Replies to This Discussion

Permalink Reply by Denver Gallentine on January 9, 2013 at 8:44pm

Todd,

     Great information! This is why I reccommend this site to anyone who has oil/gas interests. I sent the lease back unsigned. Allow me to show you what the ROYALTY section said:

ROYALTY: Chesapeke agrees to pay Lessor one-eigth of the net amount realized by Chesapeake, calculated at the wellhead for actual volumes of oil, gas and their consti-

tuents sold(excluding storage gas) from said alnd. As used in this lease the term "net amount realized by Chesapeake, calculated at the wellhead" shall mean the gross proceeds received by Chesapeake from the sale of oil, gas and their constituents sold (excluding storage gas) from said land, minus all production costs incured by Chesapeake between the wellhead and the point of sale. As used in this Lease, the term "post production costs" shall mean all costs and expenses actually and reasonably incured by Chesapeake between the wellhead and the point of sale, accounted for in accordance with generally accepted industry principles, including but not limited to costs nd expences of..." 

It then lists 6 things the LESSOR pays a0 treating and processing b) seperating liquid hydrocarbons c) transporting oil, gas etc. d )compressing gas for transport e)metering oil, gas etc f) sales charges commissions fees paid to third parties f) any and all other costs incured in the future whether or not ststed in this lease.

@ 12 1/% royalties there would not be much money left. - Denver

Permalink Reply by Todd on January 12, 2013 at 4:14pm

Denver,

That would be CHK's standard "screw the landowner out of their royalties" lease language.  You did the right thing by not signing your money away.

Permalink Reply by Mike Bardzel on January 10, 2013 at 11:30am

It is too bad you are with Chesapeake. They are pulling at least 3 dirty tricks on landowners now because they are in financial trouble, I just attended a meeting last night in our community with over 1000 people regarding this very subjectof royalties, Market Enhancement Clasue being mis used by Chesapeake and other dirty tricks they are using. A huge warning we were given was not to sign the Division Order form you will eventually receive from them in the mail when you are getting close to royalty payment time. They scare you on the form to sign or else you will not get paid plus they will withhold 28% I believe for taxes until you do sign. They conveniently add some items to this form which would contradict your agreement on your original lease. So by signing you are negating valuable items on your lease such as no deductions for costs etc. etc. Now this is not considered legal to change your lease terms on a Division Order Form. There is however a standard division order form online used by honest gas companies. It is called the "Model Form Division Order" from the National Association of Division Order Analysts. Print that out and tell them this is what you are willing to sign. They have in the past and may with you threaten to stop payment if you arbitrate with this new form. They won't according to the lawyers we spoke with. They would be in hot water. Chesapeake threatens to make you sign there twisted form favring them and giving up more of your rights. Now here is another dirty trick they are doing now and law firms are preparing to fight them over this. They created a new company called Chesapeake Energy Marketing Incorporated. This new company is totally owned by Chesapeake. The lawyers allege that Chesapeake is taking your gas, then sell it to this new subsidiary of theirs at below market value. Then they pay you your royalty based on this low dollar amount they sold the gas to themself for. Now that you are out of the way they in turn sell the gas to market at the higher market value. So the lawyers were caliing this crime, a company selling to another company within arms length". Not beyond arms length. Illegal and immoral.The bootom line is Chesapeake is said to be shorting landowners easily over 50% or more of their royalties. Everyone is hoping this eventually ends up in the supreme courts hands. Some other companies are doing one or more of these tricks too but fortunately most are being honest. One landowner I know has three royalties from his property. He is recieving royalties from chesapeaken two units which meet on his property and one royalty from a second company on a smaller section of property. He is recieving more cash from the smaller piece from the honest company than he is from Chesapeake for the two other larger pieces. He is filing a suit with a law firm. Another landowner says he is getting an amazingly small check for 27 acre Wasn't worth the disturbance to his land and lifestyle. Many law firms will look for free at your leases and contracts. Absolutely call them.

