Replies to This Discussion

Permalink Reply by Henry on October 21, 2013 at 8:39

Maggie,

My suggestion...  get that deed copy, plat, and all the documentation that your attorney mailed to them.  Have it scanned in on your computer.  Then, when you call CHK and finally get someone on the line, be ready to send that info right then to the person on the other end.  Go over it with him. Ask him what you must provide to prove your claim, if he says what you have is insufficient.  Maybe I'm naive, but I do believe they will work with you, to get to the right solution.  Sometimes it takes multiple tries to find the right person.

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Permalink Reply by Douglas Rayburn on October 24, 2013 at 6:46

Maggie sorry for all your facing. Everyone who has a potential of leasing minerals should hear your story. For this reason and many others reasons  it is so important to have a good understanding of a mineral lease and your safe guards that should be incorporated before any signing, unless you are forced pooled, But even here before a force pool ever takes place if you can show your willingness to cooperate with an operator with proven documents of that due diligence of cooperation. It would make the legal avenue so much easier. At this point I would see about putting a lean on the well, request a judge that all the money produced from the sale of hydro carbons go into escrow. At this point everyone involved in the unit will began to  wail. Check your state laws learn what you can do without an attorney until you need one. Make sure all correspondence is by certified mail.  Make sure you are precise and leave nothing to ambiguity be clear and look for other cases on line that might give you case more credence. 

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Permalink Reply by Maggie Bryant on October 24, 2013 at 15:57

Hi Mr. Rayburn,

Thank you for the information. My attorney has already sent the proper documentation to Chesepeake's attorney however, their attorney still seems to be confused and rattled. I am not the only person pooled in this well who is having problems with Chesapeake. There's about 12 of us. By the way my relatives I felt they were paying my royalties to informed me today they received  letters from Chesapeake and they were suspending future payments due to overpayments. My attorney sent me a copy of a letter he received from Chesapeake dated 10-17-13 received 10-21-13. Now they are giving another excuse. I worked in Corporate America or 40+ years these are stall tactics. I will keep you informed.

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Permalink Reply by dbob on October 24, 2013 at 16:12

Ms. Bryant,

I am not a lawyer or a landman, and I wish you well in your quest.  That said, nothing you've done will "rattle" their lawyers.  It might cause a very junior land person to get a little puckered, but a 5 minute discussion with their boss will set them straight.  I think you've been given a lot of good advice here, particularly in the patience front, and also checking your records again before filing suit. 

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Permalink Reply by Maggie Bryant on October 24, 2013 at 16:32

Thanks dbob,

My attorney does oil and gas cases. He has sent proper documentation to Chesapeake they still seem to be rattled . They have notified my relatives they claimed my brother,  deceased uncle,  2 cousins and I, had conveyed our mineral rights and land to  they were suspending their  monthly checks due to over payment. These people refuse to admit they are wrong.

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Permalink Reply by Matt Hodges on October 28, 2013 at 3:51

A bit of advice for anyone considering signing a lease with Chesapeake.  DON'T!!!!!

There are numerous lawsuits ongoing that mineral owners and state governments have filed that hopefully will address and eventually give justice to mineral owners.

I wouldn't sign a lease with Chesapeake for anything less than 100k an acre in bonus money because I won't get squat for the value of the minerals sold.

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Permalink Reply by Larry G Smith P.E. on October 28, 2013 at 3:59

Very smart Matt, the problem is that the ones that need to read this do not belong to this site. Those of us that can and do read this have already been taken in by CHK.

There is an old saying "WHAT GOES AROUND, COMES AROUND".  Am hoping that CHK soon gets whats coming around to them.

 

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Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2013 at 4:14

In Louisiana those who are force pooled by CHK have only a choice of executing a lease or going unleased (non-consent).  If a well is drilled and completed the Unleased Mineral Interest (UMI) receives no compensation for well production until the well reaches payout (makes enough money to pay for its cost).  If the well does not reach payout, the UMI receives nothing other than the possible satisfaction of refusing to lease to CHK.  A leased interest (Lessor) in the same well will receive royalty from first production.  Depending on the wording of their lease their payments may be subject to the questionable deductions that CHK is known for but they will receive compensation for the development of their minerals.  If a Louisiana court ever rules against CHK concerning deductions a lessor would likely still need a No Cost Royalty clause that was worded correctly to benefit.

Matt, and others, I totally understand where you are coming from and I don't care for CHK much either.  However in my career I must deal with them or help others to deal with them from time to time.  For those who wish to have their minerals developed and to receive payment for that production the best course remains executing a lease.  In many cases denying CHK a lease does no significant damage to them and simply results in no compensation for the mineral owner.

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Permalink Reply by Larry G Smith P.E. on October 28, 2013 at 4:27

I still have to blame CHK for what they are doing to the Royalty Owners. After all, before they came into the picure, we the property owners OWNED 100% of the gas/oil under our property. The companies come to us, the land owners, and want to lease it and will "give" us a percentage of the money derived from that gas/oil that they recover. For that very large percentage that they keep for drilling/producing/selling we are supposed to get OUR percentage at the WELLHEAD price of the product. They are to get their money back on the 75% they get, and should be looking for the best price. That is NOT what CHK has and/or is doing. They are basically STEALING from the Land owners. PURE AND SIMPLE.

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Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2013 at 4:45

Everyone can blame them, Larry.  That's fine.... and understandable.  However I think the majority of GHS members want to be leased, want a producing well and want to be paid for that production.  Where that is the case, the best course of action is to lease and get professional help to draft language that will potentially benefit from any future court rulings regarding limitations on deductions.  Not everyone has a No Cost Royalty clause in their lease and many who do don't have language that may result in relief under strict interpretation by a court.

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Permalink Reply by Larry G Smith P.E. on October 28, 2013 at 4:58

Skip, I understand that completely, we all wanted to be leased and want a producing well is our section BUT we also want to be paid what we are due. What we were told by the Land Company that was working for CHK. We assumed that they were doing  a job and were telling us the facts of the matter. I have that NO COST in my contract and also has a clause that said they, CHK in this case, could NOT sell to any company that THEY owned any interest in. They formed a midstream company, owned interest in and sold to that company at a reduced cost and that is the price that we the Royalty Owners were paid. While CHK was making the true sales price down stream. No court or judge can change the meaning of my lease in my books.

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Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2013 at 5:15

Larry, if you can get relief outside of a court order that would be great.  I understand completely why you and others are mad.  Possible actions short of a court order could be amendments to LA law by legislative action.  Difficult to accomplish with current office holders.  Maybe become politically active and support future candidates for the legislature who would support the issue.  Or try to make judges for district, appellate and supreme courts take a stand on the issue and vote for those who favor landowner rights.  All possible actions with very low odds of success. 

So what to do, or not do, in the meantime?  For some there is the possibility of leasing to a company other than CHK.  The same cautions and due diligence requirements remain in that case.  If CHK is the only offer someone can decline to lease and wait to see if they get force pooled.  Once force pooled however the choices are limited.  Then for the owners of modest mineral interest it becomes a choice to be a UMI or enter into a lease.  I think a lease drawn up with professional help is the better course.

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