Replies to This Discussion

Permalink Reply by JD on August 3, 2010 at 8:08

Baron,

Do you have an opinion about Chesapeake selling to an "affiliated purchaser"? Wouldn't it be easy to buy low and sell high? Seems like there would be a law against that.

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Permalink Reply by The_Baron on August 3, 2010 at 8:15

I do have an opinion.... probally better to keep my mouth shut....

I also agree, it might be easy to buy low and sell high... not to mention to seperate your hedging.....

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Permalink Reply by Mac Davis on August 3, 2010 at 9:53

I suspect we're basically screwed until we group together and get an organization to audit payments and accounting, etc.

Or wait for the government to actually regulate the operators and issue some monumental fines for fraud.

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Permalink Reply by JD on August 3, 2010 at 10:32

In the month of 05 when the Henry Hub averaged around $4, the price reflected on my stub was closer to $3. With the amount of $$$ that is being generated by the Haynesville Shale, I would hope the State of LA would be paying closer attention than it ever has before.

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Permalink Reply by JHH on August 3, 2010 at 12:21

Here in East Texas... we got less then $3 for gas on April and May production... on a very prolific well. i hear there's state law that forbids an operator from deducting "costs" from the price of NG. Not naming names until i get some legitimate answers from the operator. so far... no luck.

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Permalink Reply by adubu on August 3, 2010 at 13:29

JHH---unless you have a Royalty Free clause in your lease you will pay for cost preparing the gas/oil and transporting thru pipeline/ or other transport to point of sell. These will be deducted plus taxes from the price of NG those are legal deduction dependant on your lease agreement. No the operator can not deduct any thing associated with drilling ( IDC, lease cost, drilling rig, drilling the well,pad site, etc)and producing the gas ie WI cost. The question is how can we verify they pay correctly the royalty to owners.

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Permalink Reply by JHH on August 3, 2010 at 13:41

adubu, thanks for your response. i am aware they can deduct certain costs... but they must be listed. i didn't think they could just reduce the price they got for gas sold... because eventually an operator could say... we sold the gas for 20 cents... because our costs went up.

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Permalink Reply by adubu on August 3, 2010 at 14:04

JJH--they are itemized on check summary for each well in unit if more than one well. It will show gross adjusted for BTU rating then all deductions = net for well then mutiple times your decimal interest you own in well for your royalty amount due you. These things were outline by The Baron in earlier reply 1st page. Again the question how can we verify the accuracy of the numbers? Can we verify what operator received to be correct before all the deduction are taken out and are this amount correct? The only way is request by certified mail and hope what they give you is correct information then only by comparsion to units close in location with difference operator what other royalty owners receive in payments which is what Henry is trying to obtain this data to compare. HENRY---Maybe we should start new group "List what you receive this month for your royalty lease NG price--don't need your total income or anything except your NET NG PRICE received and location of unit and name of operator and month received

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Permalink Reply by JHH on August 3, 2010 at 14:18

Again, thanks... very helpful. This is a good example on how well this site can work! The only one deduction on my stub... taxes.

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Permalink Reply by king john on August 4, 2010 at 3:32

not that this gives any insight as to how the money was spent specifically, but in the past, as a cross check, i use the texas railroad commission's website to compare what my check has for deductions and what the production page for that well has for disposition. when you look at the production totals for a given well at the top of the header you will see disposition. click on it and it brings up a new screen with the adjusted production totals as well as what was deducted and what category it falls into. i also like to go by the well sites as often as possible and i read the meter first hand and compare those numbers to the states totals. i may not read the meter that often, but the new ones flash a cumulative total for the life of the well. it makes it easy to compare. one of the operators has stated they would send me detailed information upon written request. I've never requested it because there has not been any discrepancy up to this point.
kj

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Permalink Reply by adubu on August 4, 2010 at 3:45

kj--good info however the accumulative total on the meter is the amount produced since the meter was reset last not necessary since the well when on line from 1st production. Did not know that adjusted production totals was on the rrc site. Live and learn--Thx

Permalink Reply by Kat Bloomfield on August 4, 2010 at 4:42

Apropos of nothing, . . . actually, apropos references to hedging, some may find the uploaded case of interest. Once again, the wonderful world of finance at work.

Attachments:

• hershey v energy transfer.price fixing.09-20651.pdf, 5.6 MB

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