All neighbors are pooled, CHK left us out!

Sorry if this gets too long... but we're really upset!  We own 10 acres in Fox Township in Carroll County, OH.  5 years ago we leased with CHK at $1500 per acre, can't remember the royalty percent.  The past couple of years, they drilled to our west (less then a half mile away) and didn't include us in the pool.  They have another pad planned for our neighbor to the north, and his land's lease got extended over the winter.  Our lease was up in February and when I called CHK because I hadn't seen any check or renewal, I find out they aren't extending our lease.  Some more digging, I find out the EVERY ONE of our neighbors, on ALL SIDES of us are currently collecting royalties from other CHK wells, including the guy to our north who will eventually get his own rig (they pooled that one last Fall and left us out, even though we were leased.)  We aren't included in any of them.  Since we are completely surrounded by CHK, and they are draining everything around us, it makes our small 10 acre plot of minerals worthless.  Do we have any recourse?  Should we talk to a lawyer?

I called CHK and they are going to send out a release of our minerals, which is nice, but I'm waiting for a call back from Brandon the landman, who I'm sure will have some excuse of why everyone else got in the pool except for us.  HELP everyone, what should we do?

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Permalink Reply by Robin on June 29, 2016 at 5:18pm

Thanks for your input.  I will be watching what transpires.  I can tell you that the last time I spoke with any O&G businesses, I felt like a leper that escaped from my colony.  When I mentioned that CHK had approached us, then withdrew but signed on all the surrounding plots, I was quickly dismissed and found that quite telling.

Permalink Reply by David Allen Lilly on June 29, 2016 at 11:42pm

The most important thing I have learned is how totally unpredictable this situation is.

Nobody knew in 2006 when we bought our place that any of this Utica Shale stuff was going to happen. Oxford Oil came here in maybe 2008 and signed many of my neighbors and friends for the generous sum of $10 an acre.

We rode a roller coaster to getting leased and paid, not due to title issues but due to  the unpredictability of the business because it is influenced by so many and very often quickly changing matters.

I am only offering opinions based on what I have learned and what I know. Going from nothing in the beginning I am pleased with how this has gone for us so far, at least as far as how I have handled my part.

We know the markets are depressed currently, although rising. It is my opinion that the drop in prices drastically affected the future production of oil in particular, which will lead to less supply as the worlds oil usage will rise, causing the cycle to continue. I know oil prices have never gone down without coming back up and usually they come back up with a vengeance.

Other matters may affect pricing, it is possible although I don't believe likely to occur any time soon that green and renewables will grow to the extent where they cut into the dynamic of supply/demand pricing.

It is far more likely that the Middle East is going to go to war sooner or later. Eventually ISIS will have to be confronted in a much harsher manner. I also believe that Israel will have to do something very drastic to prevent Iran from developing a nuclear weapon.

No one knows really, so I play it safe with my minerals and try to keep an open mind without fretting too much over things I cannot control and things which experience has proven to me to be likely to change rather dramatically in a short time.

Good luck, if you want to continue this conversation or start a new one I am happy to do that, I need the interaction to keep me on my toes.

Permalink Reply by James on June 30, 2016 at 2:45am

Thanks to everyone, for their help and input.  After looking at all the maps, it seems that our property is 1) so small that the other rigs could pool without needing our acreage, 2) the shape of our lot and distance away from the other rigs means we aren't being drained right now.

I applaud those fighting the big corporation and hope it turns out positive for the little guy.

With so many people people watching CHK, and all the folks at ODNR, I'm confident we're not being hosed.  It's very possible that we could be approached in the future if (when) they decide to do more drilling off the Beadnell or drill George's pad.

Permalink Reply by Chris on July 5, 2016 at 2:51am

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