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Discussion Starter #1
http://www.reuters.com/article/2011/12/28/us-energy-giant-newspro-idUSTRE7BR0HS20111228

Late in the summer of 2010, hundreds of farmers in northern Michigan were fuming.

All had signed leases with local brokers permitting drillers to tap natural gas and oil beneath their land. All were demanding thousands of dollars in bonuses they had been promised in exchange. But none knew for certain whom to go after.

That's because the company rejecting their leases hadn't signed them to begin with. In fact, the company issuing the rejections wasn't much of a business at all. It was a shell company - a paper-only firm with no real operations - called Northern Michigan Exploration LLC.

One jilted land owner, Eric Boyer-Lashuay, called to complain to the broker who had handled his lease. Northern, he recalls saying, is "a shell company ... a blank door with no one behind it."

Today, he puts it this way: "It was all a fake, all a scam."

Northern has voided hundreds of land deals, and was indeed a facade - a shell company created so that one of America's largest energy companies could conceal its role in the leasing spree, a Reuters investigation has found. Oklahoma-based Chesapeake Energy Corp. (CHK.N), the nation's second-largest gas driller, was behind the entire operation.

Chesapeake had created one shell company that set up another, Northern Michigan Exploration. Next, Northern hired brokers who signed leases with residents such as Boyer-Lashuay. And those brokers were under strict orders not to divulge Chesapeake's role, records reviewed by Reuters show.

In fact, the effort in Michigan was directed from the very top - by Chesapeake's CEO, Aubrey McClendon. In corporate filings that Chesapeake made public earlier this year - nine months after McClendon's agents began signing Michigan land leases - McClendon is named as the chief executive officer of Northern, the shell company that voided hundreds of those leases.

Chesapeake's effort to hide its involvement isn't illegal.

Chesapeake's own website advises land owners that their "main consideration" before leasing should be "to discover who will ultimately be producing your minerals." But Chesapeake's strategy made that extremely difficult for the Michigan land owners.
 

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Is this where I am supposed to feel sympathetic for the lesee's?
 

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really ? this stuff appens every day. real estate buyers get options to buy signed by bordering land owners, then try to sell the land to developement companys. gas comps get lease agreements signed , then do some "R&D" to decide if they want to go through with the deal. in both cases if things dont work out, the land reverts free and clear back to land owner........no one is twisting there arm to sign!!
 

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Caveat emptor.

I have stated that lease agents can be lower than low, but it is still up to the landowner to do all their homework before they sign any lease on their property.
 

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Re: Energy giant hid behind shells in "land grab"

G17 - I'm guessing you're posting this as a public service to all us naive landowners?
Or was there another purpose?
 

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Discussion Starter #6
HomeintheWoods said:
G17 - I'm guessing you're posting this as a public service to all us naive landowners?
Or was there another purpose?
I'm posting a recent news story concerning gas leases in a gas lease forum. You have a problem with that why?
 

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Discussion Starter #7
buzz said:
really ? this stuff appens every day. real estate buyers get options to buy signed by bordering land owners, then try to sell the land to developement companys. gas comps get lease agreements signed , then do some "R&D" to decide if they want to go through with the deal. in both cases if things dont work out, the land reverts free and clear back to land owner........no one is twisting there arm to sign!!
Nope no one twisted their arms to sign. They offered a signing bonus. The more than 800 landowners affected by this signed in good faith expecting to receive said signing bonus. Then 97 percent of the contracts were voided and no bonus was paid. Will be interesting to see how it plays out in court as approximately 115 of those landowners are sueing for breach of contract.

In any case, I find it interesting as gas leasing is still happening in my neck of Penn's Woods. Had someone out on the 23rd wanting to discuss leasing my property...again..
 

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Be real interesting to read those contracts. Basically, the language would have to be very specific as to a refuseal clause.

In any event, if the persons agreeing to the contract were sane, of legal age, and not under the influence of some substance, and they signed on their own free will - the contract and all provisions are valid.

IF - the court finds otherwise - it is what it is. The court will determine penalties and or damages - or not.

Business's shielding their identies is a common practice. Just as it is for a third part representative buying property for non-business purposes. Bad feelings, turf wars, and the such have had others acting to purchase all sorts of things.

Tends to only tick off the person selling once they find out the person they wanted not to get whatever got it.

It is a grown up world we live in. Those that engage in that world need to be aware and get help if they have questions. Might be why standard avise for a basic residential house purchase is - get your own attorney.

Same thing applies with gas leases. The most casual investigation on the net will show this advise to be well published over and over and over by lots of people. The forums, this one and others, have had that advise posted for years.

Problem is, people see the money and the heck with fine print... even if it is the same size as the $$$ numbers on the contract.
 

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Discussion Starter #9
Agreed.. would love to read the contracts.
Nothing againt shells, as you said happens all the time.. which is why i made sure to include the quote that it is not illegal.

Towards the middle of the story, it seems CHK is saying they didn't cancel any contracts, but did reject some because property titles didn't pass muster. If that's the case, Michigan must be a worse clustermug than around here LOL.

In any case, I thought it was interesting and will be watching to see the outcome.
 

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My lease doesn't allow the transfer of the lease to another company. So when it was time to sign Chesapeake's name was on the lease. This is why you need a lawyer.
 
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