Permalink Reply by JK on January 10, 2013 at 11:51am

THANK YOU MIKE!!!

Good job!

Ater 8 months of waiting for our inherited ownership to get completed by CHK, and receiving zero royalties, we were contacted to sign the very division order you spoke of.

We all refused and yes they tried to strong arm us. We still would not sign. The only thing we provided were our names and SS#. No signed division order form.

Our royalty checks were sent a week later.

On all of the points you made we can only hope to be part of yet another class action.

CHK is still doing the very thing they were sued for and paid millions of dollars to owners here in WV. We are just waiting for the next suit to be anounced and you can bet we will be first in line again. It will happen.

Permalink Reply by Todd on January 12, 2013 at 4:06pm

Thanks for the EXCELLENT INFORMATION and WARNING Mike!  And Thank you also JK for the heads up!

This is absolutely unbelievable what CHK is doing... all of which is FRAUD to take advantage of honest landowners.  Hopefully, they will be acquired by a better operating company soon.

Please keep us posted as to further developments regarding whether or not folks are receiving their legal gross royalties in WV "at the wellhead".  I will make sure I have an O & G attorney review the Division Order once CHK sends me one prior to signing it.

Permalink Reply by JK on January 12, 2013 at 9:10pm

OMG TODD!!!

DO NOT SIGN THE DIVISION ORDER FORM!!

After all we've just told you!

Permalink Reply by Todd on January 13, 2013 at 5:01pm

OK OK JK!!! :))

I WILL NOT SIGN IT!  I'll message you.  Just sent you a friend request.

Permalink Reply by S in WV on March 3, 2014 at 9:18am

I just found out that I have a lease with Chevron and it sounds like the same lease that you had. Mine states royalty payment (a) for crude oil, including condensate, Lessee will pay, as a royalty, free of production cost, 1/8th of the proceeds realized by Lessee from the sale of all crude oil produced and sold from the leased premises. (b) For gas (including casing-head gas) and all other substances covered, the royalty will be 1/8th of the proceeds realized by lessee from the sale, with no deduction of any costs incurred to gather, transport, etc.   

Contract was signed in 2006. Well pad has recently been repaired and massively updated. No production in years. So, I assume this is 12.5%? I really don't know much of what is going on here because I recently acquired this lease and pad. As far as I know, nothing in the lease can be changed.

Permalink Reply by J. Kinney LandRights on March 3, 2014 at 10:21am

S in WV,

  Did you recently purchase the property and the lease/well was already in place?  

Permalink Reply by S in WV on March 3, 2014 at 11:06am

Inherited. Lease was set in place in 2006.

Permalink Reply by J. Kinney LandRights on March 3, 2014 at 11:15am

You're one of many that has already had their hand dealt to you as far as the lease on your minerals.  The good news is you still own them which gives you options. Did you file the change of ownership with Chevron to make sure any payments comes to you?  I know a lot of people that forget to do that and assume there is not production/royalty checks coming in.  Has Chevron provided you any info on the well? Regarding last known production or why they are claiming it to be in operating condition?  

  Isn't it funny how they don't care about paying or holding the lease until it's worth something to them?? haha! I've seen this scenario many times with the company showing up to repaint and cut the weeds around "abandon" wells (or at least they look abandon).  This is why I wish the states would require them to keep up to date reporting on all wells and if they stop producing or the company isn't trying to get them producing they should forfeit the lease. 

Permalink Reply by S in WV on March 3, 2014 at 1:14pm

Thanks for the feedback! I had an attorney get my lease from Chevron...that took some work. I just acquired that last week. I will PM you the detail of my situation. By the way.... they didn't show up to paint and cut weeds.  They put in no less then 1M in updates....I'm across the street from a main processing plant. They have made my well pad a mini processing plant. From what I hear, they are waiting for gas prices to increase. They have 2 more years before the lease is up, so they have some time.

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