Energy Industry (Oil & Gas)/Gas lease terms changed

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Question
When we signed a gas lease in our neighborhood, a group of us joined together to negotiate with Devon. We were able to negotiate our property size to include up to the middle of the street instead of stopping at the driveway.  Devon must have sold their leases or something because it is Chesapeake that is drilling.  When they sent out the division order it does not include our negotiated property size.  Basically, they told us that our contract was with Devon and they are Chesapeake and that they surveyed the property and would only pay us according to that survey.  I spoke with most of my neighbors and all of them signed the payment order without realizing the size had changed.  We are only talking about  a difference of .375 to .397 but it really bothers me that they think it is ok to ignore the original lease.   The way I see it, they couldn't drill at all without enough leases and if they got them from Devon they should have to honor them.  Can they do this?  I have been sitting on this for a few years because it just makes me mad but I want my money.  Is there a way to make them honor the lease without spending a fortune?  I figure either Chesapeake or a lawyer will get the difference in payout.  The difference to me personally is probably just not worth sitting on it but it is the principle of the thing.  They steal a little from me but add up all the neighbors over the course of time and they are stealing a lot.  Is it worth trying to do anything?

Answer
Negotiated your property size? You mean you were able to get Devon to pay you a bonus on more acreage than you actually owned (assuming you didn't own the middle of the street.) I've never heard of such a thing, but if you do in fact own to the middle of the street then I agree Chesapeake should pay you to the middle of the street. Apparently their landman differs from Devon's in their estimation of your ownership boundaries though.

I'm sure Chesapeake wants to pay you for all you own, but you might have to run the title yourself to figure out exactly what that is since your figures apparently differ from theirs.

If you don't like what Chesapeake came up with then you could refuse to sign their division order when it's mailed to you, though if there continues to be a title dispute they may well put your money in a suspense account until they can figure it out. You would be due interest of at least 6% on any suspended funds once they were released.

Is it worth doing anything about? Probably not on an individual basis, but I'm sure there are some class-action attorneys reading this who might take up your cause (for a percentage of anything they won) if they could find enough similar leases to get a class-action approved.

Frankly though I'd be more worried about Chesapeake (or any other company) taking more out of my checks in deductions than my lease or state law allowed for (i.e. for compressing, dehydrating, marketing etc. gas) than I would be about whether they are paying me on an extra .022 acres.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
www.mineralhub.com
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Energy Industry (Oil & Gas)

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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written articles of interest to mineral rights owners which have appeared in various industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and land and title work over the past ten years, and have also worked as a professional landman. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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