Opinions on Lease Offer

I own 40 Acres in Sabine Parish S1 T9 R11. My lease has run out and Chesapeake has staked a location in my section. I need some educated opinions on what this land would be worth before I start negotiations.

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Permalink Reply by Skip Peel - Mineral Consultant on July 25, 2010 at 15:53
Clay, be patient and wait until the well is spud. Then we can discuss lease terms.
Permalink Reply by Clay Henry on July 25, 2010 at 15:56
The one thing I forgot to mention is that it is the only unleased acreage in the section.
Permalink Reply by Henry on July 25, 2010 at 23:55
Clay,
While you try to figure out what a lease is worth, give as much thought to the extra stipulations you want in your new lease, beyond what Chesapeake puts in the standard lease. You have an opportunity to get it right. You probably know a lot more now, than you did 3 years ago. As a minimum, I would ask for:

1. Cost-free royalties
2. explicit rules on the rights of Chesapeake to use the surface (or no surface use at all)
3. Vertical pugh clause
4. Lessee must notify you any time the lease is sold/transferred/assigned.
5. Reasonable shut-in payments

If you have 40 acres, it is well worth several hundred dollars to have a lawyer draft up a good Exhibit A that protects you.
Permalink Reply by Shayne S on July 26, 2010 at 7:16
what would be a reasonable shut in payment per acre??
Permalink Reply by The_Baron on July 26, 2010 at 4:43
First, are you sure your lease has expired?

It is possible, depending on your lease that your lease is held by operations. Somtimes location building can be construed as operations and is somtimes sufficient to hold a lease.

You may want to request that a release be filed in order to be sure that you are no longer covered by the lease.
Permalink Reply by Clay Henry on July 26, 2010 at 6:10
Thanks for the opinions. I leased 5 years ago a 3 year lease with a 2 year extension. This lease was up in May of this year. Looking at sonris I have not found where they have a well permitted, but they have the location staked and are in the process of removing the timber from the site.
Permalink Reply by Aubrey C. Sanders, Jr. on July 26, 2010 at 6:59
It may be very significant to know who is harvesting the timber. Could be land owner. This may or may not be a part of location building and this may be crucial. Does appear to me that your land MAY be unleased which puts you in good position.
Permalink Reply by The_Baron on July 26, 2010 at 8:04
In any case, it is important to watch all events associated with the new well. I suggest keeping a handwritten journal, and take pictures. If possible have your camera date stamp the photos. Also, note any periods of inativity as well.
Permalink Reply by The_Baron on July 26, 2010 at 10:11
not necessarily, We were involved in a lease dispute where the previous lease was still valid and held by the operations of location building, drilling of water well, etc... We were not able to show any gaps in activity from the commencement of operations to spud.

As i said, it would depend on the wording in the lease.
Permalink Reply by Henry on July 26, 2010 at 12:08
Note -- Interruption of prescription does not appear to be the issue here. The issue is what Clay Henry's lease says will keep the lease in force.
Permalink Reply by The_Baron on July 26, 2010 at 8:04
It would be entertaining to see CHK screw up over a typo.
Permalink Reply by Henry on July 26, 2010 at 13:46
It would make my day.

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