Comment

Comment by Aaron Yeager on November 8, 2010 at 5:58am

Chuck, you're right it is a gamble. I was contacted less than a year ago, and I know of many places in PA that have been negotiating for years. I don't anticipate the price going down any time soon ( I hope I'm right). Obviously you've been working with an attorney, putting together your additional clauses. Do you have any recommendations for lawyers, or maybe even some warnings in that regard? Thanks again for all the info, I'll be taking your postings with me when I do go see an attorney!!!

Comment by Chuck White on November 5, 2010 at 5:14am

Aaron,
We excepted the $1000.00 per acre, we just got to the point of how much is enough, and how long do we want to wait. I know many areas in Jefferson Co. have been leased at $75.00 to $100.00 per acre and many acres still have old oil well leases that are being re-established by the previous lessee and most of those will be sub-leased to Chesapeake at some point. It is a gamble it could go up or down.
I don't have all the answers, but I hope our experience both now and in the future will be able to help others.

Comment by Aaron Yeager on November 5, 2010 at 1:34am

Chuck, I want to thank your for these postings. What was the price/per acre that you finally agreed to? I got a call yesterday from DPS Penn offering 1,000/acre but I'm holding out for a while. Your postings are EXCEEDINGLY helpful and educational. I just wanted to thank you and let you know that I really appreciate it.

Comment by Chuck White on November 4, 2010 at 11:20pm

These are the last of the Addendum item excepted by DPS Penn for Chesapeake

Consent of Assignment
Lessee shall be required to obtain consent from Lessor for any assignment of this lease, consent not to be unreasonably withheld, delayed or conditioned. Provided, however, that consent shall not be required in the event of an assignment by Lessee:

(a) to an affiliate, subsidiary, or internal partners;
(b) in consequence of a merger or amalgamation;
(c) of all or substantially all of its assets to a third party;
(d) of all or any portion of the lease to Chesapeake Appalachia, LLC or an affiliate,
subsidiary, or internal partners; or
(e) of all or any portion of the lease to Statoil USA Onshore Properties Inc. or a
affiliate, subsidiary, or internal partners.

Arbitration
Any questions concerning this lease or performance there under shall be ascertained and determined by three disinterested arbitrators, one thereof to be appointed by Lessor, one by the Lessee and third by the two so appointed as aforesaid and the award of such collective group shall be final and conclusive. Arbitration proceedings hereunder shall be conducted at the county seat or the county where the Lease is filed or the action occurred which is cause for the arbitration, or such other place as the parties to such arbitration shall all mutually agree upon. Each party will pay its own arbitrator and share costs of the third arbitrator equally.

No “Right of First Refusal”
Lessee is not granted right of first refusal to extend this lease.

Audit Clause
Lessee further grants to Lessor the right annually to examine, audit, or inspect books, records, and accounts of Lessee pertinent to the purpose of verifying the accuracy of the reports and statements furnished to Lessor, and for checking the amount of payments lawfully due the Lessor under the terms of this agreement. In exercising this right, Lessor shall give reasonable notice to Lessee of its intended audit and such audit shall be conducted during normal business hours at the office of Lessee. Such examination and audit shall be at the sole cost and expense of Lessor.

Shut-In Limit
Notwithstanding anything to the contrary herein, it is understood and agreed that this lease may not be maintained in force for any continuous period of time longer than three (3) consecutive years after the expiration of the primary term hereof solely by the provision of the shut-in royalty clause.

No Storage Rights
Notwithstanding anything herein contained to the contrary, Lessee agrees the herein described leased premises shall not be used for the purpose of gas storage as defined by the Federal Energy Regulatory Commission. Any reference to gas storage contained in this lease is hereby deleted. If Lessor wishes to enter into an agreement regarding gas storage using the leased premises with a third party, Lessor shall first give Lessee written notice of the identity of the third party, the price or the consideration for which the third party is prepared to offer, the effective date and closing date of the transaction and any other information respecting the transaction which Lessee believes would be material to the exercise of the offering. Lessor does hereby grant Lessee the first option and right to purchase the gas storage rights by
matching and tendering to the Lessor any third party’s offering within 30 days of receipt of notice from Lessor.

Pooled Production Unit Limit
Lessor grants Lessee the right to pool, unitize this leasehold with other lands whether contiguous or non contiguous to create a drilling or production unit in a total acreage not to exceed 1,920 acres. However, (I didn't like the However, but they would not remove it)Lessee may request Lessor waive this provision and increase the drilling unit to an amount equal to Lessees directional drilling requirement. Lessors consent to the increased drilling unit shall not be unreasonably withheld provided that Lessee shall provide a proposed drilling plat which provides an explanation for the increased drilling acreage requirement.

