Replies to This Discussion

Permalink Reply by Gary on November 16, 2011 at 13:18

I think this "should" be simple, however my experience varies.

Payment decimal from a Division Order, is straight forward, and logical.  Payment decimal in check stubs from Chesapeake seem to have no logical basis, as they seem to vary overtime, and get re-adjusted frequently. (If anyone has insight to why Chesapeake does this, I'd like to hear it.)

 

To compute your payment decimal, one needs three numbers:

1) Size of the unit (this will be something close to 640 acres and is reported on the D.O.)

2) Number of acres in your parcel.

3) Your Royalty percentage (from your Lease agreement).

Then, payment decimal := (#2/#1) X (#3).  This is a decimal value less than one (1.0).

Hope this is useful.

 

Regards,

Gary

Permalink Reply by doughboy on November 17, 2011 at 13:26

Gary, your method of calculating is right on the money ( no pun intended). I also noticed on my last check that my payment decimal had been reduced significantly resulting in a pretty measley payment. I called Chesapeake and they said I had been overpaid in Jan and Feb (payment decimal was higher those months) because some of Chesapeake's partners did not want to sell their gas at the time but have since decided to do so. So they went back and recouped the overpayment. I expressed my displeasure with the way it was handled by constantly playing with the decimal. Told them I would be calling back if it was adjusted again in that manner. Of course it fell on deaf ears I' m sure.

Permalink Reply by Ken Boone on November 17, 2011 at 15:44

I am confused on why anyone's payment decimal would ever change since all of the 3 factors are constant.

The 640 acre unit won't change, will it? And the number of acres you own in that unit shouldn't change. And your royalty won't change either. Please give me some reasons why the payment decimal may change. I am new to all of this.

Permalink Reply by waltcop on February 23, 2012 at 11:25

Ken, here is what is happening in my case.....I have not received a DO yet but received a check yesterday from my lease holder due to a demand letter requesting payment after 9 months of production by CHK. My lease holder blamed CHK for not reconnizing all their lease holds in the unit causing the delay. Well, the payment decimal on my check stub is far short of my lease acreage specified in my lease, plus I was shorted approx .25 acres by the leasor which, I hope, will be corrected by the "plus or minus" clause in the lease.  So, I am certainly hoping the payment decimal can/will change in my case.  And, I am hopeful that I may go ahead and cash this initial check while things are being corrected. I can cash my check without the fear of agreeing to the payment decimal shown on my check stub, can't I?

 

Permalink Reply by Ken Boone on February 23, 2012 at 13:10

Waltcop, I was curious to know if CHK mailed you out a royalty check for all 9 months?

" I can cash my check without the fear of agreeing to the payment decimal shown on my check stub, can't I?"

I have no idea.

Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2012 at 14:02

LA. mineral law does not require a lessor to execute a Division Order to receive their royalty payments.  The "more or less" boiler plate language means that the acreage amount is not exact.  That's why surveys are performed in conjunction with Division Order opinions.  The royalty decimal calculation will be based on that survey.  You can dispute it and perform your own survey.  If your survey disagrees with that of the unit operator you can then go to court.

Permalink Reply by waltcop on February 24, 2012 at 11:35

Ken, I contacted my lease holder regional land manager today and she asured me that it is ok to deposit my first royalty check without fear of the payment decimal being accepted as accurate. They claim that after 9 months of trying to get CHK to respond to their lease hold acreage CHK finally gave them something, even though it is incorrect, so they sent a check for the first 6 months of production without a DO.  I am NOT leased with CHK but CHK is our unit operator.

Permalink Reply by Ken Boone on May 31, 2012 at 2:30

I have a question about the formula used.

For the # of acres in my parcel, would that be mineral acres that I have or the total actual acres of surface acres?

If I share 40 surface acres with my brother but we only have 20 mineral acres, that would be 10 mineral acres for me and 10 mineral acres for him. Would the formula be

10/640 x 0.25= or would it be 40/640 x 0.25=