Newbie to Leasing

I am new to the forum and have absolutely no experience on mineral leasing. My neighbors and I need help big time. We've been approached by a landman to lease our mineral rights. This is in Elbert County, Colorado. Most of the acreages in our area are 5 - 35 acre lots. At first, the landman would not tell us the operator he worked for, but did send me an email yesterday saying he had permission to release the name and it is Chesapeake Energy. He gave me a blank lease to look over. I'm pretty sure they are interested in the Niobrara formation, but not certain about that yet. I have gone through most of the posts here at this forum and have gotten quite a bit of good information on negotiating royalties, lease term and signing bonus, and deleting the warranty clause. Also the advice to not hire a lawyer right away is well taken. But, I have questions about the rest of the lease wording and when to get a lawyer involved and who to talk to in the meantime. Since our lots are mostly 5 acres, I am certain they will be pooled and in Colorado they can force pool. I would like more information on: protecting our rights/wording in the pool area of the lease (would that be the Pugh clause?); what is reasonable or preferred in the shut-in portion (shut in royalty is $1.00 per acre and lease kept in force during shut-in); asking for no surface access? (which would drastically reduce the size of the granting clause and wording elsewhere on use of water, digging of pipelines, etc.); someone added an "indemnity clause" to their lease (what is that?); on the gas royalty part they state market value at the mouth of the well or if not sold at the mouth than no more than the actual amount and also less any costs and applicable taxes (is this normally negotiated/changed?); lease states it is a paid up lease, not obligated to pay rental or commence drilling during primary term (any changes to that?); and lease contains a release clause that releases lessee of all obligations to accrue (not sure what that means).

The landman has asked 3 times now to contact him if we want to lease our minerals. I have not called him back yet. If I start to negotiate a lease, I would want to know about these other areas before talking to the landman. So, who do you get advice from to know what you're talking about? And, do they have to notify you before you are force pooled? Too many questions?

Know who you are contacting. Make sure you can view the company profile. CEO…ect…what their standing is in the business. GOOGLE anyone trying to contact you via online as well as via mail or phone.

I was recently contactd by a broker in OK to lease my mineral rights. There is a wealth of information online, I have been reading for weeks. Just remember if you own surface property the lease is much different than owning mineral rights only. The lease is much simpler and straight forward if you don’t own the surface. I found the county clerks office to be extremely helpful. Google everyone and call as many peops as you can!! This is a wonderful thing you own don’t ever sell it, let it make you money!

Elizabeth Dee Hollier said:

Know who you are contacting. Make sure you can view the company profile. CEO…ect…what their standing is in the business. GOOGLE anyone trying to contact you via online as well as via mail or phone.

Thank you Elizabeth and Brenda. I did google the landman and his company and did not find anything out there except for one item where his company entered into a contract with the county for GIS information. That was before he finally disclosed the oil/gas company he is getting leases for. I’ve been reading for weeks also! I’m really grateful for forums like this one. I’ve gained a lot of info from here. I checked with our county assessor’s office and they say the landowners own the mineral rights in our section as the minerals have not been severed from the land. The landman stated they would be drilling a very deep well with horizontal drilling onto 4 different sections from one well. That sounds to me like hydrofracing and that worries me that our water could be affected. It doesn’t sound like you can hold anyone liable if your water is contaminated or the water table drops from what I’ve read so far. Since our properties are only 5 acres, I want to limit their access, how close they drill to property lines, noise, etc. and am concerned about just “when” to get a lawyer involved. I’m learning more everyday, so any info from here is much appreciated!

Brenda Renee Spoo said:

I was recently contactd by a broker in OK to lease my mineral rights. There is a wealth of information online, I have been reading for weeks. Just remember if you own surface property the lease is much different than owning mineral rights only. The lease is much simpler and straight forward if you don’t own the surface. I found the county clerks office to be extremely helpful. Google everyone and call as many peops as you can!! This is a wonderful thing you own don’t ever sell it, let it make you money!

