My parents were recently called by a representative of Chesapeake saying that they had been overpaid.
They said they had been paying my parents royalty money on 27 acres when they actually have 25 acres. The division papers say 25 acres. Therefore, they will be withholding their payments until this amount is paid up. How can they do this when it was their error? Anyway, no royalty check came this month. Shouldn't they send something to them showing what the well made and what their payment should have been? They received nothing. They have not even let them know how much the overpayment is supposed to be. My parent are elderly and do not understand all of this. Anyone have any advice?
Hello, one of the professionals here (who is much more qualified than I am) will likely answer you soon. My view on CHK, based on being part of this message board for years is ...
1) CHK is about the hardest company for a small (maybe any) owner to deal with but you can get some tips here.
2) You can request, in writing via certified mail a new Division Order. I believe they have to formally issue you a new division order giving your share.
3) Sadly, being your parent's interest is likely to small to warrant paying an oil and gas lawyer for advice. I could be wrong about this and you may be in a "sweet spot".
Hopefully, one of the brighter folks on here will answer you. I just wanted to welcome you to the group. Many people just like you (and me) have gotten a lot of very good info from people on GHS.
best wishes ... Hopeful About Natural Gas (HANG, for short)
Carolyn, the only answers to your question will come from Chesapeake. I will post a link to their customer service web page at the end of my comment. Mistakes in Division Orders are common especially small difference such as the acre difference in your parent's acreage total. There are many instances similar to this cropping up recently as CHK has had to perform new surveys for existing units where they have drilled or plan to drill HC wells (Cross Unit Laterals). CHK was remiss in getting in a hurry in the early land rush days of the Haynesville Shale and not performing a sufficient level of due diligence. Now corrections are being made based on more accurate information. Yes, it is upsetting to have royalty suspended especially with no detailed explanation.
Look at the CHK customer service webpage and see the type of information you will need to supply in order to be connected to the accounting staffer responsible for your parent's well. If you call do so with one or both of your parents there so that they can confirm that you are acting on their behalf. Have a copy of the Division Order to refer to. You can do that using the link below.
The best means of communication with the right contact person IMO is email. You can use the following link for that. Be sure to read the FAQs on the website so you know what information will be needed to get your questions answered. Please let us know how CHK responds. Good luck.
Email is the quickest way to get Chesapeake to respond. I have sent them many messages, and they have always gotten back to me within a few days.
At least they called. When we went through this with another company, we just stopped getting checks and the company's division orders were WRONG. Perhaps they are also wrong on your parents.
You need to get them to send you a copy of division orders and a list of payments since well started and this list need to show you when they started their REVERSAL which is when they started holding out money from your parents' royaly that they say is over payment. I have dealt with most of the major companies in the Haynesville ( we have small amounts of minerals all over Caddo & Desoto) and I have been treated with courtesy by all and I act courteous to all. Good Luck and don't give up if you think they made a mistake on the acreage. If it is a mistake you will get all back payments back.
The below interview states that landowners have been shorted all but 10% of their royalties by Chesapeake. Your 12.5% royalty will be more like 1.25%. No doubt that’s what we are seeing in Ohio with $16 to $150 per acre per month for the past 18 months.
Tell your parents to talk to a lawyer, they all know how this works with Chesapeake. I've learned a lot from those lawyers helping out my neighbors.
An interview of Propublica’s Abrahm Lustgarten on PA Dairy Farmer Don Feusner’s underpayment of royaltiesWelcome to the party!
CURWOOD: How common is this type of underpayment that Mr. Feusner’s getting from Chesapeake?
LUSTGARTEN: Well, anecdotally, it appears to be extremely common. Virtually, anybody I asked, from landowners to experts who work for landowner advocacy groups or accounting firms across the country tell me basically that this happens all the time. One executive at a major banking institution estimated about 70% of American landowners are severely underpaid for the oil and gas that are produced on their property.