Replies to This Discussion

Permalink Reply by The_Baron on October 9, 2009 at 8:01

Also, I am in the O&G buisness, and I would never go UMI. I would go as WI, but not as a UMI.

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Permalink Reply by Grillin' - MmmMmm on October 9, 2009 at 9:47

Agree, experienced lawyer will be worth his fee.

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Permalink Reply by jason on October 9, 2009 at 9:42

Thanks again for the advice I will do.

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Permalink Reply by Grillin' - MmmMmm on October 9, 2009 at 9:46

That figure is an estimate based on many areas, not just HS. It could be higher, it could be lower based on a number of things, including the operator. I'd tell you that CHK is a pretty effecient operator, having been a non-operating WI owner with them. Keep an eye on gas sales price, severance tax, severance tax credit applicability, overhead charges, processing fees for the gas and on-site engineering costs. I tend to go to Seeking Alpha's website and look through some of these companies' Investor Presentations and SEC reports. In these are lots of figures but you have to spend some time in there!

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Permalink Reply by jason on October 9, 2009 at 22:58

one other question. How difficult is it to get chkp to cooperate. If I have a good O&G attorney should I be ok. Also isnt it better to go into something like this as a unleased mineral owner rather that a unleased working interest? I had someone else on here tell me that he would never go unleased as simply just a mineral owner but he would as a working interest. I think that I understand the difference between the two. By me not being in the O&G business (and me not wanting to fork out my percentage of the cost up front) does that automatically defaults me to an unleased mineral interrests. I was under the impression that the LA statute protected umi better than most states.

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Permalink Reply by S.H.M. on October 9, 2009 at 3:49

Where are you located? We are currently unleased as EXCO is planning to drill in our section. S22 - T18N - R16W.

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Permalink Reply by jason on October 9, 2009 at 4:24

Our land is in the ringgold area. We have 5 shallow wells that we are receiving royalties on now and thanks to a vertical pugh clause our deep rights came back to us this past summer. Are you guys planning on staying unleased? Chesapeake is the operator that is going to drill in our section so that makes me feel more secure about going unleased. Giving the fact that they are one of the industry leaders we are hoping that there is no problems with the drilling process and that they are large enough to not try and pencil whip us on the cost. We are prepared to hire an accounting firm to go along with our attorney but of course we would rather not. Do you know of anyone that has gone unleased and started to recieve and royalty payments? I cannot seem to find anyone.

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Permalink Reply by S.H.M. on October 9, 2009 at 4:34

We plan to lease. Just trying to up the offer a bit. We had a 20K per acre offer this time last year but the economy killed that deal. I don't know of anyone that has gone unleased. We too have the deep rights (while benefiting from a current lease on shallow wells). Thank the Lord and our Lawyer for the Pugh Clause.

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Permalink Reply by jason on October 9, 2009 at 4:45

We are in the same postion. I would lease if the offer grew some.

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Permalink Reply by Grillin' - MmmMmm on October 9, 2009 at 4:36

Good luck. I think you will do well. However, if you think CHK is "large enough to not try and pencil whip" you on costs, think again!! Is Exxon big? Well they can pencil whip with the best of them! No size is too large for good ol' fashion pencil whipping! Nothing illegal, just expect your lease agreement to be stretched to its ends! But that's what an accountant and lawyer are for.

If you only have one well, quite honestly you should be able to keep up with the accounting.

Also, don't expect to start seeing any money for a while. It will take time to drill, to complete, to get the well into sales, to get division orders lined out, for revenue accounting lags (generally 2 months from month of production), etc. But have your lawyer draw up a nice checklist of what they are supposed to send you in terms of statements, detail cost items, daily drilling reports, well logs, run tickets/sales statements, etc. Having that list, and the time frame in which you are supposed to get it, will arm you properly!

Welcome to the wonderful world of owning a gas well! And I wish you a 30 MMCF/day well and $7/mmBtu gas prices!!

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Permalink Reply by jason on October 9, 2009 at 4:52

Thanks. We are hopiong for a barn burner our self. I was hoping that Chesapeake would be so large that they would not eat us alive on the little cost but you have a great point, it could be that since they are bigger they may just be better at it than the small companies. I have heard of the smaller companies almost taking it personaly when someone holds out and they will make it thier mission in life to eat you up in fees. I am hoping that cpk will loose us in the mix and see us as small potatoes. I dont have alot of faith in the big oil companies though. They are not evil but they are very good business men. Thanks so much for the info.

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Permalink Reply by adubu on October 9, 2009 at 4:57

jason--question from my prior post--are you 100% mineral owner under your same surface land or undivided minerals in tract?

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