Replies to This Discussion

Permalink Reply by w.r. frank on August 9, 2010 at 5:34

Henry,

Great effort and really needed. If we can get 40 or 50 people to supply data from CHK, ECA, HK, XCO, CRK, SWEPI, plus Henry Hub, then we will have a good statistical sample. Once you get enough, a picture is worth a 1,000 words or numbers. Get Excel to average all operators and then give each operator and HH a color and put into a graph with months on horizontal axis and price on vertical axis.

Right now the small data set makes CHK sales to a sister company look terrible.

Keep up the good work!!!

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Permalink Reply by Les Bamburg on August 9, 2010 at 7:08

WR, just to clarify it is the NYMEX price (final settlement) that is most relevant rather than the Henry Hub cash price.

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Permalink Reply by adubu on August 9, 2010 at 7:45

henry--I ditto GD's comments---good job--great info--thanks

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Permalink Reply by Bill McDaniel on August 9, 2010 at 11:53

Henry, I was thinking of starting a similar project, not because of price so much, but because Camterra suddenly after 6 months of low deductions, began to play Enron on us. They went back and deducted about 4 percent extra for all the months where there were no deductions then starting in Feb, deducted the following for the four months: 9.8%, 20.27%, 22.65%, and finally 19.73%. Suddenly, we find out that they had sold out to CHK! At first, I thought 'well, maybe this could be good', but when I looked at your spreadsheet, I now think'my god'!
My point is this. If we could examine deductions as well as price, what would we see? Are the no-cost people paying out the nose for punishment? These facts are not clearly revealed on your spreadsheet. I'm also a little confused over the 'leased to ' column and maybe it should say 'who writes your check?" For instance, Empresa originally leased the land, drilled a vertical well, went broke and sold out to CHK. Then lo and behold, here came Camterra and drilled a haynesville horizontal well. So we got one check from CHK and another from Camterra.
OK, so here is my data
Field 2360 Caspiana
14W, 15N, section 3, well 239603.
Camterra changing to CHK
Driller was Camterra..I assume you are not asking for the company who owned the rig.
Not a cost-free royalty.
The entire section is leased to the best of my knowledge.
Price: I'll start way back
Aug 09 $3.14
Sep 2.78
Oct 3.53
Nov 4.18
Dec 4.58
Jan 5.78
Feb 5.30
Mar 4.67
Apr 3.75
May 4.05

I downloaded your spreadsheet and stuck my stuff on it to look at. I also track the average Henry Hub daily spot price as a benchmark and stuck it on the bottom. I'm not suggesting you use the spreadsheet, but its there if someone wants to look at it have it it.

Thank you for your effort.

Bill

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Permalink Reply by JD on August 10, 2010 at 11:02

William,

I checked your S-T-R. Your Chesapeake well apears to be a Hosston well. The Camterra well is a Haynesville well. Are you receiving payments from Chesapeake on both the Hosston and the Haynesville wells?

JD

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Permalink Reply by Bill McDaniel on August 11, 2010 at 3:01

You are correct. The CHK well was purchased from Empresa. It was down at about 11000' and petered out. Initially got as much condensate as gas. Then moved up to the Hosston layer. CHK has kept the well shut down most of the time, and recently I got a final check for $27.00. Word is that CHK may use the hole and drill horizontally through the Hosston formation. The other well is/was Camterra horizontal haynesville. Haven't gotten any information from CHK, but a Camterra employee said they had sold out. The matter may be moot. 20% lost to Camterra or a dollar less from CHK. The big question is: Will CHK deduct 20% first then pay a dollar less? I suspect so.

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Permalink Reply by Henry on August 11, 2010 at 2:47

I now have a third, confirmed report of Chesapeake paying a dollar less than all the others. This report comes from a different field than the two reports I already had. And, more important, I have no reports of Chesapeake paying a price comparable to all the others. But... I NEED MORE DATA!

Please send me your gross gas prices. This is the gross price you are receiving for your gas. It will be printed on your royalty statement. I would like to have data from all operators and from many fields. You may friend me, and send me your info privately. I will not post your name, or even your area, if you ask me to keep it confidential. Thanks to those who have already sent their into.

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Permalink Reply by Henry on August 11, 2010 at 5:59

JD,

You obviously know a lot more about this than I ever will. It will take me some time to read these, and digest them, but I get the gist of what you are saying. Is it legal? I have no clue. I suspect if it were truly legal, the others would all be doing it. And, obviously they aren't.

Also, many people have a clause in their lease that prevents the operator from selling at a discount to an affiliated partner. I've seen wording that says if the only market is to an affiliated partner, the lessee is obligated to give the royalty owner the "best price obtainable from time to time in the field or area where the gas is produced." Would this language prevent CHK shafting the lessor?

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Permalink Reply by Les Bamburg on August 11, 2010 at 6:27

JD, I just have a couple of comments.

It is not clear if Louisiana Midstream is purchasing the gas or merely transporting the gas.

The downstream pipelines (Gulf South, Texas Eastern, Texas Gas, etc) are not purchasers but rather just transporters of natural gas. Other entities (marketers, utilities, industrials) would be the gas purchasers. The transaction would be either Chesapeake or Louisiana Midstream depending upon who has title to the natural gas.

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Permalink Reply by JD on August 11, 2010 at 6:51

Les B,

I am sure you know a lot more about this than I, but on the "RDT Natural Gas Transporters Detail Report" there is an important item noted. Under the Gas Disposition Details section, it says "SALES TO TRANSPORTER". That being from Chesapeake to Louisiana Midstream (917L). Am I missing something?

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Permalink Reply by JD on August 11, 2010 at 7:40

Les B,

Let me correct my last statement. I looked under the "Transporter Cross Check Listing" for Louisiana Midstream (917L). This is where I found SALES TO TRANSPORTER from CHK to Louisiana Midstream. Seems pretty clear to me.

JD

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Permalink Reply by Les Bamburg on August 11, 2010 at 9:04

JD, the term "Sales to Transporter" is just a throwback to the old days when pipeline companies were the only gas purchasers. Really the volumes are just being shown to identify the takeaway pipeline rather than the actual natural gas purchaser. For example I could sell my share of gas to a gas marketer at the wellhead but all the volumes will be reported on Sonris under the takeaway pipeline. That is the reason you only see pipeline companies listed.

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