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Permalink Reply by adubu on July 13, 2012 at 15:08

Yep--- it cost to operate a well and continue to produce it---- just "google" operating expensives of oil and gas wells--- can read many article discussion of cost and how they have increased over last few years

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Permalink Reply by Andrew on July 13, 2012 at 18:49

I'm not a lawyer.

Leasehold costs come from "operating the well." it does cost money every month to keep those wells running, though nowhere near as much the drilling costs.

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Permalink Reply by Roy Austin Smith on July 14, 2012 at 3:39

For Cheasapeke their are no legal leashold costs. They use a pencil, sorry a computer and make them up.  They hold out expenses from day one. Try getting a copy and you will run into some rude employees.  One employe, after about four months of trying find out what they were doing , slipped up and sent me a copy of the expenses. I asked for two more months copies, never received them.  called them on the phone and the employee told me, that they did not have to send them out and they were not going to,  These expenses, come out of your income before you are paid. after on year exemption, they start hold ing out taxes and they are listed on check stub, but the expense are hidden.

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Permalink Reply by El Theo on July 14, 2012 at 16:29

I'm aware of many of the costs of operating a well.  I get charged for salt-water disposal, fence building, pad maintenance, phone expense, etc., etc., etc..  I get that those are costs of operating a well.  The leasehold itself is property of Chesapeake, and in my own insignificant opinion, is not a cost associated with "drilling, equipping and operating" my well.  Why do I have to pay a portion of the leasing or leasehold expenses when they have nothing to do with the minerals they are extracting from my portion?

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Permalink Reply by Andrew on July 14, 2012 at 17:30

My understanding was that the costs you mentioned are the "leasehold costs." Costs of acquiring new leases, paying delay rentals, or royalties are not typically considered leasehold costs as far as I'm aware. I do know that the items I mentioned cannot be charged to a UMI or working interest owner unless you have a Joint Operating Agreement to the contrary (which I assume you do not). 

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