Aamendment and Ratification of Lease

i need some answers! today, i was contacted by a chesapeake landman about an amendment-ratification of a lease on a 5 ac lot.  original lease is with mb operating co. dated  1984   .we are receiving royalties from a well on adjoining property.  amendment states that for the sum of $10.00  lessor and lessee for their mutual benefit agree to modify drilling units size . the existing unit size is aprox. 69 ac.it also mentions that they can pool or unitize.  what is best for us  or are there other things we should request. thanks for any info you may have

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Replies to This Discussion

Permalink Reply by amos alexander on December 20, 2011 at 12:10pm

 i have the same probem as you ,was told that they only bought the deep mining rights and would still receive royalties from the same company that is  paying them now,they need a new lease  with amendments to be able do the horizonal drillings,i dont undrstand why everyone else is getting bonuses.

Permalink Reply by steve keller on December 20, 2011 at 7:54pm

Amos, we threw away amendment back in october and I haven't heard from them since .I'm not sure what we should have done .  I'm not signing anything involving lease for $10.00

Permalink Reply by amos alexander on December 22, 2011 at 5:03pm

hi steve, are you saying that what they offered  is about the same deal they offered me, i think we have a choice sign and make a few bucks or dont sign and have fracking all around you.i dont know what im going to do but will have to make a decision

soon.

Permalink Reply by Anne-Marie Anderson on December 20, 2011 at 10:56pm

If you don't sign, they can leave you out of of the gas well even if you are in the area from what I understand.  If you don't sign I would suspect no royalties.  A bird in hand.  I haven't heard of anyone getting paid for amendments.  They want to change wording to make the well acreage bigger than what is stated for the vertical wells for horizontal wells.  If you don't sign no well, no royalty.  

Permalink Reply by amos alexander on December 22, 2011 at 4:56pm

it sounds to me we have a choice sign and make a few bucks or dont sign and you will have the fracking all around you

Permalink Reply by steve keller on December 22, 2011 at 6:08pm

Im not anti DRILLING I just dont want to find out that I should have been offered more! after signing a lease on other property for $1500.00 per acre  signing bonus  and then reading that they sold some of there leases for $15000.00 per acre I think there's more money on table. I have little respect for oil and gas co. after previous dealings  although it was a different company

Permalink Reply by Anne-Marie Anderson on December 22, 2011 at 6:38pm

When they sell for a joint venture with another company, the original lessor is recouping their cost of doing business.  Remember they paid a salary or commission plus costs to several people to lease your property and they are making money in order to obtain more land to drill and/or make a profit.  I don't believe the company is selling the lease to another company to do the drilling, just to partner up and share in the costs and share the profits.  You don't have all your stocks in one company, you pick several in the hopes of off setting any potential downfalls.

As to waiting and receiving more bonus money, well that is like buying gas.  Yesterday it was $3.05 and I thought I would wait and get it today.  Well, it was $3.39.  I filled up and I bet tomorrow it will be $3.05 again.

The bonus money is just that, a bonus.  You will make your money on royalties.  Play with the royalty calculators and see what might transpire.  

If you sign and are paid a bonus that is great.  Some companies are making offers and trying to flip the leases to bigger companies.  If the bigger companies don't purchase them, then you won't get bonus or royalty because you won't be in a well.  A bird in the hand...

Just my .02

Permalink Reply by steve keller on December 23, 2011 at 6:55am

yea I understand the buisness  side and not many have a 1000% mark up .and what might transpire doesn't seam like a bird in the hand to me!

Permalink Reply by David Mohn on December 23, 2011 at 6:44pm

Ann I couldn't agree more.  The royalties that one can make is unbelievable.   When compared to the bonus money, it is peanuts!   When I signed a year ago everyone was saying hold off a year or two and the bonus money will go up.   So much can happen in a  few years.  I also felt that if I signed up front, I might be put into a drilling unit quicker and start getting my royalty checks sooner.   Well a year later, the bonus money has gone up but not by that much.  Also there is a good chance the royalties might be coming in sooner than later.   A lot is going on in Stark county right now.  

Permalink Reply by amos alexander on December 26, 2011 at 11:43am

hi Dave,i only have 7 acres do you think i should sign a lease,i think mayble i should the fracking is going  to be all around me and how do i know if they are not pulling gas from underneath my property if i dont

Permalink Reply by David Mohn on December 26, 2011 at 3:22pm

Well no one can tell you if you should sign a lease or not.  The best thing to do is research this topic allot and try to make the best decision you can.  Yes, they will be drilling all around you and yes they do have ways to go around a property if they have to.  With 7 acres, I don't they could go around you so you might have some bargining power there.  I have always tried to say that people should not get caught up in the bonus money.  Yes bonus money is nice but it is peanuts compared to the royalties.  Try to get a landower friendly lease if that is the way you go and try to get the biggest royalty percentage you can.  That is where the money is. 

I have heard some fantastic money amounts per acre but I won't post them because they are only rumors.  Some wells in southern Ohio are producing quit a bit of oil and there is a good chance that Stark County could be in a sweet spot with both wet gas and oil.   I do know that CHK has 4 brand new drilling rigs heading up to this area and by 2014 CHK wants to have 40 hortizontal wells drilled.  If you also read the CHK website in the letter to stockholders, CHK wants to go from 80% gas production to a 50/50 production of both oil and gas.  That tells me they want oil wells drilled! 

Bottom line is that you have to do what you feel is right.  Make the decision one way or another and don't look back. 

Permalink Reply by amos alexander on December 31, 2011 at 12:42pm

talked to my neighbor ,he told me that him and his brother have a lawyer and is going to give me the information  and the best deal they can work out,he told me they plan on drilling 6 wells in the unit ,the first two will be one south and one north,im just going to wait it out and see what they come up with.i like your reply and i thin k your right,once i make a decision i wont look back,thanks for the help.

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