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Oil/Gas/Chesapeake Subordination


We signed the oil and gas lease with Chesapeake last year.  A few months ago, we refinanced our home.  According to the letter from Chesapeake, we only need to involve the mortgage company if the lease was signed AFTER we completed the mortgage.

I think we are safe in signing the Statement of Exemption and not involve the onerous process of paperwork and $300 to the mortgage company?

This isn't necessarily a cut and dried question and answer scenario.  If the original mortgage was fully released when you refinanced then the lease will not need to be subordinated.  On the other hand, if the mortgage was refinanced with the same lender then it may be more of a renewal and extension (even though it says refinance).  A change in the payment, interest rate and term usually means a new lease.

I hate to say it but you will need to read the new mortgage document to determine what the mortgage has to say about "Prior encumbrances".  I think, if I were in your shoes and not familiar with the process, I would call Chesapeake and speak with the person requesting the subordination and explain your situation.  They will have a staff attorney that can review a copy of your new mortgage and determine whether a subordination is required.

Hope this assists some.


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Cliff Williams


I will try to answer any question you have. Even if I reject a question, I still will give a shot at what I would do in your position. The only questions I will not take a shot at would be a highly technical engineering or geological question. I am beginning to see quite a few questions from land men and other oil companies and that doesn't matter to me either. I will attempt to help.


I am an oil and gas attorney that has been in the business for more than 20 years. I have held a series 22 and 63 securities license, been in oil and gas operations, land man, division order analyst all prior to obtaining my law degree. Today, I typically write title opinions verifying ownership of oil and gas minerals, assist landowners in negotiations on oil, gas and mineral leases, easements and conveyances. I also assist oil and gas companies with the sale of working interest ownership as well as common business law issues.

State Bar of Texas, Member of the Tarrant County Bar and the Dallas County Bar Associations.

Multiple oil and gas topical columns on

I have a B.S. degree which I rely upon more than my Business Mgmt degree or Law degree...

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