To avoid getting your lease asigned to CHK or any of their subsidiaries, negotiate a clause in your lease that says, more or less, that the Lessee cannot assign the lease to anyone without your written permisson (or specifically exclude CHK or any of their subsidiaries or affiliates). More than likely you will need to be leasing a substantial number of acres to be able to accomplish this.
Wes Luke said:
Michael,
Sometimes ending up with CHK is not a choice. On two separate leases I had leased to XYZ Oil and after some time I went searching for ownership since I was no longer receiving my well logs on production. Come to find out it was CHK. They bought out my lease. We can't seem to get away from them no matter how much we hate dealing with them. :(((
Yours,
Wes Luke
There is a prior post discussing the exclusion of CHK from a lease here: http://www.mineralrightsforum.com/forum/topics/possible-to-exclude-chesapeake-from-lease
After thinking about that discussion I borrowed Mr. Cotten's comment and added some more to it to discourage any assignment to CHK. I have not yet had a lease offer to add this clause to so it has not yet been run by my attorney and I do not know if any Lessee would agree to it. I welcome any comments about it:
The rights and obligations of Lessee under this Agreement cannot be assigned without the prior, express written consent of Lessor, which shall not be unreasonably withheld. However, an assignment to Chesapeake Exploration, or its subsidiaries or affiliates or partners shall be ipso facto deemed unreasonable.
This lease shall not be sold, traded, given, transferred, assigned or otherwise conveyed in whole or in part to Chesapeake Energy Corporation aka Chesapeake Exploration, LLC, or any of its subsidiaries, affiliates or partners. Any conveyance of this lease in whole or in part to Chesapeake Energy Corporation aka Chesapeake Exploration, LLC, or any of its subsidiaries, affiliates or partners will require the conveying Lessee to immediately pay Lessor $100,000,000.00. And Lessor’s royalty from any production from this lease shall be immediately increased to 3/4 (75%) which Chesapeake Energy aka Chesapeake Exploration, LLC, or any of its subsidiaries, affiliates or partners must immediately begin paying according to the royalty calculation method set forth in the terms of the exhibit to this lease. And a new division order detailing the increase in royalty will immediately be given by Chesapeake Energy aka Chesapeake Exploration, LLC, or any of its subsidiaries, affiliates or partners to Lessor.