We have begun

We received our division orders last week for the portion of our property in the McClain drilling unit here in Millwood township, Guernsey county Ohio.

Curiously, our division orders (from Chesapeake) state in bold print that if the information is correct they do not need to be signed and returned. This is not what I expected from everything I have been told.

So yesterday I began calling around to various law firms inquiring about some royalty statement auditing as well as legal representation in the eventuality that it will be needed.

Nothing really major, made one appointment, awaiting some return calls and some telling me to call again when we receive our first royalty check and statement.

Two different conversations stood out to me. In one I was told that the fee is $235 an hour just to discuss what our relationship would look like. I explained to the person on the phone that they are the only entity I spoke with who required a fee for the initial consultation. I am planning on an email to verify that I understand their position, certainly I shouldn't be charged for them giving me the specifics of what and how they do the job and what it will cost me. This firm is the one that I have heard the most good things about and I really wanted to get a little deeper into the matter with them.

Another is not a law firm. They audit your statements for accuracy of the math and the reported production given to the state as well as what your lease terms dictate and if (when) a discrepancy is found they go to the producer to inquire further. The most intriguing part is that they teach the landowner how to read and compute their royalty statements, which I am very desirous to learn.

Two more calls today before I prioritize the contacts for a face to face meeting.

I intend to be proactive in verifying my royalty accuracy. I want what my lease dictates and am willing to put some skin in the game to that end.

I appreciate any insight anyone can offer.

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 20, 2016 at 3:05am

David,

     Lawyers give free consultations. If a Lawyer won't give you a free consultation, then you don't want to deal with them. It could be very costly and they "may" be unethical operators. They do exist. Ask if they represent O&G companies and watch for them to choke. There's no law against playing both sides. Take FACS Law for instance representing landowners and Chesapeake Energy. Who do you think they sided with in court? I have the answer to that.

We have a lawsuit that is awaiting Class Action Status. You might consider relying on the lawsuit and a vey high probability that Ohio's RICO Indictments for Criminal Activity will occur soon.

Chesapeake doesn't fear Lawyers so why use one to try and get a fair royalty. They don't fear incarceration at this time but when the first corporation has its ceo & board of directors indicted and checked in at a prison facility that will change.

Watch out for those who want a share of your royalties for protecting you. That isn't going to happen, they will share in your losses only.

Get use to being stolen from until Domestic O&G is exposed for what has always been, corrupt with unabated access to landowners potential wealth across the US.

Permalink Reply by G.H. on September 20, 2016 at 4:48am

Good luck David, I will be interested in hearing what you find.  $235/hr for consultation seems crazy.  Should be free for you to hear what services they will provide and for them to try to EARN your business.

Permalink Reply by David Allen Lilly on September 21, 2016 at 2:44am

I have several enticing options that include a free initial consultation, the first meeting is Friday. I will keep all posted as much as I can.

Permalink Reply by evan on September 20, 2016 at 1:19pm

In order for you to verify your decimal interest in the unit you must know exactly how many acres are in it, i called the number on the sheets they sent and talked with someone to find out exactly how many acres i have in each unit.  The south unit, for wells 8-10 were correct but the north units are off a little .  Till then i will wait for the first check, which is supposed to be here by the 30th and then go from there

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on September 20, 2016 at 3:26pm

Evan,

       The first check will be large, relatively speaking, since it will be for 4 or 5 months of production. The next check will be smaller and the trend will continue. Before long you will owe Chesapeake for overpayment of your royalty and you'll know that you've never been paid a fair royalty.

Watch the Tanker Trucks show up to pick up your Oil, they make as many as 10 trips a month on a new well. The minimum volume they will pick up is 200 barrels. Check your royalty statements, Chesapeake likes to use 35 barrels, 20 barrels and so on down to negative barrels if they need to, in order to make your royalty fit what the Executive Leadership Team decides to pay you.

$15 a month per acre was popular for several months then up to $25. You can bet the volumes on your royalty statement change each month when your royalty payment is holding at the same value for an unusually long time. I call this Rationing.

Let us know how this goes, it's not your fault that you will be underpaid it's Domestic Oil & Gas in the US.

Permalink Reply by David Allen Lilly on September 21, 2016 at 2:42am

Ron,

Ten trips a day would be low for what they are hauling out of our units on the McClain, very low.