Elizabeth Dee Hollier said:
Know who you are contacting. Make sure you can view the company profile. CEO…ect…what their standing is in the business. GOOGLE anyone trying to contact you via online as well as via mail or phone.

Hello Debbie,

Although the website is more geared towards landowners and production that is based in Louisiana and Texas, you will find a wealth of information on the www.gohaynesvilleshale.com website.

Plenty of info there regarding the leasing process in general to help you school up on things.

Here’s a couple of “Leasing Basics” primers in the attached files for you to check out as well to give you some starters on what basic terms and clauses to look for in your contract.

Good luck.

Debbie Trujillo said:

Thank you Elizabeth and Brenda. I did google the landman and his company and did not find anything out there except for one item where his company entered into a contract with the county for GIS information. That was before he finally disclosed the oil/gas company he is getting leases for. I’ve been reading for weeks also! I’m really grateful for forums like this one. I’ve gained a lot of info from here. I checked with our county assessor’s office and they say the landowners own the mineral rights in our section as the minerals have not been severed from the land.
The landman stated they would be drilling a very deep well with horizontal drilling onto 4 different sections from one well. That sounds to me like hydrofracing and that worries me that our water could be affected. It doesn’t sound like you can hold anyone liable if your water is contaminated or the water table drops from what I’ve read so far.
Since our properties are only 5 acres, I want to limit their access, how close they drill to property lines, noise, etc. and am concerned about just “when” to get a lawyer involved. I’m learning more everyday, so any info from here is much appreciated!

Brenda Renee Spoo said:
I was recently contactd by a broker in OK to lease my mineral rights. There is a wealth of information online, I have been reading for weeks. Just remember if you own surface property the lease is much different than owning mineral rights only. The lease is much simpler and straight forward if you don’t own the surface. I found the county clerks office to be extremely helpful. Google everyone and call as many peops as you can!! This is a wonderful thing you own don’t ever sell it, let it make you money!

Elizabeth Dee Hollier said:
Know who you are contacting. Make sure you can view the company profile. CEO…ect…what their standing is in the business. GOOGLE anyone trying to contact you via online as well as via mail or phone.
3054-oilgasleasechecklist.pdf (20.1 KB) 3055-jfhintsonlease1997.pdf (170 KB)

Thanks much for the info David! I have a lot more reading to do. The attached files will help quite a bit.

David J. Gaar said:

Hello Debbie,

Although the website is more geared towards landowners and production that is based in Louisiana and Texas, you will find a wealth of information on the www.gohaynesvilleshale.com website.

Plenty of info there regarding the leasing process in general to help you school up on things.

Here’s a couple of “Leasing Basics” primers in the attached files for you to check out as well to give you some starters on what basic terms and clauses to look for in your contract.

Good luck.



Debbie Trujillo said:
Thank you Elizabeth and Brenda. I did google the landman and his company and did not find anything out there except for one item where his company entered into a contract with the county for GIS information. That was before he finally disclosed the oil/gas company he is getting leases for. I’ve been reading for weeks also! I’m really grateful for forums like this one. I’ve gained a lot of info from here. I checked with our county assessor’s office and they say the landowners own the mineral rights in our section as the minerals have not been severed from the land.
The landman stated they would be drilling a very deep well with horizontal drilling onto 4 different sections from one well. That sounds to me like hydrofracing and that worries me that our water could be affected. It doesn’t sound like you can hold anyone liable if your water is contaminated or the water table drops from what I’ve read so far.
Since our properties are only 5 acres, I want to limit their access, how close they drill to property lines, noise, etc. and am concerned about just “when” to get a lawyer involved. I’m learning more everyday, so any info from here is much appreciated!

Brenda Renee Spoo said:
I was recently contactd by a broker in OK to lease my mineral rights. There is a wealth of information online, I have been reading for weeks. Just remember if you own surface property the lease is much different than owning mineral rights only. The lease is much simpler and straight forward if you don’t own the surface. I found the county clerks office to be extremely helpful. Google everyone and call as many peops as you can!! This is a wonderful thing you own don’t ever sell it, let it make you money!

