Beware of all the gas companies!

I signed two lease's back in 2011 with Gulfport Energy on 80 acres that I own in Belmont County, Ohio. Let me start by saying don't believe anything that any of the land men tell you, the are working for the gas companies and their own benefit not yours period. While I was negotiating my lease with several companies at the time in 2011. I clearly explained to them that any lease I would sign would require a Pugh clause, and that I would not except any lease that required me to pay any of the cost associated with the production or marketing of the finished product from any wells drilled onto my property. I ultimately ended up signing with Gulfport Energy because of the higher bonus payment and higher royalty percent, and the land man assured me the Pugh clause and the deduction clause weren't a problem, that a lot of people were requesting it. Well the land man was lying through his teeth after receiving my first royalty check and statement there were $14,574.11 in total deductions. Beware of any lease that includes the language below.

 

"All oil, gas or other proceeds accruing to Lessor under this lease or by state law shall be without monetary deduction, directly or indirectly, for the cost of producing, gathering, storing, separating, treating, dehydrating, compressing, processing, transporting, and marketing the oil, gas and other proceeds produced hereunder to transform the product into marketable form; however, any such cost which result in enhancing the value of the marketable oil, gas or other products to receive a better price may be deducted from Lessor’s share of production so long as they are based on Lessee’s actual cost of such enhancements.  However, in no event shall Lessor receive a price that is less than, or more than, the price received by Lessee."

 

It was explained to me that this was exactly what I wanted and that the second part of this clause only meant if they did any advertising to enhance the selling price of the finished product I would have some associated cost from that. Well I have since found out that this is the language that the big oil companies have adopted to lead land owners to believe that they are getting a no expense deducted clause in their lease. If you find this language in your current lease be assured be ready to pay every single cost that is associated with bringing the product to market. Don't sign it! Ask clearly for a no production cost clause and have it reviewed by a gas royalty attorney.

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Permalink Reply by skittles on January 5, 2014 at 2:53pm

NY GAS RIGHTS, The G&O companies did nothing to create the minerals under our land. But they are guilty of having the technology and wisdom to know it was there AND they are guilty of deceiving us.  Back when these early leases were signed it was like, "well, I've leased my land in the pass years and they never drilled or did anything with it, so why not. It'll pay the taxes". When we asked questions, the answer was "oh, whatever is down there". Fact is, we were lied to. All we want is our fare share. They never get over thinking we are stupid, just want us to roll over and play stupid everytime. They way you are acting, I think you are the O/G company rep on here.

n

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Permalink Reply by Darlene Newton on November 12, 2013 at 5:29am

Thank-You :)

Darlene

Permalink Reply by Darlene Newton on November 12, 2013 at 5:34am

And by the way I was very disappointed; I was really feeling good they would bring jobs and opportunity to the community;  certainly not to get rich, I have a conscious!   I was hoping they would live up to the promises that they made!  !!!!!!!!!!!!!!!!!!!!!

Permalink Reply by Darlene Newton on November 12, 2013 at 5:49am

You are labeled ignorant if you complain because there is nothing else you can do! Its like if you disagree on this Health Care Crap it means you are racist; I believe that is the Ignorant mans way out of feeling guilty, trying to talk themselves into believing they are doing the right thing as they continually steal, and lie! Very sad they have no conscious !

Permalink Reply by Shon Lenzo on March 30, 2014 at 9:34am
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Permalink Reply by Finnbear on November 12, 2013 at 2:16pm

Darlene Newton

Please go into further detail on how you had to pay back $65,000.00 to Chesapeake. How did they get the money back from you after you cashed their check? A lot of now-leased landowners here on GoMarcellus would like to know because we are spending our lease payments as this is being written.

Permalink Reply by Darlene Newton on November 13, 2013 at 4:48am

Simple, they went back from the time they drilled the well, we had one of the first ones after they could get away with redefining the words in peoples leases!  For the last 2.5 years they have taken back our royalty checks plus charged other fees!  Mind you I already paid taxes on that money!  I also am placed in a higher tax bracket so I am paying taxes on money that I received but they took back! 

I wish you luck, it is not what you think it is my suggestion I would sign NO leases until our Governor and Yaw Yaw FIX what they purposely chose to let go for the purpose of lining their own pockets! Never think they have nothing to do with it as well as our wonderful President! 

Royalty needs to be defined in as few words as possible.  The fewer words the less chance the Gas company can refine for their own benefit!  Retroactive Royalties 12.5 percent guaranteed at well head or after first  transfer to consumers! if we are due our 12.5 then it should be we get what we are paying for.  That would be on the profit of the enhanced gas!  If all ends well the Gas Companies will have screwed themselves!

Darlene

Permalink Reply by Joseph-Ohio on November 13, 2013 at 5:20am
Sounds like the well is on your land.
Wondering when the well was installed ?
Wondering if the well is still producing ?
Wondering how long it took for you to be paid the amount that it sounds like you had to return ?
Wondering if you are still now paying for continuing production from your well ?
Makes no sense to me for a landowner to suffer a well on their land and to have to pay for production.
I just don'follow and must be missing information.
I for one can't make sense of it.
Perhaps you can offer clarifications for your readers here ?
Permalink Reply by Darlene Newton on November 13, 2013 at 5:34am

Obviously sir you must be smarter than I if you cannot figure it out.  What I know is a fact until it happens to you I guess you will not get it !!!!!!!!!!!!!!!!!   Good Luck I truly mean that!

Permalink Reply by Joseph-Ohio on November 13, 2013 at 5:56am
Ms. Darlene,

I still don't understand what's happened with your well / your family in PA.
It doesn't read like good news.
BTW not taking any credit for being smarter or wiser than anyone - just trying to learn and do the best thing for me and mine.
Good luck to you and yours as well Ms. Darlene - and we really mean that as well.
J-O
Permalink Reply by Darlene Newton on November 13, 2013 at 6:07am

Thank-you so Much Joe, I was not trying to be a smart butt, it has really been a sad stressful situation.  I am not going to put my finances for everybody to see but if you ever need input please feel free to contact me!  My neighbors are big resistors of the Gas Industry and they said all along bad would happen and it has!

I just beg you to slow down they need to fix the law before you or anyone else signs a lease! Believe me you will all be forever grateful! Darlene

Remember this land will be our children's one day !  Darlene

Permalink Reply by Philip Brutz on November 13, 2013 at 8:08am

Darlene,

Are saying that Chesapeake retroactively charged you a market enhancement deduction? 

What percentage of your royalty check did they claw back?

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