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Permalink Reply by 0l1a6laz7smpf on February 8, 2012 at 7:33pm

Not necessarily Billy....with that Granting clause they may indeed have a clean way out...but a lawyer would certainly be needed.

Many of the Lessors have lands without wells...they may already be in a production unit but no well or any production on their own acreage.   I know of many like that.   So if a neighboring oil company is wanting to make a better deal with a landowner that is near to their own drill rig site they should find out if the Lessors are leased with Chief as that is where most of the contracts that have this clause are in.  Of course there is more involved regarding how the bonus would be paid while waiting for the expiration of the lease for top leasing...but it would greatly benefit the Lessor to get the same more money price of today even from the existing company in matching the offer...and if they didn't then the land would move to the new oil companies domain and be unitized but with hopefully a much more informed Lessor doing a much better contract.

Personally I think that if Chesapeake made an offer to an existing lease holder with Chief they would fair better with the pricing with the Lessor and most likely could use the land soon as Chesapeake has many drill sites already placed in many of these counties.

I am speaking of a Lessor who most likely signed at lower than 2500per acre upfront and most likely a less than 16percent royalty and maybe even a net royalty...they would like to talk with the other oil company as today's pricing is much higher per acre and better %.

The rep. I spoke with at Chesapeake last year told me that Chesapeake does not want that clause on their addendums....and I see why they wouldn't.   But surely they will be glad when they can purchase and top lease these as they can add them to their production units...so this is a tool for the Lessor.

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Permalink Reply by Billy Park Whyde on February 8, 2012 at 7:38pm

I was speaking upon a parcel where a well was drilled with a possible unitized unit not the total acreage throughout the  95 or so landowners .

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Permalink Reply by 0l1a6laz7smpf on February 8, 2012 at 7:48pm

I know that you are...and a good point this may be a way out for some of the remaining acres that ARE NOT in a production unit but included still in the lease extension if extended (those without Pugh clauses). But the Lessor could still negotiate a better offer even in production according to the contract addendum and lease provisions outlined they way they are.

I am saying that this clause is in the addendum and supercedes any clause that would contradict it.   Therefore even if there is a well and there is producing revenue and even if there are lease clauses controlling the lease indefinitely because of production....the Lessor could still take an offer and submit it to the Lessee to either match it (my lease actually states 15 days for Lessee to reply) or the Lessor has the right to accept the new offer...why...because of the GENERAL clause of the addendum stressing that the addendum clauses take precedence and prevail over any other lease term clauses.

This is a great clause for the Lessor..

Billy...if an oil company has given let's say a million dollars up front (i wish) for acreage on a bonus offer and no production unit or well...then this clause works anyway.    Now if they have more investment such as a unit or well....and even producing royalties...this clause WOULD STILL WORK..as they have it written in the ADDENDUM.   Now, of course they may not like it...but it clearly is written as a PREVAILING clause over the entire lease contract.   But first the Lessor needs an offer from another oil company or investor...before it can be put into action.   15 days is all the Lessee has to notify the Lessor of its election to meet or up that offer.   ONly 15 days.

Billy...this is great news for a way to a better deal for some Lessors...I am so glad we discussed this...thank you.

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Permalink Reply by Billy Park Whyde on February 9, 2012 at 3:48am

Kicking around things of this nature is stimulating as it should be as a land owner. This website has opened the eyes of many over the belief that they had no say in a lease. In some cases it may have provided enough information for some to keep their farm and out their kids through college. I wonder if Kieth Mauck the site publisher has ever thought thought of that. 

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Permalink Reply by 0l1a6laz7smpf on February 9, 2012 at 3:56am

Hi Billy..  I have done much reading since we spoke here and I am finding that there are many types of contracts that employ the use of Right of First Refusal and some are only for the Lessee's (or buyers) benefit and clearly sometimes for the Lessor to get a better offer when their primary term is close to expiring.   And all these are written in many different ways and statements.

It appears to me that this ROFR clause was just inserted into the addendum and it wasn't worded to protect the oil company with the lease...and this present wording of this ROFR does not indicate that it could be not utilized if the Lessee has any production or well or anything established...it is quite frankly most likely an error of this contract that was left on the addendum and overlooked by the Lessee ...as it really can benefit the Lessor if they exercise the clause as the prevailing clause against any clauses that would try to restrict or compromise it.  I would think that the oil company might even give a lessor more monies just to redo the lease addendum because of that clause.

take a look at the first part of the clause:

"Right of First Refusal"? "If , at any time within the primary term of this lease or any continuation thereof, or within six months thereafter, Lessor receives any bona fide offer, acceptable to Lessor, to grant an additional lease (top lease) covering all or part of the afore described lands, Lessee shall have the continuing option, by meeting any such offer, to acquire such a lease.

why OR ANY CONTINUATION THEREOF...doesn't that sound like forever?  Yet in the same sentence it states or within six months thereof  (SIX MONTH OF WHAT..THE CONTINUATION THEREOF?...contradictory within itself.

I don't think that the oil company realized that clause is inserted in our contracts that have these clauses or they would have put some exceptions.

Billy, I started a new discussion just about this subject...how about going over to there?

http://gomarcellusshale.com/forum/topics/who-among-you-has-a-top-le...

 

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