Replies to This Discussion

Permalink Reply by 0i7okn54zwbdo on March 22, 2012 at 4:02am

The definition of "similar" is what will be important. $3,000/acre is not similar to $10/acre. "Like terms" obviously means more of the same. You might be able to extract a little more money and perhaps a few more points on the royalty, but as it stands you (or whomever was the original Lessor) have granted the extension already. Not cashing the check has no effect on the lease renewal.

Permalink Reply by 0i7okn54zwbdo on March 22, 2012 at 5:21pm

The landowner isn't in breach of contract in this case because the extension was already agreed upon. All the lessee must do is tender payment and the lease is extended. "Like terms" most certainly refers to terms identical to the initial payment and royalty structure that was paid for the primary term. It's curious that "similar terms" was included in the contract as it adds ambiguity, something that's generally avoided in such deals.

Permalink Reply by 0i7okn54zwbdo on March 23, 2012 at 12:48am

Ohio is a rush to the recorder state, yes. However, if the old lease makes provisions for an extension then the current lessee may extend it using the mechanism in the contract. I assume that CHK sent paperwork to this person as a CYA move. Overall I agree that an attorney should handle this. Ask for more money. If you don't get it then you don't get it. It never hurts to try.

Permalink Reply by Robin Hood on March 23, 2012 at 7:09am

Thank you all for the responses. If all Chesapeake has to do is exercise the option to extend the lease then they don't need anything from us. They are however asking us to sign the top portion of the check and return it in the provided envelope.

When the lease was originally signed it was with great lakes energy partners. There was a paragraph in the addendum that states:

"Lessee agrees that there shall be no full assignment of this lease without Lessor's prior written consent; however, Lessee shall have the ability to sell partial interests in the herein lease without Lessor's written consent, as long as operational authority is not transferred from herein Lessee.  Lessor's consent shall not be unreasonably withheld or delayed. "

The letter we received from Chesapeake stated: "This letter is to inform you that Chesapeake Exploration,L.L.C. is successor in title to Great Lakes Energy Partners,L.L.C. and Chesapeake is now the owner of your oil and gas lease..."

It seems to me that "operational authority" has been transferred and we never been requested to give written consent.

Does Great Lakes Energy still exist? If so, shouldn't they be the ones notifying us about the lease extension or requesting in writing a written consent to sell the lease to Chesapeake?

By the way we are vetting a lawyer, a whole different can of worms.

Any comments?

Permalink Reply by 0i7okn54zwbdo on March 24, 2012 at 2:49pm

Great Lakes is Range Resources. They operated on their own for decades and sold leases--in whole and in part--to Chesapeake. It sounds like your contract was assigned without your consent. Clearly operational authority has been transferred. As far as attorneys this is a "no promo" forum and I will abide by that rule.

Permalink Reply by Robin Hood on January 29, 2013 at 2:04pm

I found this on a web search by entering Chesapeake Great Lakes Energy 2013: 

If you previously entered into an oil and gas lease with Great Lakes Energy Partners, LLC, which was subsequently assigned to Chesapeake Appalachia, LLC, your ownership interest in your oil and gas may at risk and you could stand to lose a considerable sum of money if action is not taken. 

Many of these Great Lakes oil and gas leases contain a provision, usually contained in Paragraph 19 of the lease, that states in pertinent part:  

“…Upon the expiration of this lease and within sixty (60) days thereinafter, Lessor grants to Lessee an option to extend or renew under similar terms a like lease.”

In many instances, Chesapeake has attempted to renew leases containing this provision for an additional 5-year term on the same lease terms merely by paying the same amount paid to you when the lease was originally signed. Chesapeake denies you have the right to renegotiate the lease terms at a higher price upon expiration of the original five-year term, even though the market price for oil and gas rights is substantially higher than it was when you originally signed the lease.  

We believe this provision is legally insufficient to convey an option to Chesapeake to renew your lease under the same terms. Our firm has brought several lawsuits against Chesapeake to prevent them from unilaterally extending similar leases under this provision and consequently appropriating their oil and gas.  

If you signed a lease with Great Lakes Energy Partners LLC, which contains terms similar to those stated above, you may have rights which would enable you to obtain a higher price for your oil and gas than is available to you under the terms of your Great Lakes Energy Lease. 

            If you would like to review your rights under your oil and gas lease, call us for a free consultation.

This is FYI only. I have no past or current connections or dealings with this law firm. I removed the law firms information to avoid semblance of soliciting.

Permalink Reply by Oliver Eastern on February 3, 2013 at 2:21pm

Robin,

There is a case pending in Federal Court (West Virginia, Northern District) over this exact language: Burkey v. Chesapeake. I am not sure how far along it is, but it may be helpful.

 

-Oliver    

Permalink Reply by Robin Hood on February 5, 2013 at 2:50pm

 I found this from April of last year on google.

A Cameron resident has filed a federal lawsuit against Chesapeake Appalachia, seeking to terminate an oil, gas and coalbed methane lease she claims the company should not have extended.

Della Maxine Burkey filed the four-page suit March 14, taking issue with the lease that was set to expire in September 2011. The suit noted Burkey did not have a copy of the 2006 signed lease.

According to the lawsuit, the lease stated Burkey was granted the option to renew or extend "under similar terms a like lease" within 60 days after the lease expired.

However, Burkey claims Chesapeake attempted to extend the lease in July. According to the lawsuit, Burkey rejected the extension because the lease had not yet expired and because the description of the renewal was "too vague to be enforceable." Burkey also claimed the language violated the West Virginia statute of frauds.

In addition, Burkey claimed she had informed Chesapeake that she did not intend to extend the lease but said Chesapeake "continues to claim a valid lease extension."

"Chesapeake's claim of a valid lease extension is a cloud on Burkey's title and is preventing (her) from leasing (her) property for a bonus in excess of $200,000," the lawsuit stated.

Chesapeake has not yet filed a response.

They could have settled,

Permalink Reply by 0i7okn54zwbdo on February 6, 2013 at 3:20am

If the company is given the option to renew then they have the option to renew.  These lawsuits are a nuisance and take away court time that should be spent dealing with real, legitimate claims (of which there are numerous).

Permalink Reply by Robin Hood on February 8, 2013 at 7:37am

Well, they may be a nuisance in the eyes the the oil companies and those who represent them, but I did hear from the law firm that filed the class action suit, that although the oil company was unwilling officially to concede that the landowner  was entitled to a renewal bonus at the current market rate, they were willing to review each lease on a case by case and perhaps reach an new agreement. This indicates they are not all that anxious to allow the judge to interpret the phrase.

Marcus, many have stated that they were told by the Range landmen that when it came time to renew, the bonus would be negotiable. To a layman the wording even suggests that.

I interested in keeping as much money as possible in the community with this current boom. If we bend a few noses in the process, so be it.