Chesapeake has changed their accounting system and so the check detail has changed.  According to their letter "the information previously provided on the check detail sill still be shown".  However the only owner total on the statement is for the amount of the check.  No longer are the totals for Gross, Tax, Fuel, Gathering, etc.  I contacted Chesapeake and was told that several owners had complained and they would take it up with management.  The only way for to get totals other than the Net amount would be to add all of the deductions for myself to come up with a Gross.  Hello excel spreadsheet.

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Yep - same here. I just sent an email to owner relations at CHK along with my old owner number and they sorted it out and had a stub in pdf form sent to me. Took about a week.

Follow up phone call to CHK phone number on new pay stub:

1) Why are both Feb and Mar sales included on one pay stub instead of just Feb as it would have been in the past?

"We are making a transition to running 30 days behind on payment, rather than the previous 60 days behind production that we were running, so this month's check should be approximately double what it would have normally been."

2) But, it is not double. It is about one and one-half times the normal amount. Why is that? Is it for a partial amount from March?

"I do not know. I will have the revenue team review your payment detail and contact you with an answer."

3) Why are quantities different from RRC amounts by large amounts?

"I do not know. I'll pass your comments along to the revenue team and have them contact you to explain."

4) What is this new "Payment Decimal" that is being used in place of the owner fraction to calculate the check amount?

"We have had a lot of people ask that. I do not know. I will also pass that along to the revenue team to try to answer that for you."

5) Using your sale quantities (which I am not in agreement with), and the new "decimal payment" fraction, the payment amount is about 50% higher than if I calculated it using my owner fraction as was done on previous paychecks. Though I shouldn't complain (haha), the old saying "what seems to be too good to be true, usually is the case" is probably going to hold true and bite me in the end."

"I agree, and will pass your comment on for the revenue team to research and call you back about."

Not too much learned about the new payment method yet, except the 30 days in arrears versus 60 days change.

Kagay, sounds like you, and many others, need the email address for the revenue team.  This could take awhile.

Skip, can you give a click by click way to navigate to in SONRIS to Original and Revised Unit Surveys, as well as payment decimals. Based on previous experience, on CHK operated wells the new system is designed to obscure sales of NG to itself at prices that reflect post productions costs (perhaps inflated) which may or may not be deductible under the CHK lease. Also, on both CHK operated and non-operated leases, working interest owners may be electing owners may be taking NG in kine and selling it for their own account. This results in a change in payment decimal for remain WI and RI owners. However, it may leave RI paying  G&T and Pipeline Transport fees created when CHK and HK monetized G&T systems and inflated rates(which RI did not share in cash proceeds, but are bearing the inflated G&T charges), plus many Lessees committed to long term pipeline contacts with MVC (remember when CHK's Aubry Mc and HK's Floyd Wilson spoke of running 40 to 60 rigs and AM spoke of $100,000/acre valuations (after HK paid lease bonus of $27,500/acre for the DeSoto Airport). See any rigs out there now. Some RI are being charged MVC on G&T and Transport. This is NG not produced and sold from wells not drilled on units in which you have no RI. What if you leased a 20 acre tract to HK in one section. You are being charged MVC for NG not produced and wells not drilled by a not deposed CEO on possible 400,000 acres gobbled up by HK before the market cratered.

WR, I can get you to the unit surveys but payment decimals for private mineral ownership are not part of the SONRIS database.  The Minimum Volume Commitments (MVC), which we have previously discussed as "stand by" charges, are the most flagrant example, IMO, of how Haynesville operating companies sought to bail themselves out of financial straits by disadvantaging their mineral lessors.  I tried for a number of months to get the Shreveport Times to publish an article on MVC's and non-traditional and excessive post production royalty deductions.  If the general public knew that this is how these companies conduct their business, they would be up in arms.  Ah, but this is Louisiana and you have to go to great lengths, and often to court, to get any consideration for the average citizen.

Go to the Document Access portion of SONRIS.  Scroll down and click on "Survey Plats".  Your best search option is either LUW code number or Field Order number if you have them.  If not, search by field code and then scroll through the list until you find your unit designation (HA RA SUX for example).  Do this chronologically through the entire list to ensure that there are not multiple surveys with later ones superseding earlier ones.  Since the Office of Conservation has started issuing compliance orders for delinquent unit survey plats, the incidence of multiple plats for the same unit is increasing.  The last I spoke with the compliance staff, it appears that this will be a multi-year process to get current on unit survey plats.  That is disappointing but somewhat understandable since the number of delinquent surveys are about 850.  And that is just for Haynesville Shale units.  There are likely thousands of missing surveys when taking into account Cotton Valley, Hosston and other unitized producing formations.

Although there are no decimal interests in the database, each survey plat will list the mineral owners, their tract acreage and their percentage of the unit acres.  Since the survey also provides the total unit acres, it is possible to calculate any interest if the royalty fraction is known.  Each owner should of course know their royalty fraction but since the industry offered everyone a quarter after about the third quarter 2008, it can be assumed that anyone leased after that time has a strong likelihood of owning a quarter royalty lease.

Skip, 

Thanks for all of your continued help, you are a great steward for the industry. As to the new CHK checks, do you understand the difference between the "left decimal" or "ownership decimal" and the "right decimal" or "payment decimal"? It seems that they are paying based on the ownership decimal, but I cannot determine how CHK have arrived at this (always lower) decimal - any help would be much appreciated. 

Thanks, 

Will

You're welcome, William.  My business focus is on the industry living up to its contractual obligations and treating their mineral lessors and Unleased Mineral Interests ethically.  I am beginning to hear more questions regarding the new CHK royalty statement format but I do not have a copy.  Without a copy I'm unable to comment specifically.

How do i get it to you? 

By email attachment would be best.  Go to My Page by clicking my name in blue text.  If you are not already a "friend", you will have to send me a friend request.  Once I accept your request, you will have access to My Page and can see my off site email address.

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