Elizabeth Dee Hollier said:
Know who you are contacting. Make sure you can view the company profile. CEO…ect…what their standing is in the business. GOOGLE anyone trying to contact you via online as well as via mail or phone.

If you haven’t already, go to the Arapahoe County website, under Clerk and Recorder. All of the leases are recorded. They’ll be pretty similiar to what you can expect in Elbert County. Most of the leases are just standard leases with no modifications. But, you’ll find some where some significant additions were made via an attachment.

Thanks Lisa, I will look at the Arapahoe Co. website. I have looked at Elbert Co.'s website for oil and gas leases. They list a minimal amount of information, the Township, Range, Section, Lessee and Lessor. No other details. Our section has had only one landman contact us so far, Blanca Peak Energy, LLC who now say they work for Chesapeake Energy. The section on the east side had Continental Land Resources, and Chesapeake Exploration contacting the section to the west of ours. GFL and Assoc. LLC and Gary Samuel Jr. and Assoc. Inc are active east of us also. Lisa said:

If you haven’t already, go to the Arapahoe County website, under Clerk and Recorder. All of the leases are recorded. They’ll be pretty similiar to what you can expect in Elbert County. Most of the leases are just standard leases with no modifications. But, you’ll find some where some significant additions were made via an attachment.

Ladies, you might want to try the American Assoc. of Petroleum Landmen and look at some of their publications. As an atttorney I have found them useful particularly regarding leases and various terms and clauses. Most of the leases are now standardized and as some one pointed out the addendum and exhibits are very important. Good Luck, Gene

Debbie Trujillo said:

Thanks Lisa, I will look at the Arapahoe Co. website. I have looked at Elbert Co.'s website for oil and gas leases. They list a minimal amount of information, the Township, Range, Section, Lessee and Lessor. No other details. Our section has had only one landman contact us so far, Blanca Peak Energy, LLC who now say they work for Chesapeake Energy. The section on the east side had Continental Land Resources, and Chesapeake Exploration contacting the section to the west of ours. GFL and Assoc. LLC and Gary Samuel Jr. and Assoc. Inc are active east of us also.
Lisa said:
If you haven’t already, go to the Arapahoe County website, under Clerk and Recorder. All of the leases are recorded. They’ll be pretty similiar to what you can expect in Elbert County. Most of the leases are just standard leases with no modifications. But, you’ll find some where some significant additions were made via an attachment.

Hi Debbie,

I recently received a letter from a gentlemen "representing Chesapeake Energy". My wife and I are new to leasing land and oil royalties as well. It looks like you are in the same area as me and have been spending a lot more time on gathering facts. I'd like to chat with you if possible...my wife and I are meeting the independent contractor tomorrow night (Dec 15th) at a Starbucks in Parker to hear his position on all of this; we have NO plan on signing anything at this time :-)

Email me if you'd like to meet up, I'm sure that the more information we share and the more we band together, the better for the landowners.

Brian (40 acres, cr 146)

Browan89@gmail.com

Folks, the main Chesapeak guys doing the leasing areDave Howell, Bill Sullivan and Derek Montgomery now operating under the name of Red Sky Land. They use susidiaries because they don't want other lease hounds to know where Chesapeake is leasing minerals. My experience is that these guys are knowledgeable pros. and the leases are standard forms with the addendums adding any unique changes. You should know that whatever you negotiate with them, they have to get final approval from home office and then they will do a thorough title search back to the original patent to confirm the amount of mineral acres you have. The other reputable company leasing is Anadarko. Also, they are not likely to drill on 40 acre sites and the current spacing unit is 640 acres for two wells. Hope this helps a bit. Gene

Debbie,

I am a landman and have leased many thousands of acres all across the country and I may be able to help answer some of your questions. Feel free to contact me at kgunter@gunterlandservices.com if you have anything you think I may be able to help you with.