What to Do?

It's about time to consider lease renewal with Chesapeake. Three years ago we signed with 2 year option for renewal. Do we have to renew or what options do we have since drastic change from three years ago? All suggestions welcome!
Suni

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Oil & Gas ProPermalink Reply by Two Dogs, Pirate on November 2, 2008 at 9:58
You have no option, only CHK has the option.
Permalink Reply by Suni on November 2, 2008 at 10:07
I was told that you didn't have to accept the offer, if low.
Permalink Reply by Snake Stewart on November 2, 2008 at 10:22
If they have a 2 year option, the price should be listed in the original contract shouldnt it 2Dogs ?

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on November 2, 2008 at 10:25
The option is already agreed to by you there is no more deal to make. Now if CHK doesn't send you the money as agreed to in the lease then the lease is dead.

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on November 2, 2008 at 10:27
Yes it will state on the Exhibit "A" what the amount will be.

Oil & Gas ProPermalink Reply by Randy on November 2, 2008 at 10:28
CHK's leases typically state the option amount on the actual lease, typically it will be a percentage of the original lease bonus up to 100% of it.

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on November 2, 2008 at 10:32
I wouldn't doubt that, bury it in the boilerplate language of the lease form so it will be hard to find.

Oil & Gas ProPermalink Reply by Randy on November 2, 2008 at 10:47
It is typically explained when the subject of the 2 year option comes up.

Oil & Gas ProPermalink Reply by Two Dogs, Pirate on November 2, 2008 at 14:10
Who brings the dealings up to the table CHK or the lessor? Do you explain the two year clause or do you wait for the lessor to ask? If the lessor doesn't ask do you keep silent on the matter? Why does Chk put the clause in the small boilerplate language of the lease?

Oil & Gas ProPermalink Reply by Randy on November 2, 2008 at 15:44
When I was working for CHK it wasn't something that was negotiable unless it was a very large lease. On smaller leases it wasn't something that was 'eligible' to be removed. I, and all the colleagues I ever heard explain a lease, explained it as a 3+2 lease. Or a 3 year primary with a 2 year option that is grantable upon CHK's paying them the option payment.

Anyway, I'm sure some people haven't been explained it thoroughly. I recommend everyone have someone who understands contracts read over their lease. Whether it's an attorney, friend, landman, whoever.
Permalink Reply by OLD HILLBILLY on November 3, 2008 at 6:53
WHAT SEC- T - R ARE YOU IN? , IT SOUNDS LIKE WHAT WE ARE LOOKING AT , 3 +2 I THINK THEY WILL DRILL BEFORE THE OPTION IS DUE TO HOLD BY PRODUCTION , BUT WHO KNOWS.

Oil & Gas ProPermalink Reply by The_Baron on November 3, 2008 at 7:49
Smetimes you just can't drill in the first three years. Maybe there are landowners holding out, or trouble getting a rig.

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