An interesting article on Chesapeake Energy lease practices

I found this recent article in the Pittsburgh Post-Gazette to be very relevant and informative, possibly others will too.

http://www.post-gazette.com/pg/11345/1196135-503.stm

 

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Permalink Reply by Kathleen on December 11, 2011 at 1:39pm

 

I am new to this board.  We received contact from a landman who evidently is the broker for Cheasapeake on property we knew nothing about.  It turns out we are heirs since property sold long ago retained mineral rights.  The landman is trying to cure the title among many heirs.  We do not have a lease yet - it gets complicated because supposedly we were to sign a "modification" to a very old lease.  Now, suddenly, we learned there will be a "new" lease.  We don't know what to do and live in another state.  With this latest news, it seems we have no control over anything...and may not even get paid.  Any suggestions would be appreciated.  We are aware of the W.V.SOROS org.

 

  

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 11, 2011 at 5:02pm

Hi Kathleen and welcome to gomarcellusshale!

Pls read the discussion at this link to help you and read as much as you can before you even use an attorney so if you utilize an attorney you would know if he/she knows what they are doing...look for a gas/oil attorney...it is a tough deal to work thru especially if you are not even in the same state.

http://gomarcellusshale.com/forum/topics/look-at-the-clauses-not-just

 

 

Permalink Reply by Robert A. Young on December 11, 2011 at 2:12pm

Great article....Thanks

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 11, 2011 at 5:23pm

Bravo...Mike....thank you so very much for posting this.   It is about time that some in the media start taking notice of what these oil companies have done to innocent U.S. citizens who would have welcomed the land agent in for coffee and local chat....now they find they were lied to verbally and given old contracts with one sided clauses for just what that article states.    I think everyone here should read that article at the link Mike provided as it states the entire story appropriately and well said.

Finally someone is taking notice.   I am sure that if all the people could actually find a way to get together they would most likely sue them for their very poor business tactics....yet it isn't just Chesapeake, it was also Chief, and many others ...they copied each other' contract clauses and used them where they could find an easy take.

Permalink Reply by jb379 on December 12, 2011 at 2:28am

And when Chesapeake (or other) plunks a monster well on my property am I going to be crying foul when the fat royalty checks start rolling in?  It is a business and business decisions are made.  It is up to each of us landowners to take accountability, do our homework, and if we so desire to consult with counsel prior to making a choice that we can live with.  Until the right offer rolls across my kitchen table, I will continue to hold out.  But rest assured, when I feel the right offer for me comes in, my family will likely sign and not look back (and certainly not wait for any little "situation" that may arise to try to get out of what we sign).  ACCOUNTABILITY sure seems to falling to the waist side in this country any more, eh?

Permalink Reply by Mike Stevens on December 12, 2011 at 3:32am

I agree that we must all be diligent and accountable for our own actions. This holds true for both the landowner and the drilling company. When did it become ok to compromise honesty and integrity just for the sake of an increased bottom line? Business is business but there is also a right and a wrong way to approach it. 

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 12, 2011 at 7:17am

Jb...I hope that you will have the experience via knowledge and professional help to put together a good lease.   I was upset because my dad was near dying (was given just so much time to live) and the oil company lease reps knew this...though I helped it was a difficult task over several months as dad did do his best to do the contract lease ....it was still new to him and we didn't have full use of a computer nor knew that there were specialized people in gas/oil leasing....still the rep lied to us.  When we asked about the $5 clause on shut in and on delay ...we were told not to worry that wouldn't be an issue...when we didn't really understand the unitizing clause we were told don't worry , you can just re-negotiate at the end of five years if you don't understand unless there is a well on the property producing.  Well dad died, the hiers are more than one...the royalty clause is 'gross' but with a market enhancement clause with Lessor paying all expenses for enhancement (if you know what that is), and there is no well on the property as yet, and they included the installment of feeder lines in the contract and any other structures, and used just one third of the property for a unit (so far) but the clause isn't a pugh clause.  So knowing that if they use the shut-in royalty clause even though the well isn't on our property we can look forward to splitting $5. per year per acre while everyone that had the capability is getting much more.  You see it isn't about today's leasing cause the pioneers like my dad started crying out when they saw they were being cheated..so you all today have much more to say about it then the earlier ones that leased...though the contracts may not have changed and the landpeople are starting to use better ethics in doing these leases cause more and more are finding out ( of course not all are unethical but some are too busy to spend time with an old man who is smiling and laughing with them via telephone while they really did cheat him of a good contract).  He was proud of himself for doing the lease contract...it was one of his final achievements you might say...but he didn't know that the rep had misconstrued much to us and we didn't know that there were people out there that would take advantage of a situation when my dad was near dying and they knew that I had my hands full in trying to understand oil/gas leasing over the telephone.

