DO NOT AGREE TO GOING INTO A 1280 ACRE DRILLING UNIT IF YOUR CONTRACT CURRENTLY CALLS FOR 640 ACRES

Chesapeake has been trying for the past couple of years to increase the drilling unit under our contract from 640 to 1280 acres. When I asked what I get out of it they told me all the supposed benefits of belonging to a larger drilling unit which is that their may be more production from a bigger unit.  Of course you split that production with more people but Chesapeake blows that off.  The latest offer in total was $10 for the whole contract.  For that I was instructed to sign the documents in front of a notary and mail them back to Chesapeake.  Needless to say they are still waiting. It looks as though Chesapeake wants bigger drilling units so they can tie up 1280 acres with one well, whereas it takes two wells to tie up two 640 acre drilling units.  Upfront savings to Chesapeake is a savings of about $5 million plus by not having to drill the second well now and no more lease payments made once one well is drilled on the 1280 acre unit.  Chesapeake can then bide their time developing the unit any further, leaving the Lessor waiting for royalty payments while not receiving any further lease payments.  The royalty received from one well on 1280 acres would be at least half of that drilled on 640 acres.   

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Try and sign with Range Resources. Better company I believe

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