Neighbors signing with different companies – how does this affect me?

I signed a lease with a Chesapeke landman back in January before news of the shale broke. Now, several of my neighbors are trying to sign with Petrohawk.

What happens if there are leases from several companies within a section?

How does this affect drilling?

What about royalties from drilling?

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Permalink Reply by Mit on August 6, 2008 at 8:21
Most likely either Chesapeake or Petrohawk will eventually aquire all leases within your section. One will buy/trade the other's leased acreage. Your royalty % will not be affected.
Permalink Reply by WHuguet on August 6, 2008 at 9:20
No worries. It is probably only an issue if a substantial amount of the acreage in the section is fractionated among various lessees, in that it might affect where that section could be on a company's drilling schedule (e.g. they might choose an adjacent section with 100% WI opposed to 75% WI) .

Your lessor's royalty will be based on your contract, no matter who you signed with and your lease will very likely end up being owned in whole or part by the large player anyway.

For smaller landowners, the "if you lease with the other company" and insert negative comment is just a bunch of crap.

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