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Permalink Reply by Judy Walter on June 7, 2012 at 1:36am

Most of their leases follow the same guidelines, unless the landowner takes some control of what is written. Standard is not based on gross. I have notarized leases and unless you negotiate, they are for the company. Since lease signing has slowed, they are harder to negotiate.

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Permalink Reply by Mike h on June 12, 2012 at 5:41am

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.

Mike

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