Permalink Reply by Jim Litwinowicz on December 12, 2011 at 3:26am

This is an interesting article, while poorly written,  that should have been written several years ago so that people could see the problems with leasing. The leases that people signed are so biased towards the O&G's that they basically have free reign to do whatever they want, including passing on production cost until the landowner gets very little in return.

The headline is completely wrong.... these are not "new leases" but the same old balderdash. And this didn't all start when CHK pulled into town. Many companies have been exploiting the loopholes and trapdoors in these leases for years. Companies have always swapped or "assigned" leases. And no one faces new terms because of their lease was assigned......the lease in still the same. Unitization has always been an industry practice, it is not a new development. And loopholes always allowed for multiple pipelines, compressor stations or other intrusive activities.

The local media has done a terrible job of covering this industry. They should have had articles on the pitfalls of leasing starting on '06 when the news first broke about the Marcellus. They could have helped a lot of people, Perhaps that is why they wrote this in such a misleading fashion.  Maybe they are trying to paint these issues as new so as to cover up their own malfeasance.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on December 12, 2011 at 7:27am

Jim, appreciate your input here.   Yet when you think about it...does the local media really have the responsibility?   They were covering other stories and the leasing was going on with most people very happy with some good size bonuses up front and not aware of some getting so much less.  But when the communities starting learning that the trucking and methods would possibly tear up roads, make more noise, and pollute..possibly water and other natural resources....then the media got involved.

Yet you are right..they should have been there at the beginning....yet they were but they were reporting their discovery of a 'NG gold rush" and the monies that the oil companies were getting by swapping and sales of leases...that was their story then.   Now they are discovering (possibly because some of them learned by their own leases) that the oil companies didn't go out there handing out upfront money without knowing for sure that they could get it back.   For many the upfront money was more than their own property was worth market wise...yet when they discover that it was only perhaps one third if that of what the oil company was making in flipping the lease the first year...they felt duped and now have to contend with how much will they get if any when the drilling starts (if they even drill).   Now let's be happy that the media will start taking notice and try to speak out for many of the Lessors in demanding better ethics and morals from the oil companies.   This is not a type of sale/lease that will go away...these are people's homesteads and businesses on these lands.

Permalink Reply by Jim Litwinowicz on December 12, 2011 at 9:42am

VG; the problem with the media is two fold. One they allowed themselves to be controlled by the no-fracing crowd, headlining any and all complaints that group could come up with. Since most media types are liberal, they buy in to what the antis are saying. 

The second is that newspapers, TV stations, and other media are businesses that run the headlines that get papers sold or shows watched.  Driving up circulation or sales equals better advertising dollars so they make more money. Thats why they put in headlines like this one that are not accurate to what the body of the article states.

They covered the stuff that sells papers.  Writing about leasing is too complicated and boring for most people to buy the paper covering those issues. The papers don't really care about people being taken advantage of, they just want their numbers up.

Permalink Reply by Jack Straw on December 12, 2011 at 2:46pm

Anyone considering leasing should first have "Caveat Emptor" tatooed on the back of their right hand (on the back of left hand if left-handed).

In this manner, they will see the tatoo every time they reach for a pen.

 

JS

 

Permalink Reply by craig on December 12, 2011 at 4:31pm

I'm just glad that this subject is being brought to the forefront, regardless of anything else. 

From what is happening to a fair number of folks in Beaver County, Pa I suspect you will be seeing more articles on the subject. Life maybe getting abit uglier for CHK in the future, which they have brought upon themselves. They probably don't care though because of the greed factor.

I've been a staunch and vocal local supporter of drilling and fracking for over 2 years. I believed in CHK. But CHK has managed to squander this asset.  I am now wanting to make life as miserable for CHK as possible, until they clean up their dirty unprofessional business tactics. Which will probably never happen. 

Simply put, I interact with many customers everyday in this area. I will be telling all that come to ask my opinion, exactly what to do and what not to do....and it won't be what CHK wants me to tell them.

It is the least I can do.  I am not a happy camper.

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