Replies to This Discussion

Permalink Reply by Les Bamburg on September 5, 2010 at 10:48

Waltcop, you are right that the royalty owner will receive payments based on the lessee's gas sales.

In my opinion more federal government intervention is not the solution. The solution lies in better written mineral lease agreements. Maybe state goverments and royalty owner groups would be better positioned to force improvements since it must dovetail with state mineral codes. Second, I believe proper compliance with existing lease provisions is the root of most current uncertainty. Additional information and communication may help address those concerns.

Permalink Reply by Cara Leggett on September 5, 2010 at 11:13

Les B,
I think we will be approached if all is approved in our area on Sept. 28. Petrohawk called once before and backed out on an appointment with us; they said at that time that they might call again later. So, how does the average consumer obtain that 'better written mineral lease agreement'? I have been reading on GOHANYNESVILLESHALE off and on for over a year now. I am aware that there are many different things that should be included in the lease to protect our interests. Does it take a lawyer to get it right? And if it does, how do I find the right lawyer? Can you give me some advice?

Permalink Reply by Henry on September 5, 2010 at 13:45

Cara,
It absolutely takes a good Oil and Gas lawyer. And make sure you make your lawyer aware of the low prices Chesapeake is paying everyone, even those who have clauses in their lease to prevent cheapo sales to affiliates. You want iron-clad wording in your lease.

Permalink Reply by Cara Leggett on September 5, 2010 at 15:09

Thanks for the advice, Henry. I will start shopping for an Oil and Gas lawyer. I want to be prepared before an offer is made. From what I have read here, they want to walk in and get you to sign on the first visit. Our 5 acres won't garner a fortune when it is time to talk about leases and royalties, but we do deserve to receive what is rightfully ours.

Permalink Reply by Les Bamburg on September 5, 2010 at 17:41

Cara, I would just suggest you educate yourself on the issues and check any langauge proposed by your lawyer to verify it meets your needs.

Permalink Reply by Les Bamburg on September 5, 2010 at 17:15

Cara, I think it means including very clear language to explain how the natural gas price will be determined and what type charges are allowable deductions. Personally I believe lawyers are of little use in developing the provisions as most do not understand how natural gas is marketed or how the midstream business works.

Permalink Reply by Cara Leggett on September 6, 2010 at 3:12

Les B,
I appreciate your advice, also. Now, here is another question. Are we less likely to be taken for a ride just because we do have a lawyer, or are the O&G companies so much better informed that they assume they can do whatever they want and still come out on top due to 'deep pockets'? Our take will be small (only 5 acres), and once the government gets its share and we pay for a lawyer, it seems like it is all more trouble than it is worth. As songwriter Zac Brown wrote, "There's no dollar sign on peace of mind, this I've come to know." ;)

Permalink Reply by Skip Peel - Mineral Consultant on September 6, 2010 at 3:24

Cara, you don't need an attorney, you need an experienced O&G attorney. Big difference. For five acres, I wouldn't necessarily hire one to negotiate the lease terms but I'd sure get some advise and then get the attorney to review the lease agreement before I signed it.

Permalink Reply by Cara Leggett on September 6, 2010 at 4:17

Skip,
I am sorry to have left out the important 'O&G' on the typing of attorney. I do understand the difference based on previous posts. However, I sincerely appreciate your reminder. I do have a friends who are knowledgeable about these matters--they own lots of properties and their mineral rights have been leased by several different O&G companies. They haven't offered a copy of their standard lease agreement for my use, but I do believe they will give me advice about what needs to be added to a lease before I sign one. Once that happens, I will have an O&G attorney take a look.

Permalink Reply by Les Bamburg on September 6, 2010 at 3:34

Cara, It probably doesn't hurt to have a lawyer's assistance but I would not rely solely on them. Generally O&G companies are not trying to get away with anything (there may be one or two exceptions). It is more a matter of parties (lessor and lessee) not having a clear understanding or agreement on how they want royalty values calculated. Both sides rely too much on the standard lease agreement language which is confusing and out of date with current times. Oh, by the way, that language has probably been reviewed on numerous occasions by lawyers and it is still flawed. That is the reason there have been lawsuits in almost every producing state and each state has a different interpretation.

I will note that O&G companies even end up in disputes with each other over confusing contract language.

Permalink Reply by Cara Leggett on September 6, 2010 at 4:30

Les B,
Between you and Skip and Henry, I have the beginning of a plan that will aid in my pursuit of an equitable deal for both myself and the O&G company when the time comes to sign an agreement. I am getting good advice from reliable people who have been down this road and know both sides of the story. I have written down many terms that appeared in questions and in responses to those questions on this site. I will do further independent research to follow up. I will hire an O&G attorney to read the agreement before I sign. The older I get, the more I hate to feel like I've been suckered. Fool me once shame on you; fool me twice, shame on me. Many thanks to those who share their knowledge here!!! While there are always folks who seek to take advantage, the evidence here is that personal integrity and generosity of spirit is still alive and well in the land that I love.

Permalink Reply by Henry on September 6, 2010 at 4:49

Cara,
When you have your O&G attorney take a look, show him the data I've collected. Tell him that some of those Chesapeake landowners who are getting bad prices have clauses in their leases that prohibit cheapo sales to affiliates. Tell him you are suspicious that Chesapeake will try to hose you too. Ask him for some iron-clad language that is backed up by strong penalties (e.g., double damages and all attorney fees) if you have to go to court to enforce that clause.

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