Replies to This Discussion

Permalink Reply by Henry on February 14, 2011 at 10:50

Betty,

I would not give it away too cheaply.  Chesapeake has already filed a permit to drill that section.

 

But listen to my advice:  MAKE SURE YOU GET "COST-FREE ROYALTIES!!!!!"  In other discussions on this site, you will see that Chesapeake will get you very low prices for your gas, if you do not insist on this clause in your lease.  Unless you have only an acre or two, it is worth the several hundred dollars to get a good O&G attorney to help you on this.  There are many Chesapeake lessors on this site who are thoroughly disgusted over their low prices.  They didn't know at the time they signed their lease about this.  You now know.

 

 

• ▶ Reply

Permalink Reply by betty v. roberts on February 14, 2011 at 12:38

 

Thanks Henry for the info.  I was asking for a friend of mine and she only has 2 acres. She said that they are already drilling in the section.Thanks again      Betty

• ▶ Reply

Permalink Reply by richard v. simmons on February 15, 2011 at 7:38

My lease for 3 years is up on May 6, 2011. I have a 2 year option with Chesapeake. They have cleared the land for one pad and have unitized the section 20 9N-12W. I, also, have land in section 8 leased to Cheasapeake  but it was unitized by Encana and they have not cleared land for a pad. My question is when do companies exercise the 2 year option? I thought I read that once there were 90 days left on lease companies would exercise the option.

• ▶ Reply

Permalink Reply by The_Baron on February 15, 2011 at 8:19

You mention that they have already cleared a location... read your lease. Does it specify what operations are?

 

If not, this will be loosly interpreted. Depending on the language a lease can be held by operations including location building, digging pits, moving in a rig, etc. Other leases will state that the well must be spud prior to the end of the primary term.

 

Is the second tract on a seperate lease? if not, do you have a pugh clause?

• ▶ Reply

Permalink Reply by richard v. simmons on February 15, 2011 at 9:08

Got to spud.  Separate lease.  Have a pugh clause. All portions of this lease not included in a unit created by La office of Con. and not produicing or upon which dilling operations have not commenced, shall be released at the expiration of the primary term.

• ▶ Reply

Permalink Reply by The_Baron on February 15, 2011 at 9:23

does it define drilling operations specifically?

• ▶ Reply

Permalink Reply by richard v. simmons on February 15, 2011 at 9:37

I don't know what you mean. Drilling operations, I suppose means drilling a hole in the ground.

• ▶ Reply

Permalink Reply by The_Baron on February 15, 2011 at 9:59

What I am getting at is that when drilling operations is not specifically defined, an operator could use operations as mentioned above or more, including drilling a water supply well, moving in equipment, etc. and consider that as "drilling operations" if they were contiuous and related to the drilling of a well. To spud means the drillbit has actually hit the ground and is turning. I have seen in the past where it was getiing close an operator would send out the bulldozers and have them drive around the location until they could get the rig in.

 

I am by no means implying that this is what will happen. My company prefers to be on the safe side and renew a lease if its going to be close. There have been occations where we have overnighted or hand delivered an extension check because we were afraid we would not be drilling in time. We also tend to be more conservative in our definition of "drilling operations". We would rather pay the extension bonus than get into a fight over definitions. However, other operators would rather fight it out. I have seen both ways happen.

 

Its also possible, that they have decided the other location is just not worth it, or maybe they don't have a suffient leasehold in the other unit.... I mean gas is now below $4. I can't believe any operator would be drilling with anything else in mind besides holding leases.. with the exception of Encana.

 

They may also have just dropped the ball, and don't realize the lease is about to expire.

 

• ▶ Reply

Permalink Reply by Henry on February 15, 2011 at 10:06

Baron,

Why does EnCana keep drilling so many wells, when they don't have to?

Permalink Reply by richard v. simmons on February 15, 2011 at 13:23

We have 40 acres in section 8-9N 12W and almost all other leases in section are Encana. Just wondering when an extension of lease would be implemented 90 days before it expires or midnight May 6. I think the reason Encana is drilling so many other wells in section 9, 16, and 3 are 1)they have great leases most are 3/16's 2) the Jimmy Brown is in the hall of fame and it is a Bossier well 3) and last maybe they might be making some money even at 4$.

Permalink Reply by The_Baron on February 16, 2011 at 8:48

They may have some attractive hedges and are trying to get the wells drilled before they expire... But honestly I don't know. I doubt they are making much money at $4.00 gas.

Permalink Reply by richard v. simmons on February 16, 2011 at 13:24

Baron, That's 3 wells per section 9,16, and 3. 4 wells for sure in section 9. Hedgeing or whatever they are spending a butt-load of money in the section next to me and I just want them to move over and give me just ONE WELL!