we could level the playing field and require that all resource extractors face up to the waste and environmental aftermath that "somebody else" pays for.

     

    But, I forgot, corporations are now "people" and they have very large pocketbooks....
    4 Aug 2014, 05:13 PM Reply Like
  • vhexpl
    , contributor
    Comments (6) | Send Message
     
    If the NDIC had a clue, just one clue, that gratuitous wasting of reservoir energy from a volatile oil reservoir is waste, none of this would be happening. NDIC director Helms seems to have learned his reservoir management techniques in Nigeria.
    5 Aug 2014, 04:36 AM Reply Like
  • RKevin
    , contributor
    Comment (1) | Send Message
     
    What we are seeing is the greed not of the oil companies but of the farmers, which have no costs in any of this, receiving free money on oil company efforts, and they want money for a bi-product of Oil production, which at this time has no method to store an ship without such costs that makes it non profitable. If the companies come back and say we generate no revenue from the gas, and if we are required to shut it off, we will need to shut down the well.. now the farmer gets no free money, and our oil production drops in this country.
    7 Aug 2014, 06:36 PM Reply Like
  • ShaleBiz.com
    , contributor
    Comment (1) | Send Message
     
    We are discussing this topic
    http://bit.ly/1mCVLmX
    11 Aug 2014, 12:19 PM Reply Like
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