Aamendment and Ratification of Lease

i need some answers! today, i was contacted by a chesapeake landman about an amendment-ratification of a lease on a 5 ac lot.  original lease is with mb operating co. dated  1984   .we are receiving royalties from a well on adjoining property.  amendment states that for the sum of $10.00  lessor and lessee for their mutual benefit agree to modify drilling units size . the existing unit size is aprox. 69 ac.it also mentions that they can pool or unitize.  what is best for us  or are there other things we should request. thanks for any info you may have

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Permalink Reply by Jim Lawrence on May 31, 2012 at 10:31am

I haven't heard or seen Chesapeake amend the royalty that is stated in the original lease, usually 1/8 which is 12.5%.  This still will be above $1000 per month on 12 acres.  Could it be better? Always.  You can look at it 2 ways.  1) Drilling is happening and you will receive royalties unlike the royalties you receive for the vertical well.  2) You can feel you deserve more, and probably do, and wait it out and possibly be passed by.   If the shale formation was not here you would continue to be status quo.  

I have seen several of the companies move their proposed well unit to either exclude a reluctant land owner or move it to include an enthusiastic land owner.

Search the royalty calculators to get an idea on what your royalties will be.  You will need some info from your landman first.  Size of unit, how much of your property will be in unit, etc.  They should be able to give you that.  Ive been told the average is 3mmcf per well is average.

You and the vast majority are held by old producing leases.  You get a piece of the cake just not as much as your eyes feel your stomach can handle.

Permalink Reply by Amy Hurd Reiter on May 31, 2012 at 1:05pm

Thank you very helpful!

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