Devon, Chesapeake execs talk leasing at conference

Top executives at Devon Energy and Chesapeake Energy, two of the biggest players in the Barnett Shale, bemoaned the high cost of getting leases in the Barnett Shale at a New Orleans investment meeting, reports Reuters news service. Chesapeake Chairman Aubrey McClendon, speaking to reporters at the Howard Weil  Energy Conference, called the escalating bonus payments "a discouraging trend," adding that "luckily, the costs of acquiring acreage are generally not a meaningful part of your overall cost equation."

"We are amazed at the royalty rates and bonuses that some people are paying to get into the area," Devon Chairman Larry Nichols told Reuters. Devon got into the play with its 2001 acquisition of Mitchell Energy, the Barnett Shale's pioneer, and expanded that in 2006 with its purchase of Chief Oil and Gas. It has stayed mostly in rural areas, unlike Chesapeake, which has jumped headlong into the most densely populated portions of the play.

-- Jim Fuquay

Devon, Chesapeake execs

Comments

[vero]

which company is drilling in alvarado, tx?

[Chris in OKC]

I think CE is a Enron clone.
And AM is a snake.
I live in OKC, you either play hard and dirty when dealing with Cheapskate Energy or you invest dirty gathering on him.
Deal with them with a willingness to deal a nuclear strike against them.
Devon is either the most ethical one of the 2 or does a better job at hiding it.

[P. Weems]

I would like to say and warn, that Devon in my opinon pales tremendously in the ethical behavior of Chesapeake. Chesapeake tries to negotiate, to be fair, and to be seen favorably with the Johnson County citizens. Devon on the other hand, plays underhanded, does not give a darn about public opinion,does not research property properly, and or does not make sure the lease owners are protected from contractual law suits, as half of their lease declarations have violations, and inaccuracies recorded in the JCAD,and JC Clerks office,and they grab land, that they know they can use without leasing the land, resulting in so called windows in lease pools that are technically Gas Captures......The Tx RRC protects them and blames the legislative inefficency to regulate..The Tx RRC needs a complete overhaul to fit todays times...Barnett Shale times...Tx citizens are being taken advantage of from lease monies,fine print items, to pipeline domain laws to torn up roadways.Devon will not pay a marketable value in bonus monies, they will come within 331 feet of properties un -leased, and they dont care about consequences, because there are none........Beware!!! Do not sign with Devon..That is my experience and opinion...........

[Harrison Bergeron]

Obviously the collective bargaining that neighborhood assocaitions have allows them to negotiate higher up-front bonus payments and royalties. While it is unfortunate that some property owners signed at lower bonuses, at the time that was the fair price. And I know that these Oil companies have more than enough money to offer high bonus payments, but from an economics perspective, this is a business, not a charity. So get over it Harvey.

[Harvey Wells]

Do they also 'bemoan' the $2,000/acre payments and much lower offers made to other areas for the same gas or is it just the market value, that they establish, that troubles them?

[Robert Lalor]

Are the lease payments in rural areas similar to those paid in urban areas?