Replies to This Discussion

Permalink Reply by Henry on September 5, 2010 at 13:44

Les,
I agree (again). But I know that at least one of the Chesapeake mineral owners in my survey had a clause that prevented cheapo sales to an affiliate. The lease went very far to outline what price the lessor should receive, should the lessee choose to sell to an affiliate (something to the effect of giving the lessor the price consistent with sales negotiated with an unaffiliated third party at arm's length. And it went on and on in order to avoid cheapo sales to affiliates.). And yet, the mineral owner still got dog prices.

Permalink Reply by Les Bamburg on September 5, 2010 at 17:28

Henry, I have not seen sufficient information to determine there are any issues related to affiliate sales by Chesapeake. In absence of complete information regarding point of sale, how price is determined, what deductions are being made, etc I cannot make judgement that Chesapeake is not complying with the terms of their lease agreement. This is something the lessor may be able to determine based on their specific situation and information available to them.

Permalink Reply by Henry on September 5, 2010 at 13:39

Les,
I agree. But, in the data I'm collecting on gas prices, there were two landowners who leased to Chesapeake, but had someone else drilling their well. They got good prices.

Permalink Reply by Krystal on September 5, 2010 at 14:05

So y'all are saying that no matter what the market price is for gas that these companies can basically pay you whatever they want?

Permalink Reply by Les Bamburg on September 5, 2010 at 17:33

Krystal, the royalty payment will be based on the market price for the gas in your area adjusted for any allowable deductions under your lease agreement.

Permalink Reply by Les Bamburg on September 5, 2010 at 17:31

Henry, but do you know who was marketing the gas? The price may have been more related to the offtake pipeline and markets accessed.

Permalink Reply by Henry on September 5, 2010 at 23:21

Les,
In one case the well was in Elm Grove. The person leased to Chesapeake, the well was in a Petrohawk section and operated by Petrohawk. The take-off pipelines listed in Sonris for this well could have been Petrohawk, KinderHawk, or Centerpoint.

As soon as sonris comes back up, I'll provide you the data on the other landowner.

But you have to admit there is something funny (and that's a kind word) going on here. All 13 Chesapeake mineral owners in my survey are netting far less for their gas than any other mineral owner in my survey. It cannot be that they had bad lawyers. Chesapeake is doing something different from all the others, that allows them to get away with paying less. To date, no one of their requests to Chesapeake for an explanation has been answered.

Let's face it... This is a huge issue. Chesapeake will have 500+ sections in NW La before they are done. They are probably dealing with 50+ thousand landowners. People better start asking questions, because they are losing out on a ton of money here A 50 cent difference in the price that a landowner receives for his gas will mean approximately $1000/acre lost over the life each well.

Permalink Reply by ken hatcher on September 6, 2010 at 2:30

I hope every one will keep feeding you data Henry and I hope you keep diging...

Permalink Reply by waltcop on September 6, 2010 at 5:57

Henry, your efforts are most appreciated......thanks a million.

Permalink Reply by Krystal on September 5, 2010 at 7:53

So is it a good thing that both companies are trying to force pool/unitize? And, does this mean that they are plannig to drill?

Permalink Reply by Les Bamburg on September 5, 2010 at 10:50

Krystal, it is a positive sign but does not guarantee any immediate drilling plans. That will be a function of lease expiration dates.

Note that only the Haynesville Unit operator can drill a Haynesville Shale well in your section.

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