Replies to This Discussion

Permalink Reply by GoshDarn on February 18, 2012 at 10:22

Dee, it's commonly thought that since Chesapeake is in a big pullback on drilling natural gas wells and is also even shutting-in some NG wells in various locations (i.e., chasing oil, not NG) -- that unless another operator buys the Ashland units per a flip from CHK, then nothing may happen for a few years, at least.  The good news is that CHK did hook up a pipeline to the 3 wells in the Ashland units.

If you hear about any leasing from Chesapeake or anyone else in the area, please let us know.

Permalink Reply by Dee Johnson on February 20, 2012 at 15:16

Myself, along with about 65 or so other relatives signed a lease with CHK on the above mentioned area.  It is only 40 acres.  I know absolutely nothing about the NG or Oil Biz and when I read these post, it is like reading a foreign language LOL

Thanks for your reply GoshDarn, but it looks like we will not see any action anytime soon.  I don't know what you mean by saying that" CHK did hook up a pipeline to the 3 wells in the Ashland units" what does that mean for us?   Looking at our lease again,it does not state any amount that will be paid to us if they did strike NG or Oil for that matter.  I live in Alabama and know nothing about this industry, I just signed the papers and sent them back.

Permalink Reply by Two Dogs, Pirate on February 20, 2012 at 15:20

Dee most of the leases were for 25% royalty to the mineral owner. Don't know that for sure with Natchitoches Parish but for across the Haynesville Shale play that was the norm. If you didn't read your lease then you are at risk for being taken to the cleaners.

Permalink Reply by Dee Johnson on February 20, 2012 at 15:32

I am counting on my relatives in LA to watch out for us, we are all in the same boat.  Even after my sister and I read the lease, it did not make much sense to us because it was a bunch of legal jargon, so I am hoping the other relatives on this lease, who actually know something about it, did their homework :)

Permalink Reply by Two Dogs, Pirate on February 20, 2012 at 15:45

Dee, it would be the Exhibit "A" of the the lease that would change things, generally the last page of the lease. I would think that thay gave everyone in the family the same lease form but who knows, everyone don't work the same way as I do.

Permalink Reply by GoshDarn on February 20, 2012 at 19:37

Dee, my tip about the pipeline means that "if and when" any wells are drilled in section 4 where your family land is -- then CHK will have a pipeline available to hook up such a natural gas well to in order to produce the well and thus pay you royalties.

And Two Dogs is correct.  Most all of the landowners who leased to CHK, per se, back when natural gas prices were higher and CHK was considering drilling more wells around Ashland -- did probably lease for 1/4 royalty.  That was the going offer at the time, more or less.

The point is -- until they actually drill a well in your section or drill a horizontal lateral into section 4 from a nearby section, you won't be receiving any monthly royalty payments anytime soon.

Again, the general thinking is, per the pullback and low commodity prices for NG -- CHK will not be drilling any wells near you anytime soon.  Is the guess.

So, as they would say in the Army, "stand down."  Relax.  Check on it in a year to see if another company has bought out CHK's leases around Ashland.  Then maybe check on it each year for the next several years until things turnaround.

Finally, CHK did drill 3 wells very close to your land in sections 8, 17, and 20.  The section 8 well is probably within a mile and half or two miles of your land.  That's a good sign.  And that well did and does produce NG.  In other words, the likelihood that you have NG shale under your land (per the Haynesville formation and the Bossier formation) is a reasonable probability.  Yet there is a question as to the profitability to produce those deep formations at that location per the high cost of such expensive horizontal wells.

Time will tell.  Now since there are so many heirs on the 40 acres -- then most likely your slice of the monthly royalty pie won't be that big, necessarily, when and if they do ever drill it.  So, the monthly income will be relatively small (maybe in the hundreds each month just for you), yet still hold on and never sell your land, nor never sell you mineral rights.  You may eventually -- maybe -- one day have a producing well or even yet another lease to sign (with yet another bonus payment) when your CHK option runs out.  Oh, and if you do have a 3-year primary-term lease with a 2-year option kicker -- then probably you might be receiving -- might be -- that small option renewal payment to extend the lease.  If you don't get such a check, then that would mean that CHK doesn't want to extend the lease (or drill).

Good luck.