Replies to This Discussion

Permalink Reply by Joe Neugebauer Sr. on July 7, 2015 at 7:15

I received a "similar" letter approximately 1 year ago. It stated that they had done an "extensive audit" of leases(Barnett Shale) and had determined that they had NOT been deducting expenses they were entitled to". They were NOT going to go back and ask for a repayment from royalty owners, however, going forward they would begin to make those deductions from GROSS royalty checks. Through law suits filed against  Chesapeake alleging under payment of royalties ,gross excessive deductions from royalties, everywhere Chesapeake has operations INCLUDING BUT LIMITED TO ,Texas, Louisiana, Pennsylvania, etc. All this was despite MY division orders stating that royalties from production would be paid at the wellhead price BEFORE any deductions for processing, etc.

NOW it has come out that the former CEO of Chesapeake was allegedly taking loans based on future royalties & pocketing the monies received for himself. All of this came to light after Chesapeake could not repay the loans & they were then 'floated' to some other company.

IF you are interested in learning more ,contact the McDonald Law Firm. PC

3100 West 7th street,Suite #230, Forth Worth, Texas 76107.

Chesapeake will NOT provide me a detailed listing of the "allowed deductions" Nor have they ever itemized any on checks received.

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Permalink Reply by 208ef0t5wi05p on August 4, 2015 at 4:43

Joe,

    You can have a copy of my Chesapeake Royalty Theft Spreadsheet which I will attach below. I'm sure your spreadsheet has the same columns of illegal deductions and Self Sales to CEMI.

Thieves lack an ability to be creative and fall into a pattern of treating everyone the same.

Attachments:

• CHK Theft Spreadsheet.pdf, 2.8 MB

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Permalink Reply by Jesse Joyner on July 5, 2015 at 7:51

Judy, for what it's worth, I've always found QEP to be aboveboard and pretty good at properly managing a JV well with another operator.

Odds are, as you may know, the problem is with CHK, not QEP.

CHK is notorious when it comes to lying and cheating landowners.

The GHS member HBP (who is posting in this thread) knows a good bit about mineral law. Could be he's a lawyer who might could point you in the right direction.

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Permalink Reply by William Howard Pritchartt on July 7, 2015 at 15:13

It is definitely the royalty owner's money not the operator. Any diversion of payments of sale proceeds of product is embezzlement and a felony. However, provided the sales were made each month without interruption and royalties are owed to the vested interest owner as in the is a binding contract between the parties.  Anything to the contrary is a breach of the contract by the operator of non performance.

Consult a reputable oil and gas attorney to write the lead attorney of the operating company certified mail return receipt advising them of your options to seek relief.

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Permalink Reply by bullbayou on July 8, 2015 at 6:51

Judy.................to be frank, all of the responses from all these people have good intensions I am sure.  But when they all say "according to the mineral code" or "get an attorney" or whatever, it will not matter.   You are getting screwed just like everybody else is and there is nothing you can do about it.  Chesapeake plays by Chesapeake's rules and will continue to do so until they are bought by someone else or the Justice Department gets involved.  I don't give a rat's ass what language you have in your lease, or what kind of a "demand" you send them, nothing will change.  Until our lame legislators get involved, you, me and everyone else are going to continue to get screwed!!  I can assure you that no one else in this forum has more knowledge on this subject than me!!!

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Permalink Reply by HBP on July 9, 2015 at 8:39

While I sympathize with bullbayou and agree there are some large issues with CHK, I know from multiple personal experiences that there are issues that can be addressed against CHK in an owner's favor, many without litigation.  If it is just a pure issue of whether deductions are "excessive" or whether price is "reasonable", then yes, those are difficult issues to address quickly because our code and caselaw make the terms arguable based on each situations facts.  But in all situations it is a good idea to stay involved and properly document.  

Again, I understand the frustration.  I feel the same way about certain issues that could easily be addressed in mineral code revisions or clarifications (including how Louisiana could tighten up the articles addressing what info must be provided to the owner, and also clarify recovery options for unleased owners upon payout to match the recovery options of "purchasers" and royalty owners).

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Permalink Reply by William C. Howsley on July 10, 2015 at 12:23

As a reasonably new gas field participant I have watched the original driller, Wiiliams, pass our contract on to a Oklahoma group named Premiere and now to a bunch called Trinity Valley in Houston. Williams' payments were promptly on the first of each month, less so with Premiere and now with Trinity we are still waiting for the check due around the first of July. I can't get even a phone call from them regarding the next step to get paid! I think they all use the same answering machines!
Is there a State agency the we can appeal to?

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Permalink Reply by William Howard Pritchartt on July 10, 2015 at 21:52

I have had quite a crash course in being educated as to the severity of this common problem. I am close friends with a company geologist in Shreveport who briefed me on the current issues and failed attempts of those who sought relief in court and have not succeeded thus far,

This is criminal activity going unchecked and cannot continue and I have been requested to assist in a different plan of attack that may end an ongoing injustice.  I am not at liberty to disclose anything other than what I state here but will do so at the proper time. 

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Permalink Reply by Bacon on July 11, 2015 at 3:01

We did not receive an April payment from CHK either. When I called, they said it was because QEP had not paid them in time to make it. We were paid the following month for April and May. 

It will be interesting to see if this becomes a trend.

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Permalink Reply by Joe Aldridge on July 11, 2015 at 5:02

Hey Guys,

You need to get an attorney to look at this from a Civil RICO standpoint. The damages under Civil RICO are triple plus attorney's fees. Good Luck.

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Permalink Reply by Judy McDaniel on July 11, 2015 at 6:26

Bacon...may I ask is your mineral interest in DeSoto Parish Section 8, Township 13N, Range 12W?  This is where I have mineral rights and the wells are MAY8H1 and MAY8H2ALT. And, CHK pulled this one on me once.  I simply called QEP and they gave me date check was issued and check number.  When I told CHK their response was they couldn't find QEP's payment but they did ultimately pay me for for the month missed.

I am now going to aggressively pursue tax fraud with the Louisiana Department of Revenue.  CHK is charging me 50% more for severance tax than is Freeport.  And, yes, I get two separate payments...one from CHK for 80% and one from Freeport for 20%.  The payments pretty much mirrored correctly, until April, when CHK withheld payment due to audit "going back to 2010" and that is when I looked into the difference.  It is in the amount of severance that CHK is charging compared to Freeport.  As an aside when I spoke with PXP (the original purchaser of 20% of my lease agreement with CHK, they told me they were not "comfortable" with CHK's accounting practices...and I now know why.

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Permalink Reply by Joe Aldridge on July 11, 2015 at 8:05

Judy,

Go to an attorney and allege fraud under RICO. Going to Dept. Revenue won't do any good. They are not going to fight your battle for you. If CHK is sending them more money then They will be fine with that. Go online to whatever search engine you use and type in "Civil RICO". You will get some very clear explanations of the law and how it pertains to a "criminal enterprise". There have been some very creative uses of the law. Good LUCK!!!!!!

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