Replies to This Discussion

Permalink Reply by w.r. frank on December 10, 2012 at 17:20

I have seen royalty statements retroactively charge post production expenses for over a year on several occasions. By chance are CHK and/or PXP involved? Do you have some form of "no cost" royalty clause?

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Permalink Reply by Jo Ann Carter on December 10, 2012 at 17:55

I had to send a certified letter to CHK asking for an explaniation of the third party charges. Your royalty check shows 0 deductions. They will send it to you, you just have to ask by certified letter. The charges were deducted from the gross value of the gas when it was measured at the well. This lowered the gross value of the gas, and it is refered to as the net value. The net value is multiplied times your decimal value which reflects your share. CHK then pays you a dollar amount that they have sold the gas for. I think I have this right. When I called and ask, I was told that the deductions were embedded and that I would have to ask for them.

My take on this is, if they charged me for the deductions then I should be able to know so that I can deduct it on my taxes. There is a transportation charge, a fuel charge, gathering and treating charge. All of this when my contract called for no transportation charge and to be paid at the well head where the gas is measured when it comes from the well. I have a royalty intrest not a working intrest. Actually they are selling the gas at a cut price to another party and charging everyone in the section for the gathering, transporation,treating and whatever a fuel charge is. What good is a contract anyway? But enough of my ranting. If you send a certified letter they will respond to your question. Make sure you keep all of your corespondance.

If I am wrong, please someone correct me.

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Permalink Reply by JHH on December 11, 2012 at 2:49

Thanks Jo Ann and WR. This is an old lease... almost 30 years... and i don't think we have much protection but other family members would know better.  Our family has had issues with the current operator... but i think all in all they very good at drilling and producing.  Just hope this "accounting" issue isn't something that becomes a problem!  

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Permalink Reply by Mark384 on December 11, 2012 at 12:50

I can understand your anger. While the Oil basically runs through a pipeline, the Gas has to be transported by truck. And the "Gas Transpertation Fees" are so High, that they can actually eat up more than half of the money that you make from the Natural Gas portion of your check. So in the end, you are.left wondering "how they can actually spend that much money just to transport Gas?" 

So do they really spend that much money to transport Gas? Ha! Just stop and think about it. The price of Natural Gas right now is actually less than $ 3.50 per MCF and these O/G Companies need for Gas to be about $ 4.00 per MCF just to make some type of profit off of it. So if your well is producing "primarily Natural Gas," and Minimal Amounts of Oil, then you can "expect" to be the victem of this type of thing.

I try not to blame the O/G Companies for this. Rather, I am angry with all of the greedy people on Wall Street who attempt to 
Shortsell Natural Gas in attempt to make a profit. Were it not for them, there wouldnt be as much Fear in the Natural Gas Market," and the price of Natural Gas would probably be closer to $ 4.50 by now.

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Permalink Reply by JHH on December 11, 2012 at 12:54

Thanks Mark384... Our gas is transported by pipeline and the liquids by truck.  You're right... it is frustrating and it looks like in some cases... the double transport costs more than the well is making.  very odd... but i;ll keep looking into it. jhh

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Permalink Reply by Don Robertson on December 11, 2012 at 13:55

I have been getting royality checks since March 2011.  In Sep 2012 I didn't get a check.  So I called Shell and asked them why.  They said I didn't have enough credits.  So when I got my Oct 2012 check they took out $10K in transportation costs dating back to Jul 2011.  The only reason I got a check in Oct is Shell told me they were rebating the La severence tax as I didn't need to pay it anymore.  Then I get my Nov 2012 check and they take out La servence tax again!  I don't know what is up with Shell.  I have interest in 3 wells in Desota  and all 3 are a Encana/Shell parnership.  I have never had a problem with Encana checks but my Shell checks blow my mind.  I wonder if Shell actually has accountants.......lol.

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Permalink Reply by JHH on December 11, 2012 at 14:04

sorry to hear that!  i think all of the o/g companies are trying to make up for losses during the price dip.  good luck when getting someone on the telephone... and they have more lawyers too.  one day we'll have more of a say.

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Permalink Reply by Don Robertson on December 11, 2012 at 14:16

I have no problem getting in touch with owner realations with Shell.  It is just what they tell me I have a problem.  Its like nothing I can do.  I have alredy spent several thousand dallors on lawyers with other problems with Shell.  All to no availe.  I should not have to spend a penny on a lawyer with a problem I have with Shell.  After all they are extraction gas from my propery, not theirs.  Also they got their money that paid for the drilling expenses etc after 3 months of production.  Why do they have to punish the land owners any more?

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Permalink Reply by JHH on December 12, 2012 at 2:20

as far as i can tell... the landowner/royalty owner is trash to many O/G companies.  And they know the typical owner can't afford to sue... and will be long dead before anything ever gets resolved.  There are a few real good companies... and treat royalty owners real well.  So far... Penn Virginia has been a very good company.  The rest will bully you if they can get away with it.  Especially one that shall not be named!

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Permalink Reply by robert minton on December 12, 2012 at 14:21

Natural gas is transported  by pipeline.; oil is transported from well by truck in most caSES!

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