Special Warranty Title
It is understood that Lessor warrants title to said property only with respect that the title is good to the best of Lessor’s knowledge and Lessee agrees that no claims will be made against Lessor pertaining to warranty of title.


Location Approval
Provided that Lessor is the current surface owner of the affected lands at the time of Lessee’s surface operations, Lessee and Lessor to mutually agree on all drill site, pipeline and access road locations, consent not to be unreasonably withheld, delayed or conditioned by Lessor.


Facilities
Lessee is not granted any right to construct any gas treatment or processing facility on the leased premises, including but not limited to separators, dehydrators and compressors, without Lessor's separate written consent, such consent not to be unreasonably withheld, conditioned, or delayed.

Comment by Chuck White on November 2, 2010 at 11:13pm

Disposal Wells
Lessee is not granted any right whatsoever to use the Leasehold, or any portion thereof, for construction
and/ or operation of any disposal well, injection well, or the construction and/ or operation of water
disposal facilities.

Ad Valorem Taxes Lessee agrees to pay a proportionate share of any increase in ad valorem taxes assessed against the leased
premises, which is based upon the value of oil and gas production from, or reserves under, the leased
premises.

Comment by Bill Meyer on November 2, 2010 at 2:56pm

interested in a group price on your land . a meeting was held tonight at Edeson High School if you are interested call ATT. Trey Peterson 740-282-1911he will be happy to talk with you about your lease and what the group might do to help you

Comment by Chuck White on October 30, 2010 at 11:30pm

Addendum item excepted by DPS Penn for Chesapeake

Water Usage
Lessee agrees not to use any water from Lessor's water wells, ponds, springs, or creeks without Lessor's written consent. Notwithstanding anything to the contrary herein, Lessee is not granted any right to drill any water well on the leased premises to obtain water for injection or use in drilling operations without written consent from Lessor.

Comment by Chuck White on October 30, 2010 at 11:27pm

Addendum item excepted by DPS Penn for Chesapeake

Hold Harmless Lessee shall indemnify and hold Lessor harmless from any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or relating to Lessee's operations under the terms of this Lease, including, but not limited to, environmental issues, claims for injury to or death of any persons, or damage, loss or destruction of any property, real or personal, under any theory of tort, contract, or strict liability. Lessee further covenants and agrees to defend any suits brought
against Lessor on any claims, and to pay any judgment against Lessor resulting from any suit or suits, together with all costs and expenses relating to any claims, including attorney's fees, arising from Lessees operations under the terms of this lease. Lessor, if it so elects, shall have the right to participate, at its sole expense, in its defense in any suit or suits in which it may be a party, without relieving Lessee of the obligation to defend Lessor. The terms hereof do survive the expiration or surrender of this lease and/or the completion of operations.

Comment by Chuck White on October 27, 2010 at 11:25am

Below is the is the email I sent to our landman this morning and today he replied, that the Company would except the 45 day up front payment but would not alter anything else. I told him I would make a decision by the first of November, either to wait or sign up.


Good Morning,

Yesterday you said your company would not agree to the 30 day payment schedule but would agree to the 45 day schedule, so I changed item #1 to reflect that information.

You also said after talking to your Division Manager you couldn't except Item # 2 but according to your calculations, We would most likely be receiving royalty payments around $1,100.00 per month by the time the 5 year primary lease is up.

You later called back and said you miss-calculated and the royalties would most likely be around $3,000.00 per month.

The calculations are still based on the pool of 1920 acres, but as I said, “we are still concerned with the "However" in the clause“.

Our main concern is, "no matter how small the royalty payments, our property could be tied up for many years".

According to the lease even after the lease is surrendered, the drilling company will still have easement rights that could go on for ever.

I have an inspection this morning and should be able to give you a call around 1:00 PM. so we can discuss some of these items.

Would it be possible to add the edited items below to EXHIBIT "A"?

(edit #1). If the lessor does not receive full upfront payment of $$$$$$.00 within 45 days of signing this lease is null, void, and no longer in effect.

(edit #2. At the end of the 5 year primary term, if the lessor is not receiving monetary compensation of at least $500.00 per month the lessee will pay the lessor the difference on the anniversary date yearly for as long as the lease is in effect, this compensation will also continue if the lease is surrendered and if any easement rights are granted to the lessee for as long as those easement rights are in effect.

Thank You,
Chuck White

Comment by Bill Meyer on October 27, 2010 at 4:57am

there is a group meeting in Jeff. Co. I am not sure when the next meeting will be held. I would not sign with anyone until i attended some of these meetings and had a GOOD attorney. A group in PA. signed for $5750 per acre so don't sell too low.

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