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Permalink Reply by JAMES SMITH 20 hours ago

GM..I received a deposit from Chesapeake $300 on April 25 but the amount was $1400 less than what I received in Jan/Feb/Mar from deposits from Sepco. I know they fluctuate but seem like that’s a big drop unless I should be receiving one from SWN as well. Anyone else had similar experience. Sec 19 14/14  6 acres  Sec 18 14/14 1 acre.            

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Permalink Reply by Skip Peel - Mineral Consultant 20 hours ago

James, there are a number of reasons for fluctuations in your royalty income.  First and foremost is the monthly price of natural gas which is volatile and changes.  That's why I post the monthly natural gas settlement price on the website. The second is the volume that your well(s) produce in a month.  For example the well that produces from 19 &18 reported in December only 60% of what it reported in January.  Unfortunately the January production is the last reported monthly volume entered in the database so I can't speak to Feb thru April.  The well in question was drilled in 2023 and is reaching the end of its most productive period.  It should continue to produce for years with small yearly declines in reported production.  The third thing that happens to interrupt monthly production is when an operator shuts in an older well because they are fracking new wells nearby.  This is done to prevent frack hits on the older well.  If that well is shut down for an entire month, reported production can be zero but in many cases the shut down is only for a portion of the month so there is a reported volume but it can be much lower than usual.  Have you checked the volume of gas for the well for those months?

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Permalink Reply by full name 20 hours ago

I found a few interesting items on they Expand check.  I have a location that is 1/2 SWN and 1/2 Chesapeake.  Expand still reports them as two different line items and prices on each well.  I have another location that has two different contracts dating back to Encana days.  SWN had combined them into one line item.  Expand separated them back out and had two different prices - 20 cent difference.  Sent them an email about this as this was always the same price.  Otherwise all interest decimals and deductions as well as volumes appear to be correct. 

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Permalink Reply by Skip Peel - Mineral Consultant 20 hours ago

Not sure what the reason or reasons are but imagine the accounting that takes place for ten of thousands of royalty owners and hundreds if not thousands of wells.  The integration process particularly the accounting part that is required by the merger of the two major companies can take many months.  As to the 20 cent difference, there may be two leases with somewhat different terms.  Accounting often turns to the legal department when that happens.  If you can get the email address for the person in accounting that is in charge of your wells, that is the most likely means of communication that can be successful in getting answers and explanations.

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Permalink Reply by full name 14 hours ago

The reason there are two contracts is due to Encana's error.  They missed some property in a couple of sections.  While the terms are somewhat, the difference is covered in the owners decimal interest, not in price.  There were always two line items on the payments (always the same price) until SWN combined them (just added the interests together).  Expand separated them back to the original two line items but they now have much different prices.  As I explained to Expand in my email (not yet answered) "same well, same pipe, same company, always before the same price, what changed".  As a reference the adjoining section under the same contracts was sold to Comstock years ago and for those wells leach contract is under a separate line but the prices are always the same.

I have some some with two owners (Chesapeake and SWN) they still are still separated and the price varies a little but never by 20 cents.

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Permalink Reply by Rock Man 16 hours ago

Issue here may be tied to SWN and CHK having separate gas contracts and each company taking their share of gas "in kind" instead of letting the operator sell / market the gas for the non op WI owners.

Question moving ahead should be "Will the two separate gas contracts be continued or will this be renegotiated into a single gas contract?"

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