If possible you do not want to sign a contract that the oil company gives you. It will not be a good contract. The clauses in the contract will favor the oil company as they have many ways of taking deductions based on their contracts. For instance, the oil contract may say that if post production expenses (compression, etc.) are performed by an unrelated party that your part of the expense will be deducted from your payment. The oil company may then deal with a subsidiary or a third party and get its expense rebated but it will be deducted from your check.
These oil companies are not nice. They are going to take advantage of you and Chesapeake is one of the worst.
You also need to find out if your bonus is a reasonable one. They in the past have paid $25,000 per acre and up.
Right now the price of gas is low. If you wait a while it should go up. At higher gas prices, the bonus will be better. Also, if you have a large tract you might try holding out for the 1/4. You don’t need to rush in. They may want your property more than you want to lease to them. You need to check with others in your area.
There is also a Railroad Commission office in Fort Worth. I don’t think they would know what leases are going for, but they should be able to tell you what drilling activity and by which oil company is going on in your area. It is worth a try anyway.
Jim Colley said:
Hi Jana How did you make out? Did you get a contract yet?
Jim
jana mccreary said:
Hi Jim Yes, we’re waiting for a copy of their contract with tentative of 3,500 a w/ 22% royalty. They won’t budge on the royalty. The problem is that anyone else who might be interested has to visit the Courthouse and peruse the deed records. I’ve spoken with a rep for CHK, no return call from them. Will check out the other two you mentioned. XTO is who my personal residential contract is with (different location). Any overall suggestions? Wondering what others in this immediate area are including in any contracts. Lost Layperson jana