Unwanted Checks!

Having just read on another site about a oil/gas company check being returned, I realized a few folks throughout the PA Marcellus have adopted this action.  This has happened when a lease has expired or is near its expiration date, and the O/G company wants to maintain its hold with little if any improvement upon the first numbers and/or clauses agreed upon.  Figuring the person receiving the check will cash it without much fore-thought, the stage is set for another 5 yrs. or longer.

Folks are catching on! They don't have to cash these checks. They can send them back, and request a Letter of Surrender ... documentation from the O/G company that proves the lease is no longer valid. It's likely at this point that a company landman will appear on your doorstep --- again!  However those choosing not to open that door can open another one for a better leasing experience ...  allowing better clauses, higher numbers, and more protections than anyone knew were needed a few years ago.  We're understanding more and learning to take our time.

I've read and heard of this company ploy(an unasked-for-check) being used in Tioga, Potter, and Westmoreland counties. That's a good spread of territory so it's likely happening elsewhere. 

Anyone who can validate this scenario happening in your county, please give the rest of the GMS readers a heads-up!

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Permalink Reply by Gregory J Adams on March 7, 2013 at 3:29pm

Oliversan, your Googlefu is stronger than mine.

Where do you come up with that?

 

Permalink Reply by Oliver Perry on March 7, 2013 at 3:36pm

Not Google but the links posted above. I can help you navigate if you like. I already took the liberty of checking to your north, south, east, and west. I sent a friend request if you want to communicate privately.

Permalink Reply by Gregory J Adams on March 7, 2013 at 11:54am

Zactly. It was Phillips Production that XTO aquired.

I wrote a addendum that a renewal would only be with written consent. XTO sent a check for 50% of the initial bonus and a new rent check with a letter stating that they were going to exersize their option to extend the lease. That was the "standared" lease. I sent them back with a letter stating that I was not consenting to the renewal.

IF, I had signed the contract w/o addendum, I would have had to take what they gave me, and whimper all the way to the bank. If you sign a lease with a renewal option clause, then they can exersize that option.

IF I had cashed the check because I didn't remember or understand what I had signed, then I would be locked in. Money changes hands, the contract is accepted, thats the rule.

Permalink Reply by Oliver Perry on March 7, 2013 at 12:49pm

Greg,

Sorry for putting the lease info out there if you are offended, that was not my intention. I am just fascinated by the fact of you obtaining a no extension without written approval lease. I didn't realize that was possible, and I would like to have that put in my future lease if I could.

Permalink Reply by Gregory J Adams on March 7, 2013 at 2:15pm

No biggie, was just a tad disconcerting. I knew that it is public record just kind of a suprize.

Like I said in the other post, I got burnt on a land contract 20 years ago. It was a expensive and painful lesson. You just have to remember that there is no such thing as a standard contract if you own a pen. They may choose not to sign, but if they do and money exchanges hands, both parties are bound. The one that XTO gave me to look at is already lined up pretty well. The landman said that there was no provision for a well, and that if they were going to drill, that they would have to negotiate that seprately. Not IAW para 25 (?) so that has a line through it.

For this discussion that comes into play also. If your contract has a renewal clause that lets gives the company the option to renew, and you both signed, and you took money. You are going to get what they told you they would give you in the contract.

Permalink Reply by Mike Sero on March 7, 2013 at 11:50am

Dane, you are correct on the lease extension. It's pretty much set.

And now with the renewals actually coming up - depending on where - some companies are finding it easier to just drill a hole or let leases expire - Range for example in Washington Pa, they aren't planning on drilling any new production wells till 2015 in that area.- why renew small acres - letting those just lapse and renew larger parcels and thats a big maybe right now.

Permalink Reply by Bill Drill on March 11, 2013 at 11:53am

You are correct.  We didn't cash the check and it didn't matter.  Now we have to ask for a new one or lose the money.  They have you right where they want you.  "Delay of Rental Payment".

Permalink Reply by Marion R Schaeffer on March 7, 2013 at 12:34pm

I signed 6 years ago for $5 per acre.  Just before the first 5 years was up, I called for a copy of the lease for another legal matter.  The agent on the phone was very rude and abusive.  I was accused of trying to get out my lease.  I was informed that they would renew and I had no recouse because I had signed a contract that included automatic renewal.  Plus, I don't see how they can be called " an unasked-for-check" when the check is a part of the stated contract.  Any way, to make a short story long,  I am still getting $5 an acre for another 5 years and I have a lawyer.

Permalink Reply by Star Gazer on March 7, 2013 at 12:35pm

From what I have seen with the PA law, any extensions of leases past their initial time are illegal. This is my opinion from reading the "HITE V FALCON ENERGY" that went through the PA Supreme Court. If I'm mistaken, please let me know.

Permalink Reply by Marion R Schaeffer on March 7, 2013 at 12:41pm

The lease is for 5 years with the oil company having the option to renew for another 5 years.  The renewal is right in the contract.  It is not an extension.

 

Permalink Reply by Gail Wypasek on March 7, 2013 at 1:14pm

This has been going on in Hancock County, West Virginia by Chesapeake for the last year on the contracts flipped to them by Range Resources and some other companies.  Chesapeake has gone so far as to send a check to a person for $100 to renew their contract and threaten to contact the State of West Virginia because they didn't cash it and they were told by an attorney to just not cash it and not worry about sending it back.  I have insisted to them to void it and return it but they are listening to their attorney not realizing that it will mean a lawsuit for they attorney just to make money off of him in the long run.  By all means do not cash a check for a renewal of a contract that you do not want or have not authorized.  Fight, Fight, Fight for what is rightfully yours and form your groups again!  Do not sell them everything this time from the top of the ground to the center of the earth - Don't sell the farm!  We all realize now how important the terms are along with the money involved and we need to hold out and get the terms we can live with for our and humanity's future!

Permalink Reply by Chico Beegle on March 7, 2013 at 1:33pm

Who would have thought that we would be taking that initial lump sum of money only to spend it later on nothing but legal issues? I expect my issue with "assignment" to a new company will come down to this soon. I have heard of people in Bradford Co starting to receive royalties, buying items on time based on the monthly royalty, then having the check cut down by close to 90 per cent. My opinion: The gas companies are untrustworthy and exploitive, and if I had it to do over I would NOT sign. I'd rather not have the headaches than have the money.

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