Borden County Lease

Oil and Gas Leasing Help
1

I have a small interest in this area. We leased about about 1400+ acres to Chesepeake In Jan 2011 for $300 per acre & 20% royalty. Yesterday 1/9/14 a Company call Tall City started calling my family members saying they bout the leases and wanted to release payment on a two year option @ $200 per acre. Incredibly they sent us checks overnite. With a letter saying the were going start drilling a horizontal well in Feb 14. They told my sisters that I had agreed to it-- but by mistake they called my son who is mentally disabled and lives in assisted living.

Sure enough I found the check there this morning.

They were looking up people on the internet--what an operation!

Now I wonder what they are paying on new leases? There is no leader of the royalty owners--and it is like herding snakes to get most going the same way. I guess the bird in the hand is the best play. The GOOD news is the planned HZ drilling. Anybody got any thoughts on this?

2

$200 is way too cheap! And 20% royalty stinks, too. Chesapeake does not pay market price on the oil they produce since they sell to a Chesapeake-affiliated purchaser for half of what it is worth. Get someone to examine lease extension terms from this new operation. It could be Chesapeake using a different name, which they are notorious for doing.

3

Usually you don't all have to go in the same direction. If you can get even half to go your way it could boost bargaining power.

I agree with Susan B's comments.

4

Just curious as to where your acreage is located in Borden County. We currently are leasing 4 sections.

If you don't my sharing that information, I would appreciate.

5

Find your lease and read it to make sure they complied with the option before cashing the checks.

6

In reply to various questions. The new company did comply with the terms of the option. They called my sisters & I because our our leases expired first before the other 45. They said they had a few days on the others and will just send them checks telling them they are picking up the option. The option exercised is for sections 21,28,29,30 Block T Borden county and sections 25 block 32 section T Howard County. They picked only 1359 acres out of the 1760 acres orginial Chesapeake lease.

7

Are you sure that they complied with the option? It sounds unusual that they get to cherry pick acres on an option to extend. I'd make sure that was in the lease.

8

yep it is in there they dont have to opt all-unforunately

9

R.W. it may be funny answering your comment 3 months later but just happen to read the discussion because our group is involved in this Tall City project. When they bought the leases from Chesapeake in late 2013 they bought the lease covering only 13,861 acres out of the 15,141 we had leased so we have two sections open for lease on Block 25 they did not buy. I have no idea how many acres they bought but so far they have permits for three horizontal wells in this area and 2 test vertical wells.