was I taken again on my lease?

I am a newcomer and this is my first post.

I am like so many others that were taken in by signing up to lease my mineral rights for $80 a acre (40 acre) at 12%. I am just a average middle class person that feels we were all taken in by large companies that had privilege information we didn't. I would say that is water under the bridge BUT her we go again.

With less then a year to go on my lease they would have had to renew the lease and pay me the $80 a acre. A land Man came and talked to us with papers in hand saying they were going to put me in a pool and drill in June (most likely April or May). They needed to change my contract to change the size of the pool so they could drill. After talking to two lawyers we decided to sigh the papers because of the amount of money we would get from royalties. My property is adjacency to the Magum well that is and has been producing for over a year so things looked very promising. I did not get a pugh because I believed everything the land man said.

Now I get a check from Chesapeake saying 1/10 of one of my acres is on the Magum pool. The check is for $45 for 4 months. Bottom line: It looks like they are paying me $100 a year to keep from paying me the $2000 for a new lease. Now they are said that they are not going to drill on my land until MAYBE next year, and I can't even find where they applied for a permit (Kinsey well Augusta township, Carroll County) Is my land man just taking advantage of me or is this how they do things ? Can you trust a land man or will they say anything to get you to sign? How long apter they apply for a permit do they usually drill? Thank you for any help.

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Permalink Reply by Tom Driscoll on August 13, 2013 at 6:51am

And of course I had to pay one of these lawyers.  Basically he said what would I gain for not signing  when they owned the lease?  He also said they usually drill when they say they are going to. With 40 acres  I had no leverage.  And if you do the math for the well next to me I would be getting over 50 thousand a year. I am sure they will drill sometime but at 70, well I can 't wait.  thanks for your reply

Permalink Reply by bo boboski on August 13, 2013 at 10:37pm

Lawyers round here are gonna love Chesapeake for years to come!

Permalink Reply by Tim Tarr on August 14, 2013 at 5:04am

You can trust what a landman says when it's in writing and only then.

Ever try to get that same landman a few months after signing something? If you do you'll probably get this response:

     " I'm working in another State or another side of the State now !!!!!! We're really busy out here......" Or even " Thats a long story I no longer work for them..."

For that matter I don't completely trust my Lawyer. Greed can do strange things to people.

Permalink Reply by Garfield on August 14, 2013 at 6:04am

Should have included a PUGH CLAUSE ... and I would NEVER sign a "Market Enhancement" Agrement...........unless it included a Minimum of a 20% royalty with an "enhancement clause" on the condition that under NO Circumstances will it be a penny less than 20% GROSS sold at true market value at arm's length deal with unaffiliated third party!!!!!!!!!!!!!

Permalink Reply by Judy McDaniel on August 19, 2013 at 4:38pm

Can someone explain a Pugh Clause?

 

Permalink Reply by Kathleen on August 20, 2013 at 1:57am
Judy
Example. My Pugh clause states; the oil co., can only hold acreage that is included in a unit, all others acres will be released or released at the end of the leases term.
That's not word for word.
It helps a landowner from having all their mineral acres from being HBP if all their minerals are not included in the unit.
You want a Pugh clause
Permalink Reply by Judy McDaniel on August 20, 2013 at 8:31am

Thanks that helped

Permalink Reply by Tom R on August 20, 2013 at 2:06am

This is a quote from a  PUGH Clause in a neighbors lease,

"In the event a pooled unit is created which encompasses land located outside Leased Premises and some, but not all, of the Leased Premises: any drilling or reworking operations on or production from a well located on that pooled unit shall continue this Lease in full force and effect BUT ONLY AS TO THAT PART OF THE LEASED PREMISES CONTAINED WITHIN THE POOLED UNIT." (I added the emphasis.)

Without this, a standard lease would allow the gas company to hold ALL of your property under the lease by including only a small portion in a unit. I'm in a unit where one lessor's parcel totals 864 acres but only 3.6 acres is included in the unit. If they don't have the PUGH that 3.6 acres will hold the entire lot to the original lease terms. If they do have it, they have a shot at getting the rights to get a new lease on the remaining 860.4 acres when the term runs out on the original lease.

Hope this helps.....

Permalink Reply by Judy McDaniel on August 20, 2013 at 8:33am

Thanks that does help

Permalink Reply by Finnbear on September 3, 2013 at 1:19am

Many landmen are independent contractors who seek leases for whatever company is seeking leases at the time. They tend to be young, nomadic, and without families to anchor them in any one place for any length of time. Many have education backgrounds in marketing. They may be seeking oil and gas leases this month for company A, water agreements for company B for a few weeks next month, pipeline survey permission for someone else after that, more leases for company C after that, etc., etc. A landman I've dealt with did just that and at age 24 after 2 years here from TX, is now training "new" landmen who are fresh out of college. They usually are not given all the details for the project they are working on, just enough to go out and "sell" whatever they need people to sign up for.

Permalink Reply by Bill Bergseid on August 15, 2013 at 10:42am

And if the used car salesman told you the used car was "cherry" would you take his word for it?  Is he taking advantage of you?  Maybe, maybe not.  But it is guaranteed that he is not paid to look out after your interests.  I'd want someone to look it over closely, like you should have done with the lease and amendment.  Don't take it to any lawyer, find one who has done oil and gas work.  You wouldn't go to a foot doctor to ask questions about heart surgery would you--even though they are both doctors?  It's no different with lawyers.   The landman is not paid to look out for your interests.  You should have had a Pugh clause though under any circumstance.  The company would probably have included one when you amended your lease--but you didn't ask.

Permalink Reply by Finnbear on September 3, 2013 at 1:32am

Almost everyone in my township "jumped" and signed with W******** and ended up with G******* at $1840/acre & 14% royalty with very average lease terms . The W******** landman never could tell me the same story twice so I wrote him off as untrustworthy and started doing a LOT of research on my own. I joined a landowner run landowner group in my area and also explored every option/lease offer I could scare up for about two years. I finally signed a lease I could live with in late 2012 and got paid early this summer. I got $6000/acre and 20% royalty and a much better lease to boot.

Still think you should jump because your neighbors did?

Your neighbors might be fools, suckers, uninformed, too lazy or not smart enough to learn what they are getting involved with, or, one of them may even be working for the landman to sway you to sign their deal.

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