Changing a unit size.

Hello everyone,    I recently had Chesapeake approach me to alter one of my leases. A 62 acre partial.  they want me to agree to increase the unit size from 640 acres to 1280 acres.  I am currently in a 500 acre unit in Jefferson county Ohio.  when I bought the property it was already held by production, so I had no negotiation rights.  my question is if they want to change the contract, should I try to negotiate bonus money and higher royalties?  I am currently at the 12.5%.   Any advice would be appreciated.     Bob

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Permalink Reply by mark ondrusek on August 5, 2013 at 4:47am

do not change it!

Permalink Reply by Robert Matthews on August 5, 2013 at 4:58am

Why not Mark?  I was thinking if I can get at least my percentage up to 20% like my other property that would be a good thing. 

Permalink Reply by mark ondrusek on August 5, 2013 at 6:25am

if you can get your percentage up...go for it.  I was in same boat.  they would not budge and we would not sign.  I am now in 2 640 acre units.  to make it short.  they will have to drill 2 wells to hold 1200 hundred acres instead of one.  you will get your royalties sooner!

Permalink Reply by Robert Matthews on August 5, 2013 at 7:32am

thanks for the advice.  If i don't get an increase in royalties I am not signing.  I was wondering if anyone out there got compensated for making this change in their lease. 

Permalink Reply by Kathleen on August 5, 2013 at 8:33am
I was approached about the same thing by them.
I knew $$ wasn't going to happen.
I asked for higher bonus; no,
I asked for higher percentage; no, since I was already at the upper limit for this play.
I asked for a strata release and the guy thought that might be a yes, but it was a, no. My attorney felt he could get that for me if I really wanted it.
I told them they were opening my lease and they, very, quickly told me they were not, they just needed to change a little wording.
If CHK really wanted me in a 1280 unit than they had to give to get.
The guy said they really, really wanted my lease to say 1280. I told them, no they don't or they would have offered something.
I only have 3 acres in a 450+ unit that had one well drilled on it back in Feb, than shut in.
About half of the land in that unit was HBP so I'm hurting this unit and we all know it, but they still wouldn't given in at all.
Total acres owned 19.
Permalink Reply by Robert Matthews on August 5, 2013 at 8:52am
Thanks for the input Kathleen. Can I ask you when was the last time they made contact? If increasing the unit size would benefit them then I don't see why they would not try to work with you even a little bit. I am hoping in time They will decide it would be in their best interest to Increase the unit size And finally work with us. My lease was held by production. It was part of a very large Group of properties under one lease. They just put one Shallow well up. So missing out on the bonus money was a bummer.
Permalink Reply by Kathleen on August 5, 2013 at 11:37am
Hi,

I would guess my last contact was in late Aug, early Sept 12'.
The unit was declared in the courthouse late Sept 12'.
Your shallow lease has that large of a unit size listed? I've seen and heard of many that have no size listed or under 100 acres.
I'm just surprised yours allows such a large unit but also has limits.

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