is the ALOV lease as strong as it appears?

just wondering if anyone who signed an ALOV lease with CHK have been seeing any deductions on royalties?...........seems the 2 pages of gross language is pretty strong.......but also hearing a lot about CHK ignoring lease terms.

 

also wondering if anyone with an ALOV lease has had their lease sold, transferred, conveyed or assigned by CHK, and if so, were they notified beforehand and did they receive the "additional bonus" as outlined in the lease?

 

 

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0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on September 6, 2013 at 4:39pm

We'll find out how strong it is once there's a lawsuit.  That's usually how these things go, especially when CHK is involved.

Permalink Reply by Booger on September 7, 2013 at 1:43am

i was thinking maybe the language was strong enough that CHK would not even attempt to take deductions............although i'm not sure what they would stand to lose.......they don't seem too worried about their reputation.

 

maybe if they continue losing law suits like the one in PA, they will change their royalty theft strategy..............but if their theft proves to be succesful, the others will soon follow that strategy.

Permalink Reply by Sonja on September 7, 2013 at 2:13am

My fleeting thoughts on our ALOV lease... I was thinking for those of us that are not developed, that CHK will let us expire and non-renew in the 5 years.  Then we are back out on the market to go through the lengthy, hair-pulling renegotiation with other companies.   We were happy with out ALOV lease.  From speaking with others, I hear that there are many items on the ALOV lease, that CHK wouldn't even look at after the big ALOV lease was complete.  I don't know? I know that they have come around to several neighbors whom are also ALOV, wanting an amendment of the unit size restriction.  Maybe that is a small indication that they are not on board anymore with the lease the way it was written? 

Permalink Reply by Booger on September 7, 2013 at 3:02am

Sonja.....i have had the same thoughts on the non-renew scenario.....this is a pretty restrictive lease for chk.........however, they have a whole bunch of core acerage signed under the ALOV......i am thinking they will try to get ALOV leaseholders to sign a series of amendments to suit their needs - before just letting all of that good acerage expire....especially since they got it at a decent value.

i would be open to signing the unit size restriction amemdment and maybe some others - but i would be against changing the gross royalty language. Mainly because of Marcus and Chips points above........I believe that gross language is strong enough to beat them in court relatively cheaply.....my hopes would be that chk wouldn't even go there with the ALOV......I hope maybe someone replies to this thread who may be recieving royalties on the ALOV already, and can fill us in.

Permalink Reply by Alan Bowers on September 8, 2013 at 7:55am

If you have been following what companies have been signing and/or acquiring new and existing leases in Columbiana, Carroll, and Mahoning Counties you will notice CHK is NOT the only player.  Hilcorp and BP have been acquiring a foothold moving south down from Trumbull County.  Also Atlas Noble just pulled three(3) permits for Unity Township in Columbiana County on 08-29-2013.

Both "Group A" and "Group B" from ALOV signed their leases in April 2011 and have the same ALOV-CHK Lease.

We are 2yrs 5mo into the first term for those of us who signed on the first day of signing.  2yrs 7mo remaining on the first 5yr term of the lease.

In the run up of time to the first Lease Signing in April 2011 CHK did consider landowners who were still under lease and did sign leases with those landowners that took effect starting when the prior lease expired.  CHK looked at landowners with one(1) year or less to go from the April 2011 signing date.  Landowners at two(2) years remaining were not considered because CHK felt 2yrs was too long to wait.

ODNR has information showing that Chesapeake Appalachia LLC had drilled wells, and had data from those wells drilled in Columbiana County in the late 1980s and early 1990s. 

With CHK still in need of cash to pay off debt and more production numbers for wells drilled being reported the chance that one of these other companies will buy leases from CHK is good.

Permalink Reply by Alan Bowers on September 8, 2013 at 8:28am

As of 08-31-2013 ODNR shows eight (8) wells as "Producing" in Columbiana County.  None of those 8 wells have an ALOV-CHK Lease.  Of those presently owned by CHK they were all leases that CHK bought from another company.

Permalink Reply by Sonja on September 7, 2013 at 3:48am

btw I meant "happy with OUR ALOV lease!" Not with out!!!

Permalink Reply by Craig Stull on September 7, 2013 at 5:50am

Sonja,  If you have a market enhancement clause on your ALOV lease I would be concerned !!  

Permalink Reply by Booger on September 7, 2013 at 8:58am

i signed with group B and there is no market enhancement clause.........i would assume the same with group A.

it seems to be a darn good lease for the landowner.......best i have seen but i'm no laywer.

i'm hopin to hear from someone who has this lease in production (or assigned/sold).....i would think they are out there.....a whole bunch of folks signed this lease.

Permalink Reply by Sonja on September 8, 2013 at 3:22am

Booger, I was also with Group "B".  I agree that we got a good lease.  Not to be a Debbie Downer on CHK, but the fact that they won't even look at considering any new leases that look close to the ALOV lease, In my mind says, "good for Landowner, not so good for CHK!" As for the Unit modification that they brought to our neighborhood, I never saw it.... But, the landman threatened my neighbor (who was also ALOV) with the fact that they would be cut out.  They put pressure on them for about 4 weeks, all the while stating that they would be coming to my door next.  The neighbor caved, and signed!!!  Funny thing is the landman pulled a $10.00 cash bill out of his pocket to pay them for the change and left with the admendment.  No witness, no notary, and no receipt for the cash!  So when they came over and told me about what they did, I was shocked that they would just sign something like that, when we worked for months on the ALOV lease!  Funny thing.... it has been over a year, and guess what, that landman must have gotten lost because he never once contacted me about an amendment!

Permalink Reply by Kathleen on September 8, 2013 at 9:52am
Hi,

I have a good lease with a higher gross similar to AlOV, from a lawyer group that your acrage had to be preapproved to be accepted. I too was approached to admend the language for a larger unit just a few months after they paid me. I still can't figure out why they accepted my unit size to begin with.
IMO, if they are coming to your door to admend for larger units a unit is planned in the area, and they want to hold as much as possible.
CHK leased too much to drill in the timeframe allowed.

Alan,
IMO I do not feel CHK is avoiding ALOV leases. These units are almost in a straight line. I cannot image they have this plan, then see an ALOV lease and move the unit over, if that's what your implying. I could be way off on what you mean.
Once these pipelines are done we will see these wells go online and I bet there's ALOV leases involved.
Permalink Reply by Alan Bowers on September 10, 2013 at 10:47am

I was not trying to imply anything.  Only trying to provide some facts.  Watch the McKarns 8-13-3 8H well to see when it starts producing.  There will be people on that leg of the well that have an ALOV Lease (April 2011) that will be receiving royalties when it starts to produce according to documentation filed by CHK with ODNR. It also includes a lease holder that had an Anschutz lease and was a plaintiff in the suit against CHK but is not listed in the appeal of that case.

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