First royalty check has me baffled

So most of you know me from the site and some know me in person. I have been an active participant in these forums on this site for more than 2 years, probably more.

I have read everything I can read about the entire industry, not just on this site but up and down the internet and print publications.

Some of you know that I signed what I was sure is a very good lease, with Antero. Antero traded our acreage to Eclipse who traded 12.5 acres to Chesapeake who put us in the McClain unit here in eastern Guernsey county Ohio.

  • Production began in May, we should have started receiving oil royalties in July, I should have called on it but didn't because it didn't matter to me so much when we got the money as it did that we got what was right.

Virtually everything I read about Chesapeake was extremely negative and I was working on auditing and legal representation for what I considered would be the inevitable litigation.

Boy was I wrong.

My statement is two pages, front only. It shows production, pricing, unit gross and lease gross. There is a deduction column which shows only zero's, as in no deductions for anything.

We received $744 an acre per month.

I am totally relieved that at least at this point things appear to be very fair and proper. I have spoken with other landowners on the same matter who are in my unit, they report the same satisfaction. One landowner told me the production figures match the states figures found on the ODNR web site and the other tells me that his royalty is within $5 an acre of mine.

I am still going to go to a professional for help in verifying that there isn't anything I am overlooking, I admit that I don't know what I don't know and it could adversely affect me.

I also suppose that the figures could be fudged from the actual as I am told the state doesn't verify the numbers a producer reports, however that scenario, in my opinion, would require a conspiracy with too many players to risk someone becoming upset and spilling the beans.

I have to say and gladly do that I was incorrect in my guess as to how we would be badly mistreated by our producer but you get that way when everyone is singing the same tune. I even had an attorney assure me that Chesapeake would abuse me in every way possible and there would be no realistic remedy for us to get it right from the producer.

I sincerely hope that this is a harbinger of better landowner/producer relations as it pertains to royalty payments.

Please do not feel that I am trying to hurt anyone who has had a different experience, I am only trying to share an honest assessment of our experience.

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Replies to This Discussion

Permalink Reply by Rick S. on October 5, 2016 at 6:23am

Your original lease was with Antero, I have several with them and they all state "cost free royalties etc."no matter how often the lease was transferred or who drills they all have to abide by the original lease, in this case Antero.

Permalink Reply by lance on October 5, 2016 at 9:31am

It is definitely nice to hear that the O/G company is being land owner friendly.

Permalink Reply by bo boboski on October 5, 2016 at 9:34am

Yes David, the fact that you originally signed with Antero, was maybe your best decision. or maybe you didn't have a choice at the time,they may have been the only ones interested. But nonetheless, that's where you hit the jackpot.I have been like you, watching this site and many others from 2010 until now, learning all I can, and have never heard any complaints about Antero. happy for you. But you still better be watching ,you may still be getting shafted be the driller in some way or another. They have their sneaky ways,you know.

Permalink Reply by lance on October 5, 2016 at 9:48am

Hi Bo, do you know anything about Ascent Resources extending any leases. The Halo guy contacted me 6 or 7 times prior to my 30 day window for payment of my bonus money trying to get me to take 1000 per acre for up to 10 years and sign off on some amendments to my original agreement with Shell. I refused and he said I would be released so, OK, where's my release? Should I get it by the expiration date which is the 20th of this month. 

Permalink Reply by Guernsey 4Life on October 5, 2016 at 10:00am

Don't expect a release before the lease expiration.  What incentive do they have to do that?  They may send you one after the expiration, or you may have to get after them for it.  Or maybe they will surprise you and renew under the original terms.

Permalink Reply by bo boboski on October 5, 2016 at 12:46pm

Lance, I'd wait, you may be surprised and get a renewal check to extend your original lease another 5 years.  NC Man, waited em out and got a check just before his expired. The Eggelson wells are the top oil producers in the state,and if they drill wells on that pad north/nw. that should include you?.

Permalink Reply by lance on October 5, 2016 at 2:38pm

Thanks Bo for the insight, yes I think you're right about the Eggelson pad. And also the one on County Home road just a little S.W. of me. And now they are allowed to go under the Interstates with the laterals.... Somethin good is getting ready to happen.... :)

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on October 5, 2016 at 2:01pm

Did you ask for a Release Lance? Domestic O&G companies traditionally don't act on an expired lease unless you are familiar with your lease and ask for the release.

Remember that clause in almost every O&G lease: "If We Don't follow the Lease, you the landowner must tell us what we have failed to follow and give us 45 days to correct the error. Certified Mail, Return Receipt Required".

Domestic O&G Companies traditionally have ignored leases, the only contract in the US that is signed by a company with no intent of following the contract, and so the "You Must Tell Us" Clause exists. Some Farmers over the past 100 years couldn't read even if they could find their lease.

Permalink Reply by lance on October 5, 2016 at 2:43pm

Hi Ron, I did send an email to Ascent Resources requesting a release but the email got sent back to my inbox unanswered ....3 times

Permalink Reply by Finnbear on October 5, 2016 at 3:41pm

Email? You're joking, right? You obviously weren't serious about what you wanted from Ascent.

Send a LETTER, on paper, and use Registered Mail to send it.

Permalink Reply by David Allen Lilly on October 5, 2016 at 10:41am

yes, we are 20% gross with no deductions and by all appearances Chesapeake has respected our lease terms.

Permalink Reply by Finnbear on October 5, 2016 at 3:46pm

And this is why a well-written lease is of the utmost importance to the mineral holder. No matter who ends up with that lease, they are bound by its terms. The better it is written, the less likely they are to try and skirt its terms. It seems you did your homework and it has paid off.

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