Sometime back on this board, there were a discussion on "flippers," those parties who seek to purchase land at a discount then sell to the highest bidder.
At that time, many people were saying "Know Thy Operator" as if it were a commandment from the Allmighty. Followed by "I would never lease until I know the company behind the lease."
The Flippers were judged to be evil because they were capitalists and that of course is bad. Well, it's good, until it is your land that is sold at a profit to hopefully someone who will develop it. Then it sucks. Kinda like justice. My old pal, Jack Brook, told me,"Buddy, everybody wants justice until its their neck in the wringer."
Enter Chesapeake.
An Operator.
Big Independent, not extremely vertically integrated.
Plenty cash on hand (2005-06)
2nd largest natural gas producer in the nation.
No reason not to lease to a powerhouse like them, right? I mean back in the halcion days of gas shale plays.
Chesapeake has perhaps made more money, quicker, at less risk, by commercializing their leases by selling them (oops, "flipping them") to another company/investor, and likely retaining a small share of production.
So, your lease can easily end up with someone whom you would prefer not to own your lease. Perhaps a bad experience in the past.
What do you do now?
What can you do now"
Like the old band WAR said, "Absolutely Nothing. Say it again."
The time for forward thinking on the part of the mineral owner has passed.
What could you have done? Make sure that you have an airtight lease form. Especially if you are the surface owner.
The story does not end here. Chesapeake is the tip of the iceberg. In the next years, companies heavily invested in dry gas plays will have to do the same thing. How can they? Who will buy? This would be when they hope that the Greater Fool Theory works in their favor. Who will be the next greater fool on dry gas.
This is not a condemnation of all dry gas/wet gas shale plays. Some are better than others. Most are just not economic.