The trucking ebbed when prices dropped to near $40 a barrel and seem to be ebbing again but other than that it has been constant, probably averaging two an hour, at least.

I cannot even sleep with my bedroom window facing the road opened because the traffic stays consistent through the night waking me up.

I have an open mind as to how the royalty payment situation will pan out while also taking every precaution I can to protect our side.

I am under the hood so to speak but I haven't heard the motor yet so I don't know what the next step will be.

Auditing first, of the royalty statements. Then if, when, necessary will be legal. A third step will be trying to motivate the state to step in, I am good at knocking on enough doors until I find some ally.

I still talk to folks around here who are receiving more than $100 an acre per month and who are getting a NGL royalty as well.

I believe sharing accurate information is very important and that is what I intend to do.

Permalink Reply by arminius on September 21, 2016 at 5:38pm

David,

I would contact Atty Bill Williams of the law firm KWGD in Canton.  He is preparing a class action lawsuit against Chesapeake on behalf of royalty owners.  I had planned on meeting with him once the royalty statements arrived.  However, it would seem Chesapeake is forcing me to bring action sooner.

My family owns the oil/gas rights on land just to the west of you on the opposite side of Putney Ridge.  Through a landowner group sponsored by the above named KWGD law firm, our acreage was leased to Gulfport Energy in the Fall of 2011.   Gulfport assigned our lease to Chesapeake in 2015.  Shortly after the assignment, Chesapeake executed a second lease with the surface owners.  At the time, I was told that this was a "contingency lease" on the part of Chesapeake, and that it was a common practice where issues surrounding the 1989 Dormant Mineral Rights Act could arise.  The surface owners never brought action against our interest.  In fact, the surface owners recently sold the property to our units;s namesake, Herb McClain and in the deed granting their interest, they recognize the oil and gas reservation we base our rights on. Evidently, though, Chesapeake refuses to recognize our rights for we have yet to receive our Division Orders for the McClain Unit (south). 

Permalink Reply by David Allen Lilly on September 21, 2016 at 11:25pm

I wish you luck. I do not like the DMA and fear it has caused much more harm than good and in fact has padded the bank accounts of law firms across the state because of the litigation that arises from poorly written laws.

I am aware of other cases like yours but the issue of ownership of the minerals was handled differently. The producers refused to sign a lease until the matter was cleared in court between the parties disputing the ownership of minerals.

KWGD has a sterling reputation as perhaps the best legal representation money can buy, but it is a lot of money.

I cant figure why the surface owners sold or why the purchaser desired to buy but it doesn't really matter to me. I was only over there twice, there was rarely anyone around the cabin.

Again, good luck to you.

Permalink Reply by David Allen Lilly on September 21, 2016 at 2:33am

Evan,

I have the acreage and the decimal interest and I believe that what Chesapeake has is accurate. I was surprised that the didn't require me to sign and return copies of the DO as that is exactly what they told me I would need to do when I spoke with them two months ago.

I was also surprised that if you choose the direct deposit option, which we desired, you will not get a statement mailed to you although you sign up for an online statement option, which I declined.

Not sure if it matters but things on the internet can be changed easily while the statement mailed to me and in my possession will be what it is.

Permalink Reply by Guernsey 4Life on September 21, 2016 at 4:48am

Whether the division order needs to be signed by the landowner varies by state, I believe.  From what you are saying, I am guessing that Ohio does not require a signature from the landowner on the division order.  

I get a digital statement from another company.  It is emailed to me as a PDF attachment.  Not sure what CHK's system is, but you could always print/print to PDF the statement as soon as you receive it, and save that copy on your computer or put the physical print in a folder.  Just a thought, but good old regular mailed statements work just fine too.

Permalink Reply by Carla Powell on September 21, 2016 at 8:58am
The statute of Laches will probably determine what the time limit is for filing. You probably have at least a year before you have any time limitations. You put Rex on notice, and they have not responded. Therefore, the sooner you act on your claim the better off you will be
Permalink Reply by Carla Powell on September 21, 2016 at 8:16am
we had an analysis done over a year ago but could not find anyone to move forward as a group. we are in the j hall well and the deductions are awful i will attach the audit from the lawyer we hired if i can figure out how to do it

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