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Started By
Message
Now that HS leases are starting to expire...
Posted on 6/22/10 at 10:04 am
Posted on 6/22/10 at 10:04 am
anyone heard back from Cheasapeake or Petrohawk regarding lease extensions? if there's not a well yet on the property are they letting the leases expire or are they renewing them?
my 3 year is up next may and its like trying to get into fort knox to get any info out of these companies.
my 3 year is up next may and its like trying to get into fort knox to get any info out of these companies.
3
Posted on 6/22/10 at 10:12 am to CAD703X
Why are you trying to remind them?
Posted on 6/22/10 at 10:20 am to CAD703X
Posted on 6/22/10 at 10:30 am to CAD703X
Ours would have expired in March. Imagine my disappointment when I pulled up Sonris in late Feb and saw they (Encana) had managed to punch Haynesville holes in order to gain leasehold in every section. 
Posted on 6/22/10 at 11:20 am to Tiger JJ
JT, same thing happened to us in April except it was one week prior and had been given info that they were not going to drill it b/c so much of the remaining section was unleased. Already had negotiated a new lease. Like a swift kick to the nuts I tell you. Looking forward to seeing production info on the new well though
Posted on 6/22/10 at 11:26 am to DandyPimp
I can't imagine these companies letting too many of the leases go, for 1 of 2 reasons:
1) They leased the land for dirt cheap (under $500/acre) before the land grab started and can't afford and or don't want to spend the money to re-lease at the current rates ($5000/acre)
or
2) They leased the land at the height of the land grab ($15-20K/acre) and have got to put a hole in the ground to try and get some of that money back.
They probably won't be able to keep all of it, but you can bet they'll try their hardest.
1) They leased the land for dirt cheap (under $500/acre) before the land grab started and can't afford and or don't want to spend the money to re-lease at the current rates ($5000/acre)
or
2) They leased the land at the height of the land grab ($15-20K/acre) and have got to put a hole in the ground to try and get some of that money back.
They probably won't be able to keep all of it, but you can bet they'll try their hardest.
Posted on 6/22/10 at 11:51 am to LSUGUMBO
Posted on 6/22/10 at 1:44 pm to Tiger JJ
quote:
Ours would have expired in March. Imagine my disappointment when I pulled up Sonris in late Feb and saw they (Encana) had managed to punch Haynesville holes in order to gain leasehold in every section
i'm not sure i understand what happens after the 3 years is up. if they have a hole do they have the option to re-lease at the same rate on a year-to-year basis? is the concern that if it doesnt expire you can't renegotiate at a potentially more attractive per/acre cost?
i need to go back & reread my lease papers..haven't pulled them out of the drawer in a couple years.
This post was edited on 6/22/10 at 1:45 pm
Posted on 6/22/10 at 1:58 pm to CAD703X
quote:
i'm not sure i understand what happens after the 3 years is up.
The lease they sign with you is literally an option for them to explore for gas on your acreage for up to 3 years. If they do not do so in the 3 year period, then the lease expires. If they do punch at least one functioning hole (and actually it might not even have to be functioning), then the lease becomes "held by production" and the royalty splits apply going forward.
Posted on 6/22/10 at 2:09 pm to Tiger JJ
quote:
and actually it might not even have to be functioning
All they have to do is spud a well on the lease. All they have to do is turn the bit to the right and break the ground the day before the 3 years is up.
Posted on 6/22/10 at 2:14 pm to Lil Man
Virtually all of the leases I've heard of are being extended. Most leases have a 2 year option provision so if they pay you a per-acre rent in year 4 and 5 they keep the lease. The rents are obscenely low, so these companies are typically paying them rather than having to release or lose out to someone else.
Posted on 6/22/10 at 3:39 pm to ShreveportTiger07
quote:
Virtually all of the leases I've heard of are being extended. Most leases have a 2 year option provision so if they pay you a per-acre rent in year 4 and 5 they keep the lease. The rents are obscenely low, so these companies are typically paying them rather than having to release or lose out to someone else.
so let me get this straight. i signed a pretty straight-forward boilerplate lease with petrohawk...3yrs/5k acre, 1/4 royalties.
so they might add 2 years at (5k/3)*2 on the option? so we'd get $1666/acre (or $3,333/acre) for the additional 2 yrs?
i know i need to look back at the lease papers but i was always a little unclear on precisely how this part worked.
This post was edited on 6/22/10 at 3:40 pm
Posted on 6/22/10 at 9:28 pm to Lil Man
All they have to do is spud a well on the lease. All they have to do is turn the bit to the right and break the ground the day before the 3 years is up.
This. Exactly.
This. Exactly.
Posted on 6/22/10 at 10:23 pm to LSUMBA91
My lease with CHK expires in 11 months, they have just unitized the section. Most of the leases in my section had an option for 3 year renewal, but at the same rate per acre as the first term of the leass. My lease was done by a oil and gas attorney as part of a group negotiation, and is not the typical "boilerplate" handed out by landmen. It requires a producing well to avoid expiration, just an effort to "spud".
Posted on 6/23/10 at 8:05 am to JWS3
quote:
My lease was done by a oil and gas attorney as part of a group negotiation, and is not the typical "boilerplate" handed out by landmen.
i should point out that this is how we handled it as well. we had someone negotiate on behalf of all the folks that were part of our 160 acre lot. i was just happy to get the acreage price and 1/4 royalties so i fully admit to being ignorant of all the 'fine print'. i was too busy multiplying the per/acre price by the # of acres i had over and over and over again in my head
yep i'm easy.
This post was edited on 6/23/10 at 8:06 am
Posted on 6/23/10 at 10:00 am to JWS3
quote:
is not the typical "boilerplate" handed out by landmen.
Whenever someone tells me, "it's ok, it's just a standard form," I reach for my revolver.
Posted on 6/23/10 at 11:28 am to Cold Cous Cous
quote:
Whenever someone tells me, "it's ok, it's just a standard form," I reach for my revolver.
I am a semi-auto type guy, capacity becomes important when there are multiple lawyers in a room.
Posted on 6/23/10 at 12:10 pm to Cold Cous Cous
quote:
I reach for my revolver.
Should've stopped using those in the early 1900's, brah.
Posted on 6/23/10 at 1:44 pm to LSUMBA91
quote:
All they have to do is turn the bit to the right and break the ground the day before the 3 years is up.
That would only hold it for an additional 60-90 days on most of the leases i've seen (continuous operations).
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