I'm new to this and wondered what will happen when my lease runs out in 10 years. I heard that Chesapeake was cutting pumping activities due to the low price of natural gas.
If you have not been drilled, or at least unitized, in ten years, your lease will self-extinguish and you will be permitted to lease your land all over again.
Thank you for the reply. What if the property is in a unit that is drilling? Do they have to re-lease the property?
Once the property is drilled or "hbp-held by production" it is held for life. You can not lease your land again.
Thanks for your help!
If you are in a unit that Chesapeake has a well or pipeline, you will be locked into the lease which will be automatically extended. It seems Chesapeake is putting wells up on land where leases are expiring. This way they don't have to pay landowners a sign on bonus again. Good luck.
Good post and agreed.
But it's not just Chesapeake doing that. I acknowledge Chesapeake is the largest operator here in Bradford County. But a number of other gas companies also operate and have significant presences here. And they all are doing the same thing you described, called "HBP" (hold by production).
So after the Lease expires, they dont have to pay the bonus money again. So at the 5 year mark, if they have drilled on our land, then they have to renew the lease and pay the bonus money again, right? After the 10 years, does the Royalty rate stayed locked in at the original rate?
Once you have been included in a production unit, you are HBP (held by production) for as long as a well in that unit is capable of production. Your lease is locked in to the original numbers for as long as it is capable of production. No more bonus money, only royalities. If no production is occuring due to say no pipe line you will be paid a shut-in royality which is usually $5/acre/year.