Hi everyone. New to the group. Nice site. I have a question. My grandmother owns full mineral interests on a 75 acre piece of land in Wetzel County. Chesapeake had made her an offer. My question concerns the royalty payments. They say they will not pay "gross royalties". I assume this means that they can deduct certain expenses from the percentage they offered. Could someone explain to me what they can deduct? Also, does anyone have experience with this company and know if this is actually their position? Not sure if I am saying all this correctly. From going over this site, it seems like what they are proposing is a no no.....
Don't rush to sign the lease. I would recommend the following steps:
1) See if there is a landowners group in your area. You will generally be able to to get a better lease by participating in a group - assuming the group has good leadership.
2) Contact your immediate neighbors and see if they are unleased. I don't know what typical unit sizes are in WV but if you can get closer to a complete unit size you will be in a better negotiating position.
3) Think about what else is in the lease that might affect your interests. The O&G companies throw all sorts of things into their standard leases that you may not wish to agree to. For example they might have thrown in the right to use all your water except household water or the right to put in pipelines across your party unrelated to a well on your property.
4) Pay attention to activity in the area. This will give an indicator of how desirable your grandmothers property might be.
5) Take the time to think about the tax consequences and how the lease might be structured to minimize taxes.
I think this is a good basic starting point. We have a lease (not with CHK) that provides a gross royalty at the well head. A gross lease is generally better for the landowner all other things being equal.
Hope this helps.