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Permalink Reply by Two Dogs, Pirate on November 12, 2008 at 15:36

When I write drafts they say 15 banking days after sight. If your bank or my bank sits on the draft then that could delay the time it takes to get your money. We have changed banks before because they sat on a draft. We send a check direct to the mineral owner, not to a bank unless it is stated in the OGML to direct deposit into a bank account. I have never used the language to deposit directly into a bank account, it's hard enough to get someones social security number these days with identity theft, much less their bank account number.

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Permalink Reply by Rachel A. Hassell on November 12, 2008 at 15:41

SOOO TRUE!! very few people at the bank even know what to do with these!! sad...but true!! So they absolutely "sit" for quite some time.
bless you for doing the right thing on your drafts!!

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Permalink Reply by Two Dogs, Pirate on November 12, 2008 at 15:58

It isn't me it's our Landman/Secretary that is in charge of that and she is to the minute on doing her job. Your bank sends the draft to our bank and our bank faxes the draft to us. A date is penciled in on the right top hand corner of the draft when we recieve the faxed draft. Some times we find documents that are filed that are BS, like MEMO of OGML that doesn't alert you to the fact that only certain depths have been leased. This is a BS way of doing buisness. I have to get a copy from the mineral owner of the original lease that the mineral owner may not have because those that took the lease didn't send them a copy. What do I do when a Memorandum doesn't spell out the basics of the lease, I don't give a crap about amounts paid for bonus or royalty or any other BS deal that they made but depths leased is vital in knowing what has been leased. Look at what you sign and if it dosen't say what you leased then run like hell from whoever is making the deal.

Permalink Reply by Larry L on November 12, 2008 at 11:37

The issue in Greenwood doesn't just deal with mortgages but also equity loans and lines of credit ( personal and business) tied to the property. Some members had a line of credit that had a good interest rate and a zero balance (sort of a back up credit source they could get at quickly) Most of these individuals opted to cancel the line of credit in lieu of the arduous task of getting the "non disturbance and attornement" agreement signed. As soon as they get their their bonus money then they will go back and get the line of credit. Ridculous!

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Permalink Reply by Grillin' - MmmMmm on November 13, 2008 at 4:35

Actually, Aubrey has hedges set up against NG prices. And yes, CHK has great REVENUE...not the same as CASH FLOW. Their problem is really simple...the same as my wife's problem...they were SPENDING too much money relative to their income. They were spending 150% of their revenue! That is not sustainable in most companies, particularly companies the size of CHK. Exxon coult afford to do this but they have 40-50 billion with a "b" dollars in the bank.

So, CHK has stopped spending money on leases, reduced the amount spent on drilling to get their spending in line with their revenues. And have sold some properties to help pay off some of their near term obligations and build up their reserve. The overwhelming amount of their debt is long term debt that doesn't come due for many years and the monthly payments are really small. But drilling and leasing like they were doing just couldn't be sustained.

Most of the ink on CHK missed the biggest point...their spending problem. If focused on hedges MAYBE not being worth anything (which is totally wrong) and their debt being high (which really isn't that high and is long term). Again, simple problem with simple solution. STOP SPENDING SO MUCH MONEY ON DRILLING AND RIDICULOUS LEASE TERMS. They have addressed both of these issues, a portion of which directly impacts many here in a not-so-great way.

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Permalink Reply by The_Baron on November 13, 2008 at 4:41

Good points. CHK has to begin reducing debt, not to mention they have leased far more than they could possibly hope to drill. I would not be suprised to see partnerships with other drilling companies as these expensive leases near expiration.

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Permalink Reply by Grillin' - MmmMmm on November 13, 2008 at 5:33

I'm not in this play so it doesn't help/hurt. But this market is hitting all areas and I'd make a lot more money paying more for leases but getting more for the gas we sell!! I'm not talking down the price of anything...in a competitive market the price of the lease is the price of the lease...whatever someone is willing to pay. Its gone up way fast and come down way fast. But as I tell my wife, just because its on sale doesn't mean we need to buy it! CHK bought too much, either in quantity or price.

But again, CHK DOES NOT HAVE TO PAY DOWN THEIR DEBT. At the rates the debt is owed at, it is better to not pay off the debt!! Leave it on the books because it is relatively cheap debt. Instead, drop rigs and stop drilling for a little while!

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Permalink Reply by The_Baron on November 13, 2008 at 5:41

I disagree. CHK has large leaseholds in multiple plays. They have sold intrests in these plays to third parties. They have to drill these leaseholds before they are put in the position of trying to renew or extend leases here and in all their other plays thoughout the country.

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Permalink Reply by Grillin' - MmmMmm on November 13, 2008 at 11:55

Actually, they don't have to drill the leases. Their partners can take over the leases and CHK can go non-consent if there is a difference in opinion on the pace of development.

What you will see is drilling on 640 acre spacing to get as much acreage HBP as possible. Then they can go back and drill the other 5-7 wells later. Plus, they have a large amount of HBP already. Plus, in the short term a huge portion of their drilling costs will be paid for by the partners. The new Statoil venture has Statoil paying 75% of CHK's share of the cost. In the BP and PXP deals, I believe those companies will be paying 100% of CHK's share for about the first year or so. All of this reduces the amount of cash required but still gets acreage held and wells drilled. Very smart moves on Aubrey and his team's part.

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Permalink Reply by BirdDawg, plain ole' idiot on November 12, 2008 at 16:01

GD,
The money may be forthcoming, but I doubt if it will be as much money as once promised. Just my opinion.

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Permalink Reply by Grice on November 13, 2008 at 1:21

Unless there is a deadline (for execution) established within the lease, the lease can be executed whenever the holder elects to do so. Compensation will need to be issued at that time.

If you want to formally withdraw your offer to lease, might I suggest you send a demand letter to JDP (since they are who you signed with) requesting the return of all originally signed papers. They would only be required to send the original signature page, and not the entire lease document. If you do send a demand letter, be sure to send it by certified mail, return receipt, and include a SASE with the letter.

If you want to keep the option open for potential future execution, then do nothing and wait for them to officially execute the lease. You will be paid upon the execution of the lease.

If Chesapeake wants to withdraw their option to execute the lease at a future date, they will return the signature page(s) to all potential lessors. If they do not respond to the demand letter within 30 days, judicial options would be favorable.

Sidenote: The lease can not be terminated, since it was never officially executed.

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Permalink Reply by The_Baron on November 13, 2008 at 4:03

Just make sure they did not record the lease already. If they have send a demand letter for a release.

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