Replies to This Discussion

Permalink Reply by Anne-Marie Anderson on January 15, 2012 at 1:53pm

Why do you feel like you were robbed?  If the companies would have picked up and left after you were paid, you would have looked like a genius for taking their money.  You can't count the money you never had.  I signed and received less than those around me, but I know the money to be made is in the royalties.

Permalink Reply by steve keller on January 15, 2012 at 2:44pm

joe ,doesn't sound like companies are going to pack-up and leave .I keep hearing about all the royalties  but like you,think I should get the best deal for my family. after dealing with these oil companies i'm sure they are not looking out for my best intrest.

Permalink Reply by Finnbear on January 17, 2012 at 5:01am

If the play turns out to be profitable, they will eventually come back to you to renegotiate so they can develop the leasehold.  They may be playing hardball now but as you get toward the end of the primary term, they will be more likely to negotiate so they don't lose what they obtained so cheaply. 5 years goes quickly and the oil and gas will still be there. If they let the lease expire, you will be in a position to negotiate with any oil and gas company interested in the area and then you can move forward with the knowledge you have today that you didn't have in 2009 and 2010 when you signed.

Permalink Reply by David Mohn on January 15, 2012 at 2:34pm

Another thing to consider is that if you are in a larger unit, there is more of a chance that more wells will be drilling in time.  Yes, they put together larger units to hold that land I agree, however, tey will be back to drill more.  I have been told I am in a 1200 acre unit and in time they plan to drill 6 wells. 

Permalink Reply by Anne-Marie Anderson on January 16, 2012 at 12:22pm

No I am not receiving royalties as of yet.  I wish they would start drilling today.  So, if you sign the amendment do you think they will drill within 6 months when the lease expires?  Also, just curious here, why did you lease at $25 per acre and not wait as others have?  Was it a good deal then or something else?  My husband bought a 1965 mustang for $10,000 but they were only $2,500 when new.  I guess timing is everything and you might have time on your side.  I can't see a well going in in 6 months time.

Permalink Reply by Pat Grischow on January 27, 2012 at 12:38pm

The leasing activities by these companies are very confusing!  The previous owners of our property signed a lease around 1966 that is now with Enervest.  The previous owners still receive the royalties from the well that was drilled and is still operating on our property.  We have not been contacted by any one about the lease of our property.  Chesapeake has drilled a horizontal well just over the hill from us that extends to the SE away from our property.  We are not included in the tract.  We contacted Enervest and they told us if the well would come our way, we as the property owners would get royalties.  But we have no agreement with them or Chesapeake that states that fact.  Are we eligible for the royalties just because they say so?  We really have no idea if we should do anything to obtain this in writing.  If the well comes our way, does Chesapeake or Enervest have to contact us if they want to include our land in the new tract?  Is there an online resource available that can explain a property owners' rights?  Any advice would be appreciated! 

Permalink Reply by Finnbear on January 27, 2012 at 1:56pm

   We contacted Enervest and they told us if the well would come our way, we as the property owners would get royalties. 

   In a generic sense, they would be correct in what they told you, and they would assume you own the mineral rights to the property. In light of what you mentioned concerning who is receiving royalties from the existing well, I don't believe you own those rights. I hate to be the bearer of bad news but that is the situation you have described. The previous owner probably retained the mineral/oil&gas rights when they sold the land to you. That would explain why they are still receiving the royalty from the old well. They would be considered the lessor party in that old lease. The oil and gas co. (Enervest) is the lessee in that transaction. No oil and gas company (lessee) would really have any reason to contact you, they would contact the mineral/oil&gas rights owner (lessor) about any leasing issues that may arise. Because there is an existing, producing well, the property is still under the old lease and is considered HBP or Held By Production and will remain under that old lease as long as the existing well is in production. In this case, the oil and gas company probably doesn’t need to contact anyone about leasing because they already hold the lease under the 1966 agreement.

Do you have a copy of your property deed?

What does it say about minerals, oil and gas, etc?

When you purchased the property, did you inquire as to who owns the mineral/oil and gas rights?

Permalink Reply by Pat Grischow on January 30, 2012 at 10:55am

We did talk about the existing well and who would own the mineral rights when we bought the property.  The purchase agreement says that "All mineral rights and right to drill or store resulting in new wells on property pass to the buyer."  The exception was the one well operating on the property.  The deed says that the previous owners "reserve... all right, title and interest in and to an oil well now producing on the granted premises, including rights of royalties or interests in the tangible oil drilling equipment located thereon."

Is that enough to protect our rights to royalties on future wells?

Permalink Reply by Amy Hurd Reiter on May 29, 2012 at 2:59pm

Has anyone actually received a per acre bonus for a lease amendment? with Chesapeak? We own our mineral right but not the gas/oil rights for our 30 acres. We had a mtg. with Chesapeak today was we were given a very basic lease/amendment document to look over. How do we know what to ask for? a per acre bonus and what percentage of royalities. This was not even discussed today. We would only be 12 acres of a 1260 acres group? Any clarification would be great on this matter.

Permalink Reply by Jim Lawrence on May 30, 2012 at 1:35pm

Short answer is no.  If it is an amendment there is not much to ask for with chesapeake.  If you look at the amendment they want to change the pooling or maximum unit allowed.  Your existing lease is for a smaller unit size then needed for horizontal drilling.   The 1280 acre would be the maximum size of unit.  Ask your landman what the size of the unit is.  

If you are talking about a lease then that is a different story.  A lease is where your property is not hbp (held by production, an operating well that you are part of).  12 acres will still bring a nice monthly royalty check.

Permalink Reply by Jim Lawrence on May 30, 2012 at 1:27pm

Steve, from everything I have seen and done, Chesapeake is not offering anything monetarily other than the $10. They want to modify the pooling clause to form a bigger (horizontal) unit.  Your lease from 1984 probably allows a maximum of 160 ac.  This is fine for vertical wells but horizontal wells need have a larger unitization.  I believe Chesapeake is maxing it at 1280 acres but all the wells they have drilled so far are smaller.

Amending the old lease is a personal choice.  There are several factors to consider. 1. will you be in a unit?  2. If you don't sign the ratification will you be left out of the unit? (proposed wells have been moved to avoid parcels for several reasons).  3. what is the time frame.  

Chesapeake has not paid anyone that has an existing lease.  There are rumors but I have spoken to a couple of mineral owners that supposedly were paid to open their lease.  A couple were but it was not Chesapeake and I don't think they will now as it will create major discourse. 

Permalink Reply by Amy Hurd Reiter on May 30, 2012 at 3:25pm

Thank you Jim that is very helpful. Our land is HBP with a very old lease but still producing. Any idea what percentage we should be asking for?

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