Replies to This Discussion

Permalink Reply by Two Dogs, Pirate on February 9, 2009 at 6:20

Hey Baron, the owner of the title plant wanted $10,000 a quarter section to look at his records. All I needed to do was a five year update.

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Permalink Reply by Todd M. Baker on February 8, 2009 at 6:41

Chatty:
In Arkansas, unleased mineral owners are afforded the protection of getting a "fair" deal through a process called integration via the Arkansas Oil & Gas Comission. This holds true for other leasehold owners as well. These owners are given notice about a hearing on the merits of the unit well and the offers that have been made. The Commission takes testimony from the party that wants to drill the well as to the prices per acre and royalty that have been paid in the section of land being pooled. The unleased mineral owner is then given a period of time to make an election as to what terms they desire to be subject to. If they don't make an election within the time frame prescribed, generally 15 days from the date of an order issued in the cause, the commission deems the unleased mineral owner or non-consenting leasehold owner to be bound by specific terms of the order issued. During this 15 day period you can solicit other offers to see if you can better yourself. So in that respect, yes "they have to let me". You may want a 1/4th royalty, but if that was not given to any other owners in your particular unit, they don't have to offer it. If your interest becomes part of an intergration cause, just be sure you read everything that is sent to you from the Ark. O/G Commission and you act accordingly. You will be OK.

TMB

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Permalink Reply by Rod B. on February 8, 2009 at 4:08

It's in section 26 11N 15W.

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Permalink Reply by Greedy Landowner on February 8, 2009 at 8:42

According to sonris, blackstone 26 was permitted in your section on Jan 16th so the well is definately on the way. It is surprising that you did not get a copy of the application?

http://dnr.louisiana.gov/CONS/CONSEREN/hearings/2009/03MAR/09-292ap...

Almost 3 years ago there was a big leasing project in that area (for like $300 per acre), those leases will be expiring soon so they are drilling like crazy. I'm aware of this because I have land close to yours, and had the same exact offer which I incidentally rejected.

Everybody has to make their own decision on leasing, and there are factors which are private to you and your brothers which influence which way you go. Everybody has a different financial situation. I would not let her threat of force pooling be an issue in deciding to lease "right now". The well is going in with or without your lease. What I would do is do everything that I can to get educated on it and make a decision that is based on what is best for you and your family. Once you lease, that is it. Good luck and hopefully you will get a really good well.

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Permalink Reply by Rod B. on February 9, 2009 at 7:39

Yes I got that in the mail last Thursday. One of my brothers wants to go as interest owner in this deal. Is that a good idea?

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Permalink Reply by Greedy Landowner on February 9, 2009 at 9:33

Well its a yes and no kind of answer, it all depends on your individual situation. It has the potential financially to be much better for you to not lease at this point. If you don't lease you aren't going to hold up drilling as the well is already permitted. You just have to be mindful of the stories out there about how rotten interest owners get treated by the oil and gas companies. I have found that most of those stories either go unverified or are related by those who worked in the small operations around here before this thing exploded. So the relevant question becomes how will chesapeake treat you? I don't personally know of anyone who has been paid or not paid as an interest owner by them.
I'm sure as more of these wells come online we will begin to hear how they do business. The possibility exists to be cheated by them on the accounting, but that also brings about the possibility of a class action lawsuit the likes of which are previously unknown in this neck of the woods. Simply put, it would be a bad business decision for them not to not just go ahead and pay according to the law. I know that I have been unable to get anyone at chesapeake to even return a phone call, which factored greatly in my decision not to lease with them.

If it were me in your described situation I would most likely roll the dice on being unleased. You give up the bonus, which would be 35K which would be split at least 3 ways (don't know how many total there are of ya'll). Just a few months ago your lease bonus could have been close to 200K, another reason to say no to leasing right now. But, you ultimately need to do the research and make a decision on what you need to do. Good luck, it's a nice problem to have.

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Permalink Reply by Rod B. on February 9, 2009 at 10:41

Thanks for your information. It is very helpful.

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Permalink Reply by Jay Murrell on February 10, 2009 at 2:53

Rodney:

I suspect that how you will be treated is a function of whether or not you pay your way in the costs of the well, or if you “ride” the well down on the operator’s dollar.

I don’t know what Chesapeake will do, but I can tell you that the former option will not endear you to them and there are some companies that would make you pay dearly for not paying your way and assuming the same risks that they are taking on in drilling the well.

You could very likely end up having to file suit to get your gas marketed and get into pay status. Lawsuits of this type with a lawyer that knows what he’s doing start out at $40,000.

If you are willing to sign an AFE (authority for expenditure) and pay your way, then you should expect to be treated as any other industry partner. You just need to be aware that there are large risks involved in being a working interest owner in one of these wells. Bad (expensive) things can happen on the way down and in completion.

Good luck.

Jay Murrell

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Permalink Reply by Jay Murrell on February 10, 2009 at 3:22

Well....

Are you supportive of people getting something for nothing?

The operator assumes all of the risk and there is no negative consequence for mineral owner who wants a free peek?

What are we...a bunch of free-ride, welfare types??

JM

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Permalink Reply by Jay Murrell on February 10, 2009 at 3:29

You are not answering my question.

Is it acceptable to not pay your way?

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Permalink Reply by Greedy Landowner on February 10, 2009 at 15:31

As I stated above "I have found that most of those stories either go unverified or are related by those who worked in the small operations around here before this thing exploded. "

Many of these operators are bitter because they couldn't afford to pay to play when the big bucks came to town so they come on here and huff and puff about it. I've sort of become to see their comments as sort of a background noise, ever present but never meaningful.

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Permalink Reply by Rod B. on February 11, 2009 at 5:52

OK, but i thought this was my minerals. So, i should give them 75% of it for eternity just for taking the risk of drilling the wells? I have been drilling oil and gas wells, vertcal and horizonal, for 28 yrs. I know about problems in drilling wells. I have had a few wells that i had problems with, but very few, probably less than 10 my whole drilling experience. I really don't think there will be much risk involved in the drilling part. I think i should get at least 40% royalty.

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