Chesapeake deals

Texas Mineral Rights Dimmit County, TX
1

A friend owns 5 acres in Dimmit county. I'm asking this question on his behalf because he does not have a computer and is not computer literate.

Early this year he signed an oil and gas lease with a company acting on behalf of Chesapeake. Recently, he has been approached by a different company also acting on behalf of Chesapeake to lease all oil, gas, and mineral rights regarding the same land. It appears that his current lease becomes part of the deal and that the new lessee would have the benefit of any future royalties. The original lease has a primary 3-year period that extends as long as there is production with a 25% royalty. A single bonus was paid up-front. The proposed agreement gives the owner a per acre payment for a lease that appears to be permanent but no royalties. Is this kind of deal common or normal?

2

I would call that abnormal in the extreme. I suggest your friend take any future leases to a lawyer.

3

THANKS! That was my thinking also. I have urged him to contact a lawyer but he doesn't have the money to do so. I may have to do it for him. Not good.

4

Perhaps someone will help for a percentage. There are some mineral managers in these forums and I think they probably charge less than an attorney and have greater experience in negotiating leases than your avreage attorney. I think there is serious money to be lost of you DON'T have competent help if it's more than just a few acres. On a house lot you could get skinned pretty bad and hardly notice it, ten or more acres and it could look like a massacre.