Companies seek lease amendments, beware
Wednesday, June 13, 2012
Alan Wegner, a partner at the law firm of Harrington, Hoppe & Michell said he’s ‘suspicious’ about energy companies who want to amend current leases, according to Dan O’Brien at The Business Journal.
Chesapeake Energy is seeking to increase its unit size for Ohio’s Utica Shale drilling sites. Chesapeake said increasing the size is for efficiency, but Wegner thinks it’s for a different reason:
I’m suspicious that the real reason, particularly Chesapeake, given its obvious financial situation, is to get the most out of these leases they signed and flip them to other companies such as BP and Consol,” Wenger said. “They don’t need 1,280 acres to drill a well.
Wenger suggests consulting an attorney before signing any amendment.
» Via: The Business Journal.
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Shale FAQ
How often do royalty payments come?
Depending on the company, royalty payments can arrive monthly or quarterly.
Are my royalty payments transferable?
Yes. If you plan on selling your property, notify the gas company that is leasing your land and your realtor. They will make arrangements to allow the royalty payments to transfer to a different land owner.
What are royalties?
Royalties are payments from the gas company to the landowner as part of a lease agreement. Royalties payments cannot begin until production begins. The payments are dependent upon the market price of the resource.
After reading Alan Wegners comments about being suspicious on amending our leases, what should a land owner do to feel comfortable about waiting out for some kind of compensation for amending a lease? The oil companies tell me they don’t pay for amendments and if I don’t sign what they have then I’m not going to be left out as part of the unit which is planned.