Saturday, August 25, 2007

The Devil Is In The Details

As Tom Waits once sang, "The large print giveth and the small print taketh away." Those of us in Fort Worth who have previously signed gas drilling leases are finding out how true those words are.

As this morning's Star-Telegram reports, Fort Worth residents are finding that signing over their mineral rights may actually cost them money.

Sayeth the Startlegram: "Before they can cash their royalty checks, they have to get legal releases called subordination agreements from their mortgage companies. And the mortgage companies are asking for fees that amount to several years' worth of royalty payments. Gas-company officials said the problem may affect every homeowner who has signed a gas lease after reaching a mortgage agreement. That could include thousands of people in Fort Worth."

Get this from one Chesapeake executive: "We do realize now that there needs to be a better job of telling people upfront," she said. "We're changing our language in the leases and telling people that they have a responsibility to make sure they get the subordination."

Thanks, guys. That's the first I've heard of this. Is it premature to utter the words "class-action lawsuit"? I'm having a little bit of trouble accepting the fact that I may actually lose money because I signed a drilling lease. Meanwhile, my good friends at Chesapeake and Four Sevens are rolling in the money and laughing all the way to the bank.

Oh, well. Caveat Emptor. If you haven't signed a drilling lease, I urge you to be VERY CAREFUL. You may not be getting what you think.


Bernie said...

The S-T article points out yet another instance of the gas companies' landmen overselling the benefits of lease signing, and conveniently "forgetting" to give homeowners all the information they need.

It's unfortunate that these companies don't want to be better citizens and neighbors, but I think their "well take it because we can" attitude will come back to bite them soon. Sentiment against Chesapeake and friends seems to be growing daily...

Steve-O said...

It's certainly growing in my house.