My parent's well was completed in late September. Does anyone have an idea of how long it takes Chesapeake to begin paying royalties on leased land? They have not received a division order yet. (BTW, I searched this topic but couldn't find an answer!)
I asked Mark P the same question because Chesapeake has our land leased as well. This is what he told me, "A good time frame estimate on getting first royalty check assuming a completion is 6 months from spud date. Figure 1-1.5 months to drill, another month to get well stimulated and flowing back and then 3-4 months for paperwork to be processed (Division Orders, etc.) and checks starting to be sent out.
Based on what I have seen, Chesapeake is slow to get paperwork processed and start getting checks sent out. This is pretty typical of big companies."
Jeff, this is Courtney talking now. Chesapeake said they were going to start drilling on our land on December 1. Then it changed to December 15 then they said we are getting a new rig and it will be brought to the land between Christmas and New Years. How long did it take to start drilling from the time the rig is on the land? Have your wells been frac'd? Have you received any information as to how good the well looks?
Our land is in Dimmit County near Big Wells/Cotulla.
Do you know how to look up the well on SONRIS? See if they're reporting any production yet. If you can't find it, post the Township-Range-Section of the land, or tell us the location where we can find it on the map.
A good guess is that they'll report the data 3 months behind, so there's a good chance you'll get something soon. September through December is 3 months. Then sometimes they will delay a little handling the paperwork, Division Orders, etc. Don't spend it yet, though. There are sometimes further delays.
The above assumes it's in Louisiana. Delays may be a little different if it's in another state.
As for the reason for a long time from spud to production, the operators have to start the drilling process to hold the leases. Once started, they don't have as much incentive to finish with gas prices so low, so they may take their time. They're not going to pay to have a rig sit on the site any longer than necessary, but they may use one well for the vertical, then another rig for the horizontal, another for fracking, etc. They might be rather slow moving in the next rig once they remove one rig.
I called Chesapeake yesterday and found it very easy to get through and get an answer to my question. This is what they said in response to my question of when royalty payments begin (in Louisiana): "Once the well has been completed, it takes 4-6 months for you to receive your division order. You will receive your first check at the end of the month that you receive your division order."
Hope this info helps someone.
Coral, I am pretty sure my division orders came 6 months before my checks came. It was like sweating blood waiting for them!
However, now that you have a DO it means that you WILL be getting checks.
See the (admittedly long-winded) post here: Link